In addition to the other comments, mortgages under $50k might be very hard to write legally. For the most part, the origination, appraisal, and closing fees for a $50k loan and a $250k loan should be very similar.

Let's assume $2000 in fees associated with these two loans. Both borrowers area offered a 4% interest rate over 30 years. On the $250k loan, the APR is 4.0662%. On the $50k loan, 4.3280%. 35k, 4.4665%.

I'm not an expert in the law, but these APRs, or the ratio of fees to loan may trigger anti-predatory lending laws.