On top of the the borrower most likely owns it outright or has a small balance left on the loan.

Typically lenders for non recourse require the borrower to have a net worth that is equal or greater to the outstanding loan blance, have at least 1 year reserves for debt service and experience and or a track record.

I try to have this conversation with my borrowers when i see finished basements on the scope of work.

Rates have been coming down the last couple weeks and it's possible to get rates in the 6s for DSCR loans depending on the LTV  (loan to value) and borrower credit score. 

I just dont see the point of going hard money when I can borrow from my HELOC.  

I want to be able to borrow against this somehow to give me capital to work on some other development plans that I have.Anyone have any advice on how best to pursue this?

As a lender it is a big red flag for me when I ask a potential borrower what the ARV and rehab budget is and have them say "well, the wholesaler says xyz".   

A "lender's title policy" is typically purchased by the borrower for benefit of the lender. 

With that being stated, what do I do if I borrow funds from someone and the deal goes sour?

Spend your time on your contracts, insurance, and operations.Contracts-  copy, borrow from someone else as a starting point.