MTC Financial, Inc. v. Nationstar MortgageAnnotate this Case
Sparrow obtained two loans from Countrywide, each secured by a deed of trust on Hercules, California property: a residential mortgage of $205,080 and a home equity line of credit (HELOC) of $15,000. Both deeds of trust were recorded on December 16, 2003, with the Contra Costa County Recorder’s Office; the HELOC deed as instrument 0603657 and the mortgage deed of trust as 0603058. The HELOC was assigned to the Bank and the mortgage was assigned to Nationstar. Following Sparrow’s default on the HELOC, the trustee conducted a nonjudicial sale of the property and received $105,000. After payment to the Bank and of the costs of the sale, a surplus of $73,085.50 remained, which was claimed by Sparrow, the Owners’ Association, and Nationstar. The trustee deposited the funds with the court. The court of appeal affirmed that Nationstar, as a senior lienholder, was not entitled to any of the proceeds of the sale under Civil Code section 2924k. Absent evidence of timing that was determinative, the trial court reasonably relied on the apparent intent of the parties to determine the priority of the two liens. Given that Countrywide was the lender on both loans, the reasonable expectation is that it would secure the larger mortgage loan in the primary position.