The Creative Investor - California Foreclosure question

I have a question about foreclosing on a 2nd when there is a 1st in place.

1. Default filed on HOA Lien (2nd) for $5000
2. TS sale held, no sale, REO to beneficiary (HOA)
3. Owner of record is now HOA (????)
4. Default filed on 1st TD
5. TS sale held, no sale, REO to beneficiary of 1st

Is the Trustee deed issued in step 5, subject to the $5000 owed to the HOA.

In other words Does the HOA get it's 5000 (plus interest?) out of the proceeds of the TS on the 1st or does a "secured lien" for 5K still exist?

Thanks