That is TOTALLY crazy.
Now, granted, rules are a bit different here, but... for us, a property value under about 80 grand is subject to more stringent "percentage" limits... like, if you want to get a mobile home, you can get a mortgage, but you HAVE to put down at least 25% (some want 35%)... on a standard residential home, you can get a mortgage with 10% down. The theory is that these "cheaper" living options are harder to get rid of if the bank has to repossess. But... you should still be able to get a morgage. And if I have a house worth 150 grand and want a 25 grand mortgage, it's a non-issue. (they won't go below 10 grand due to the costs of setting up a mortgage)