Whether it’s true or not doesn’t matter as much as the fact that the industry at large believes it’s true.

I am seeing more bureaucracy like inspections and fees, which I can understand because some people let their places become true hazards.I do agree what @John Underwood said and would consider lawyering up. 

I'm trying to prepare incase this is true.

True although the fires this year just adds to the reasons to leave California (excessive taxation and regulation, overbearing political correctness, downtowns littered with feces, etc.).

It is easy for people to download fake W2s, ESA paperwork, etc, with a few mouse clicks and a credit card. 

I also want to say that if you see this as a true passive investment, you'll be in for a surprise because it's anything but....usually.

And a few from 0% interest for a year credit card loans too.

Based on what you have explained here and assuming that all of it is true, than you really only have two options to get it rented1.

This would probably allow me to qualify for the FHA loan if this is true since the giant loss is throwing off my DTI. 

Quote from @Chris Seveney: I wonder what the OP's true motivation is for asking this question.