Legal Question in Real Estate Law in California

Based on what you have provided, I don't think you are obligated to pay, but that doesn't stop them from filing a lawsuit to attempt to collect.

Normally, when the senior forecloses, the junior trust deed holder is permitted to sue on the grounds that they are a frozen out junior lienholder. This rule does not apply however, when the same lender held the junior and senior deeds of trust.

I agree with Mr. Roach on a different basis. If this is your principal residence they are barred from collecting from you personally by the purchase money anti-deficiency statute. You should advise the collections company that they are in violation of the Fair Debt Collections Practices Act for trying to collect a debt that is legally barred. Tell them if they disagree you demand a written verification of the valid debt. If they produce something, let me know and we can see if we can figure out why they think the debt is good. If it's not, I'd be happy to take the FDCPA lawsuit you would have against them.