Also, very important, is to realize if you get into a default situation on your HELOC, they will come after your personal house... so there is a bit more "implied danger" in the event of default... you don't lose the rental you bought on credit, you lose your own house!

In the event of a default 1st Mortgage gets paid and whatever is leftover if anything 2nd Mortgage Lien is paid.

While a 50-50 split is often thrown around as the default provision, I would think that the money parties would want closer to 75-80% of the deal, leaving 20-25% ownership for the sponsors “promote”.  

@Tomasz Kaminski a "notice to quit" is typically around some sort of non compliance or default of the lease by the resident.   

Knock on the door, show the tenants my note (which they probably won't understand and will be highly skeptical) and say you need to pay your rent to me now since the owner (borrower) is in default?

This is because they don't have the infrastructure to foreclose should you default on the mortgage.

Then call the lenders loss mit division (may be called something similar - they will usually automatically route you there based on the accounts default status).

Lots can go wrong with your type of scenario… like what if the purchaser alters / destroys the property before you get all your cash and then defaults.  

Hello,I was wondering if someone had some insights on what happens if someone wins a property Tax auction bid on a defaulted property.I saw a property listed for tax Auction and with some more due diligence I happen to find out that the property has two mortgage liens.

They've certainly been sending statements and late notices - not to mention the notice of default and other legally required foreclosure documents.