Each state has lots of borrower protection rules.
This is clearly not about borrower protection, as loans are still being listed today with borrowers in the affected states. (According to LC available notes)
The rest of what you mention sounds about right. It could be something major, or it could be something minor, we just don't know enough yet.
My returns have been above average (top 10%) and i've been planning on investing more, even with the recent scarcity of good notes.
I'm just glad this didn't happen after I deposited/rolled over more to my Roth account. What a headache that would've been! Certainly not looking forward to winding down my Roth either.