When you bought your home (or any real estate property) and signed your first mortgage loan documents, you probably signed a first trust deed giving your lender a right to foreclose on your home if you default. Similarly, when you took out a home equity loan, or second mortgage, you signed another trust deed giving that second lender a right to foreclose on your home. This means there are now two lenders with security interests in your home.

Timing is critical for the lender who holds a second trust deed. Because the lender on a second trust deed records the trust deed after the first lender records the first trust deed, this means the first lender is going to get paid first if you default on both loans. Therefore, a second trust deed has an inferior claim to your home.

Any subsequent trust deeds will be in the same priority order during collections process.