CMS-7373 is back or was never fixed completely.
Reproduction on 7.9.12 and 10.2.1
1. Create anywhere under /content/documents a new non-translated folder
2. Open its context menu, use the option "Edit allowed content"
3. In the "Edit allowed content" dialog, choose the "Add new translated folder ..." to enable user to create translated folder as a child node of non-translated folder.
4. Create new translated folder and in the new-translated-folder dialog, choose a language.
The folder is created, the language is set, a country flag appears.
The folder is created, but the language is not set, instead a yellow-warning icon appears.
On the folder, property hippotranslation:locale="inherited locale" is present.