Title Issues on Purchase - Advice Needed

[Jesse Smith]

I'm in the process of trying to purchase an off-market deal in my neighborhood.  I already own one of these, and it's a tremendous cash flow property.  During the title search, the following issue came up:

Property is a duplex with approx value of $165k.

• Seller got a loan for $94k in 2000 from Lender A, secured by a deed on the property
• Seller got another loan for $105k in 2002 from Lender A, secured by a deed on the property
  • Seller claims that this was a refinance of the original loan, with additional debt rolled in
    • Loan docs from the seller suggest this is true, BUT the box labeled "refinance" is not checked
  • No modification or release was ever filed for the 2000 deed
  • Title policy from the 2002 transaction listed the original 2000 deed as an exception to coverage
  • The HUD-1 settlement from 2002 doesn't show any specific payoff of the original note.
• The current loan servicer sent a payoff statement that will release the 2002 deed, but no mention of the 2000 deed

I reached the person listed as trustee on the deeds. He was a lawyer, but is no longer practicing, and he said he does not have access to any docs from 17 years ago. He also claims that he "allowed Lender A to use his name," but he doesn't know exactly what they were doing.  It seems like he should have been responsible for filing the release or modification when the refinance happened.  

I am not sure how to proceed, because my title company will not write an owner's policy, if there isn't a release on the deed from 2000 ($94k). They have offered to write the policy with the 2000 deed as an exception.  I don't want that, because it would just create an issue for me when I eventually sell.  Lender A is no longer in business, and the servicer doesn't have any records available to show a release of the 2000 deed.

I know that's a lot to digest.  Any advice?