BILL ANALYSIS                                                                                                                                                                                                    

                             JEFF DENHAM, CHAIRMAN

          Bill No:        AB 2455
          Author:         Nava
          Version:        As Introduced
          Hearing Date:   June 22, 2010
          Fiscal:         No

                                 SUBJECT OF BILL  
           Amending California Military Families Financial Relief Act

                                   PROPOSED LAW  
              1.   Amends Military and Veterans' Code (MVC) section  
               800 to make state level Soldiers' and Sailors' Civil  
               Relief Act (SSCRA) protections apply to all auto loans  
               and not only "seller-assisted" auto loans.
             2.   Guarantees that financial protections protect the  
               service member's family.

                          EXISTING LAW AND BACKGROUND
             1.   During the American Civil War Congress passed a  
               moratorium on civil actions against northern troops.   
               Certain southern states are said to have done the same  
               for their armies.  

             2.   In World War 1 Congress passed the Soldiers' and  
               Sailors' Civil Relief Act of 1918 to protect service  
               members from losing at home what they were fighting  
               for on the front.  The law gave courts the authority  
               to make equitable decisions involving military  
               personnel who had no ability, or a compromised  
               ability, to meet obligations at home.

             3.   In 1940 Congress renewed the expired Soldiers' and  


               Sailors' Civil Relief Act, now commonly called  

             4.   In 1942, due to the courts improperly carrying out  
               the will of Congress, the SSCRA was amended to correct  
               errors of the Federal Courts and to give stronger  
               protections to those serving the United States of  

             5.   As some business owners found new ways to attempt  
               to avoid the SSCRA law, Congress and state  
               legislatures have consistently returned to defend  
               service members by strengthening the law.  In 1991  
               further amendments were passed in response to the  
               experience of Desert Shield/Desert Storm personnel.  

             6.   In 2002 SSCRA protections (the Veterans Benefits  
               Act of 2002, Public Law 107-330. Section 305) were  
               extended to National Guard members activated under  
               Title 32 if activated for federal reasons. [Note:   
               Federal active duty is usually activated under Title  
               10 of the United States Code (U.S.C.).  Usually Title  
               32 is state activation of the National Guard.   
               However, after 9/11 state National Guard units were  
               activated for state service in such places as airports  
               and bridges but the activation was done by and paid  
               for by the Federal Government.]

             7.   In December 2003, President Bush signed a revised  
               version of the SSCRA, now known as the Federal Service  
               Members Civil Relief Act (SCRA), which again extended  
               SSCRA protections.

             8.   Existing law provides financial and legal  
               protections to military members, reservists, and  
               members of the National Guard that are called to  
               active duty with respect to rental agreements,  
               security deposits, eviction, installment contracts,  
               credit card interest rates, mortgage interest rates,  
               mortgage foreclosure, civil judicial proceedings, and  
               income tax payments (Service Members Civil Relief Act  
               of 2003, Public Law 108-189).

             9.   Since 2001, the California National Guard (CNG) has  

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               responded to the needs of the state by deploying  
               thousands of Soldiers and Airmen throughout the state  
               for a multitude of missions, many lasting for months  
               and some for years.  Many of these Guard members must  
               leave their studies in order to respond to state  
               emergencies.  Some may be required to perform duty for  
               over 15 or more consecutive days (as was the case with  
               California's recent wildfires).

             10.             After September 11, 2001 California also  
               strengthened SSCRA.  In 2002, the Military Department  
               sponsored AB 1433 (Horton)*, which was chaptered into  
               law and repealed California MVC 399 and 399.5 and  
               added Chapter 7.5 "Protections," commencing with 400  
               through 420.  AB 1433 codified into state law many  
               aspects of the Federal SSCRA including eviction  
               protection, capping interest rates at 6%, obligations  
               secured by real or personal property, and protection  
               on installment loan credit.

             11.               The passage of AB 1433 provided  
               financial protection for military members performing  
               military service in regards to court proceedings,  
               credit contract obligations, rental agreements, taxes  
               (except income taxes), and health/medical insurance,  
               as well as eviction protection for the military  
               members' families.  These new provisions enabled  
               National Guard members that are serving in state or  
               federal status and other military reservists  
               performing federal duty to receive financial  
               protections consistent with those found within the  
               federal SSCRA.  

