Wisconsin Code says to do per manufacturer's instructions and I've never seen any shingle or other roofing manufacturer say anything but stepped flashing. Call your inspector and have him write it up as a Code violation and take it with you to negotiate a new price. It looks like trouble waiting to happen. If your banker doesn't understand then you've just learned what I've known for years, all the bank cares about is closing the loan, they don't make the payments or have to take care of the place... from the photos shown J flashing a roof - wall intersection is key-wrap!
