This is what I don't get --
There's no doubt in my mind that ANY lending institution worth its salt would ALWAYS ASSESS any property it is lending money, against. It is never going to be just - YOUR WORD. So any bank WOULD HAVE done their own assessment. Without direct knowledge, I have to think they DID, and decided, yep, let's lend him the money. Even if they thought, yeah, overvalued - they knew he'd be good for it, and they would make money.
I'd also hazard a guess that lending institutions do THIS, also, all the time. You know - look at it - you say it's worth 500, I say 350 - but I also know you have a perfect record in paying back and you won't default, so who are we to fuss? Loan granted.
ALONG comes an attorney and says, oh no - you overvalued this to get a loan. And BOTH THE BANK and the lendee say - so the hell what? We are BOTH OK with it.
So yeah - if I make deals like this all the time - and the bank does too -
It IS TIME to get the hell out of Dodge. Because if the courts can exploit weird laws to intervene on your normal lending operations, you'd better leave.