It is like adding insult to injury. First you lose your home to foreclosure, then a collection agency comes after you for the loan. The truth is you do not want to ignore a collection agency. They can get nasty and make more trouble for you than it is worth. Obviously, this is a legal question and there are few if any attorneys on Trulia. This is not legal advice, since I am NOT an attorney.
As a real estate professional in California, it is my understanding that all purchase money loans are non-recourse in a foreclosure situation. You should dispute the debt during the dispute period and let the collection agency know that this is purchase money. They may be counting on your not knowing anything about your rights and may try to bully you into paying something that you, most probably, do not owe. This is how they make their money, by collecting debts, whether legitimate or not.
Of course, when you send the dispute that might just put this to bed. The collection agency may acknowledge that under the circumstances you do not owe the debt. If they continue to pursue you, then your best bet at that time is to get legal assistance. There are legal advocate groups out there that may help you for no cost or a nominal fee. Look into such groups, many of which are non-profit. Hopefully this will go away smoothly. Dare to Dream.
Shel-lee Davis, CDPE
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty