Legal Question in Real Estate Law in California

The foreclosure may not be effective against you. We will have to review the title to the property and any documents you might have to help you further.

Until you mentioned you didn't record your DoT, I wasn't worried about you. Foreclosure would have wiped out your second. A deed in lieu would not. That is why it was legal for them to do it without notice to you. But then you mention your second DoT was never recorded, which explains why the holder of the first would take a deed in lieu instead of foreclosing you out. They didn't have to. They took title clear of your DoT since it was not of record, unless they had actual or constructive knowledge of your lien. You need to get an attorney involved right away.