Can anyone verify this is OK or is it state by state-regulated based on their individual jurisdiction?  

That's tough to do, even in California.Even if you borrow the equity from your current property, the bank doesn't give you that money for free.

Attempted to report him to state agencies but there was no clear jurisdiction.

If I were ever forced to take Section 8, I would start selling off anything I had in that jurisdiction.

See who represents owners frequently in your jurisdiction and get set up with them.

I would check the rules in all of your jurisdictions.

Anything that involves a load bearing wall will generally need an architect IME, but it can also be required (maybe indirectly) through the jurisdiction's building code/enforcement.Got it, thank you for lending your expertise!

For example in many jurisdictions I can STR units in a duplex but cannot STR an ADU (some jurisdictions will let you STR if you owner occupy).

They were taxing as a fourplex, but the CO said it was a triplex.I found out when I went to try to refi with the bank.

We also have a bank account at a smaller Chicago community bank, but there technology isn't as good to be honest.I think @Jonathan Greene's main point is don't step over dollars to pick up pennies.