Yes. All parties who collude to defraud the first mortgage lender are liable. Never believe anyone who says it's not fraud. Never believe anyone who tells you everyone does it.
If you are a seller providing a second mortgage for the buyer, I suggest you get written verification from the buyer's mortgage lender that they are aware of the second mortgage and that they have approved of it. You may be able to simply review the buyer's mortgage commitment letter. The approval of the second should be acknowledged in the letter. Also, make sure the HUD-1 Settlement Statement discloses the mortgage and its recording fee.
If someone tells you it's none of your business, tell them to jump in a lake.