Frankly it sounds like manipulation of collateral to me.
I’m just learning the term so my understanding is petty rough.
If you borrowed from me and used your house as collateral and I borrowed from someone else and also used your house as collateral.
It’s worse than that. You rent me your house and I use it as collateral for a loan.
That's why mortgages and liens are supposed to be registered with the country, so that if I use my house as collateral for loan A, and then try to use it as collateral for loan B, the originator of loan B can check with the county and say "Hey! That house is already mortgaged!"