Can you have 2 secured loans on your property from the same company?

secured loans
I thought this was illegal. A couple I know have a secured loan on their propertyof 5k, the same company who gave them this then gave them a second loan secured again on their property of 12k which puts them in negative equity and unable to remortgage.
Is this legal practice and do they have any redress against the company who put them in this position?

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