Debt paid to original debtor, yet Palisades reports a collection

I had an AT&T account for a cell phone and after the 2-year contract I changed to Verizon. However, my final statement from AT&T was incorrect so I disputed the amount. I finally paid the erroneous bill because it was taking too much time & effort to warrant the dispute and I didn't want a negative mark on my credit report. However my check was returned to me and I received a collection notice from Palisades. I made sure the account was paid in full and not late, yet Palisades is reporting it as a collection--even after I disputed it with all 3 credit reporting agencies. Now I'm unable to do anything, and they still haven't provided any "validation" to me, they only communicated with the credit bureaus. It's been 6.5 years since it was reported--but I have to apply for a mortgage now, before it is removed. Do I have any options left?