Legal Question in Real Estate Law in California

You'll probably have to buy out the 1st to protect your interest in the property, it there is any equity to be protected. You should consult with a local RE law attorney for specific advice and help.

I think it was rather risky to allow seven months to go by after hearing nothing from the holder of the 1st. You presumably knew you were incurring liability for it by buying the 2nd, and that it was a ticking time bomb. The liability for the payments on the 1st marches on, whether you hear from the holder or not. True, the lender doesn't seem to have made much effort to contact or bill you, either -- where the heck do you suppose the monthly statements and late notices were going?

Oh, well, at this point I think you have at least one choice besides waiting for the foreclosure sale and bidding.......I think as the successor to the original borrower you can reinstate the first by paying all the arrearages. See Civil Code section 2924c. This may require putting up a lot less cash than bidding at the trustee sale, and the outcome is more certain.

It's an economic decision - whether to pay up on the existing loan and reinstate it, or bid at the sale and just buy out the 1st. The deadline for reinstating loans is five business days before the trustee sale, but start working on it ASAP if you decide to go that way because it may take some time to identify the party to be paid who can stop the sale, and to get them to calculate the amount. Paying 5c too little is ineffective.