2% cap on closing cost contributed by seller

[John-Mark Chesney]

I was talking to a conventional lender who is telling me there is a law stating that a seller can only contribute up to 2% of the purchase price towards the closing cost. Ex: $100,000 purchase price= a limit of $2000 towards closing cost that the seller can contribute and the buyer is responsible for everything else. Anybody heard of this?

Not sure if it matters, but the lender is in Tennessee and one house is in georgia and one in tennessee. Thanks