Legal Question in Real Estate Law in California

Everyone calls it a mortgage, but California doesn't really have mortgages. In California, the security instrument of choice is the deed of trust.

So my questions to you are as follows:

1) Are the equity lines secured by one deed of trust, or two?

2) If secured, who holds the deeds of trust? The same lender, or two different lenders?

An "equity line" is essentially borrowing against real property collateral, as is getting a so-called mortgage, which in California almost always is a promissory note secured by a deed of trust, rather than a true mortgage.

Loans against real property (whether called mortgages, deeds of trust or home equity lines of credit) seem to fall into one of three possible categories as to borrower risk following default. The least borrower risk flows from a default on a purchase-money loan secured by a first deed of trust on an owner-occupied home. A default on such a loan almost never results in a claim for any deficiency (or other claim) after a trustee's sale. The highest borrower risk is from a non-purchase-money second (or higher) loan's lender after a foreclosure by the holder of the first. Such a lender becomes an unsecured creditor due to the foreclosure (and loss of the collateral) and can sue the borrower for whatever's owed. All other lenders would generally fall in between, with limited rights.

OK, the essence of Mr. Roach's answer is that it makes a difference whether the law would regard the two loans as "separate" or a single deal. If it's all really one loan package because there is a single security instrument (deed of trust) and a single lender, the whole thing would be foreclosed, the proceeds of foreclosure would be the limit of the lender's recovery, and the matter would end there. If, however, there are two lenders, or two deeds of trust to the same lender, you could end up with a lawsuit for a deficiency brought by the holder of the junior obligation.