Mortgage bankers moved closer to ridding deadbeat commercial real estate borrowers of an unintended shield when the Senate Judiciary Committee approved legislation that will curb the practice of filing Chapter 11 bankruptcy petitions by debtors who are only protecting a single asset.

The committee approved the bill [S. 540] by voice vote Sept. 15 and reported it out. The bill outlines modifications to Chapter 11 single-asset bankruptcy protection (see story, this page), one of which will allow lenders to begin foreclosure proceedings as early as 90 days after bankruptcy petitions reach the court. Mortgage banking lobbyists believe the bill may reach the Senate floor this session.

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