Trust deed (TD) in CA limits amount secured

[Chet Mazur]

I came across something odd I haven't seen before when researching a property in pre-foreclosure.

Due to having been in and out of default for A LONG time the note face value was 501K, but the UPB is~1.7M. When I reviewed the actual TD, it said something to the effect of "this TD secures a maximum of 501K in debt" since it was the TD securing a LOC. Does that just mean the the difference between 501k and 1.7M is unsecured, or does the stated limit exclude cost associated w/ a default?

Do people see an opportunity to separate the (seeming) unsecured debt from the secured debt? E.g. something like buy note for 500K (secured) +1.2M unsecured and write off the unsecured amount.

Property is work ~ 2.5M.