Legal? $800k mortgage on a $60k property

[Serenity Ji]

A rural property with a run-down residential manufactured home worth $60k; is there any legal means the owner was able to take out a mortgage on it for $800k? 

[Ryan R.]

This could be part of a cross collateralization type loan, were several properties are part of the collateral for one large loan. For example each property may only be worth $200,000 and 10 of these properties are collateral for one $800,000 loan, while each property would be upside down and seem to be over encumbered but combined they are only at 40% LTV.... The loan recorded on each property will still show as $800,000 not a fraction of the total loan amount.