             12.             AB 306 of 2005 (Baca)**, also known as  
               the "California Military Families Financial Relief  
               Act", created MVC sections 800-810, which updated the  
               state's version of SSCRA to include all California  
               service members who served in the post 9/11 era,  
               whether Reserves or National Guard, as well as adding  
               protections on auto loans.

             13.             Other state legislation-

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                     a) California MVC 800-810 was codified by SB 1  
               (Calderon)*** in 1991   to provide emergency economic  
               relief to California residents called to active  
               military service during the Iraq-Kuwait crises.  This  
               legislation augmented protections that were already  
               afforded under the federal statute known as the  
               Soldiers and Sailors Civil Relief Act (SSCRA) of 1940.

               b) AB 1666 (Frommer) of 2005, the California Families  
               Financial Relief Act of 2005, addressed (among other  
               things) the following:

                           Waives county recorder fee for power of  
                    attorney for recording a service member's agent  
                    if that member is performing military service.

                           Allows for the cancellation of a cell  
                    phone contract within 30 days if the member or  
                    spouse sends a written notice to the cell phone  
                    service provider.

                           Requires a full refund of tuition and  
                    fees for college students ordered to military  
                    service if they withdraw prior to the school's  
                    withdrawal date.  

                           Waiver of bar dues for the time period in  
                    which the military member is serving military  

                           Allows for past due or unpaid amounts on  
                    a vehicle lease to be paid in equal installments  
                    over the length of time the member served  
                    military duty if a vehicle lease is terminated  
                    pursuant to the federal Service Members Civil  
                    Relief Act.

                           Allows qualified customers to receive up  
                    to 180 days of shutoff protection for utilities  
                    if income reduction is due to a member of the  
                    family being activated to duty and the individual  
                    notifies the public service provider of the need  
                    for assistance.

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             1.   This bill is another in a long line of legislation  
               (federal and state) since 1942 that attempts to  
               protect those serving our country who otherwise are in  
               situations beyond their control.  When reservists or  
               guardsmen are activated, they usually take a pay cut.

             2.   The Military Department (sponsor) says the change  
               of definition in auto loan is needed because "the true  
               intent of 'The California Military Families Financial  
               Relief Act' cannot be carried out".  

             3.   Delinquency of spouses shows up on a service  
               member's credit report.  Those extending credit are  
               not necessarily honoring relief legislation for  
               soldiers.  For example, if a soldier has a family  
               vehicle in his/her spouse's name because she is at  
               home while the service member is deployed, even though  
               the family budget has still been impacted certain  
               entities maybe taking the opportunity to not comply  
               with the law using the excuse that the vehicle is in  
               the name of the spouse instead of the service member. 

             4.   The problem, according to the Military Department,  
               is that "legal staff found ambiguity in the manner  
               that the vehicle loans were subject to the Automobile  
               Sales Finance Act".  

             5.   The shortcomings of the existing legislation lies  
               in a definitional reference within MVC section 800.   
               Section 800 presently references the Civil Code  
               regarding auto loans; however, that code section  
               references specifically "The Automobile Sales Finance  
               Act," which covers only "seller-assisted" loans.

               When a potential purchaser walks into an  
               auto-dealership without pre approval from a bank the  
               car dealer helps set up financing.  This form of  
               financing is known as "seller-assisted" because the  
               dealer finds a lender. 

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               If a soldier got pre-approval from his or her bank or  
               credit union, there is no seller assisted financing  
               and, therefore, there is no protection for that  
               service member, or his or her family, under MVC 800.  

             6.   Changing section 800 to refer to vehicles instead  
               of the Auto Sales Finance Act will allow every auto  
               loan of deployed soldiers to be protected under the  
               relief act.

                                  PRIOR ACTIONS  
            AB 2455 (Nava)
            Assembly Veterans 7-0
            Assembly Floor 71-0 (Consent) 

            AB 306 (Baca)
            Senator Cedillo                 "Aye"  9/6/2005
            Senator Denham                  "Aye"  9/6/2005
            Assemblywoman Negrete McLeod "Aye"  5/31/2005
            Assemblyman Wyland              "Aye"  5/31/2005

          Military Department (Sponsor)
          CA Bankers Association
          CA Credit Union League
          CA State Commanders Veterans Council
          National Guard Association of CA

          None received

          *Jerome Horton served in the Assembly in 2002

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          ** Joe Baca, Jr. served in the Assembly in 2005.
          ***Charles Calderon served in the Senate in 1991

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