Reg O doesn't seem to answer the question. Section 23A prohibits the offering of an affiliate of the bank's stock as collateral for a loan to that affiliate. So this may be the closest anaolgy to your question. I think I would avoid the bank stock as collateral issue, especially since the house didn't appraise for enough money. This extension of credit will really get the attention of examiners. You don't want anything unusual setting off bells and whistles. These comments are mine and will be dissavowed I am sure by my employer.
Societies that do not find work in and of itself "pleasing to God and requisite to Man," tend to be highly corrupt.