Can my mortgage holder be held liable for filing foreclosure in error on my property after I paid the full amount as instructed?

I'm a little confused as to what happened. It sounds like a foreclosure action was initiated against you, you were given a reinstatement amount that, if paid, would prevent your loan from being foreclosed. You made that payment, the foreclosure happened anyway, but your servicer kept on accepting payments and acted as though you were no longer delinquent. Now, they find out they foreclosed in error, so they started a lawsuit to have the sale rescinded. As long as I understood that correctly, you may have some recourse. If you are concerned about your credit, you should obtain a copy of your credit reports from the credit bureaus, which you can get once per year for free at: https://www.annualcreditreport.com/index.action . If they have been reporting a foreclosure against your credit, you may have some recourse. An attorney who has experience with the FCRA should be able to help. You also may want to consult with a real estate/foreclosure attorney to cover your options as far as the foreclosure that may have been done in error. It sounds like the lender identified the error on its own and is now trying to fix things. And since you didn’t know the sale had happened until being served with the summons, I would guess your actual damages are limited. Each state seems to treat errors like this differently, though. In Minnesota, I would be surprised if the courts would award a significant amount of money in a case where the actual damages don’t appear to amount to much. But Virginia may differ on that.