To ensure the bank is fully secured without a doubt, loan officer also wants to take the house being purchased. . . . . It doesn't matter what the value is to us because we have the farm RE.
Well which is it? Is it a condition put on the loan by the loan officer for loan to value purposes or is the borrower volunteering the additional collateral for better terms?
One would assume the appraised/evaluation value of the farm land would erase any doubt of the bank being fully secured.
If the loan officer has doubts about the loan without the additional security then I think you would be hard pressed to classify it as abundance of caution.
If it truly doesn't matter to the bank, then why go through the hassle?