“You can put any value you want on a loan application, the bank ultimately decides what they will lend you”
I agree with you, but if you knowing lie about anything you put on most loan applications, you’re committing a felony in states like New York.
That is what the case is about.
Stating you think your property is worth more than the bank is not a felony, I’ve taken out many loans on properties in NY - I state what I think the property is worth and the bank does an appraisal to determine what they think it’s worth.
And you can disagree with the bank’s appraisal and negotiate it with them.