Not working with terraform 1.2.7

[zakandrewking]

TL;DR

After upgrading to terraform 1.2.7, terraform init does not work with this module

Expected behavior

This basic file should work:

module "iap_bastion" {
  source  = "terraform-google-modules/bastion-host/google"
  version = ">=5.0.0, <6.0"
}

Observed behavior

This error:

repos/tf-1.2.7-test:main $ terraform init
Initializing modules...
Downloading registry.terraform.io/terraform-google-modules/bastion-host/google 5.0.0 for iap_bastion...
- iap_bastion in .terraform/modules/iap_bastion
- iap_bastion.iap_tunneling in .terraform/modules/iap_bastion/modules/iap-tunneling
Downloading registry.terraform.io/terraform-google-modules/vm/google 7.8.0 for iap_bastion.instance_template...
- iap_bastion.instance_template in .terraform/modules/iap_bastion.instance_template/modules/instance_template
╷
│ Error: Failed to read module directory
│
│ Module directory .terraform/modules/iap_bastion.instance_template/modules/instance_template does not exist or
│ cannot be read.
╵

╷
│ Error: Failed to read module directory
│
│ Module directory .terraform/modules/iap_bastion.instance_template/modules/instance_template does not exist or
│ cannot be read.

Terraform Configuration

main.tf


module "iap_bastion" {
  source  = "terraform-google-modules/bastion-host/google"
  version = ">=5.0.0, <6.0"
}

### Terraform Version

```sh
repos/tf-1.2.7-test:main $ terraform version
Terraform v1.2.7
on darwin_arm64

### Additional information

_No response_

[bharathkkb]

I believe this a TF core issue
hashicorp/terraform#31615