It will be interesting to see how this plays out, because this last July, Seattle also passed new land use legislation that allows up to 2 additional units on a single family home property (one attached accessory dwelling unit and one detached ADU). 

Currently IL has passed legislation to outlaw it, but it's not to North Carolina yet. 

Does this vary per lending institution or is there actual legislation involved? 

Warren’s renters protection plan reads a lot like the legislation San Francisco has been busy passing for the last 20+ years.

Is it simply time savings or is it weak legislation meaning you’ll never enforce a damage claim or what?

Changes in U.S. trade policies may negatively impact Midwest RE prices,  uncapping the SALT deduction - boost RE demand in high-tax states at the expense of the rest,  proposed legislations aimed at strengthening tenants' rights and depressing rents - dampen REI everywhere.

I don't know why, but this is how it works here and the current legislations supports the practice.

The states are cracking down on this issue big time (just check out the new legislation in Ohio and Illinois - Illinois being the most aggressive new legislation to stop wholesaling the way it is currently being taught and done - there are more states working on similar legislation).

Sweeping legislation for employee rights paired with major decrease in immigrant workers.

Rental growth hasn’t kept up with appreciation here and that won’t change (particularly with the recent rent control legislation being enacted).