BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                  AB 2455|
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          Bill No:  AB 2455
          Author:   Nava (D)
          Amended:  As introduced
          Vote:     21

           SENATE VETERANS AFFAIRS COMMITTEE  :  4-0, 6/22/10
          AYES:  Denham, Correa, Negrete McLeod, Cedillo
          NO VOTE RECORDED:  Wyland, Vacancy, Vacancy

           ASSEMBLY FLOOR  :  71-0, 4/8/10 - See last page for vote

           SUBJECT  :    Military service:  benefits

           SOURCE  :     Military Department

           DIGEST  :    This bill authorize members of the military to  
          defer payment on up to two loans on vehicles.  In addition,  
          this bill provides that a spouse or legal dependent, or  
          both, of a member of the military is entitled to the  
          deferral of payment benefits accorded to a member, if the  
          member is eligible for those benefits.

           ANALYSIS  :    Existing law authorizes members of the United  
          States Military Reserve and National Guard who are called  
          to active duty as a result of the Iraq or Afghanistan  
          conflicts to defer payments on specified obligations for  
          the period of active duty including up to two loans subject  
          to the Automobile Sales Finance Act.

          In 2003, the Service Members Civil Relief Act (SCRA) was  


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          signed into federal law.  This was a new federal statute  
          that revised the protections included in the outdated the  
          Soldiers' and Sailors' Civil Relief Act (SSCRA) to reflect  
          new economic realities.  Previous legislation was intended  
          to augment the federal SCRA and provide financial  
          protection benefits to California's service members that  
          are superior to the benefits already granted them pursuant  
          to SCRA.

          When the existing law was put into practice, attorneys in  
          the Staff Judge Advocate Corps of the California National  
          Guard found that the law needed minor revisions to ensure  
          that "members" and their families are provided all of the  
          intended protections.  Specifically, California National  
          Guard legal staff found ambiguity in the manner that  
          vehicle loans were subject to the Automobile Sales Finance  
          Act, which led to some "members" having their vehicle loan  
          deferment request denied by some financial institutions.  

           The author's office believes the true intent of "The  
          California Military Families Financial Relief Act" can not  
          be carried out when considering that the companion statute  
          to the Military and Veterans Code (MVC) Sections 800-811  
          specifically extends the protections and financial relief  
          to a "member's" family, possibly due to legislative  
          oversight in omitting the family in MVC Sections 800-811. 

          Currently, MVC Section 800(a)(5) provides for the deferment  
          of two vehicle loans subject to Civil Code Section 2981.   
          Civil Code Section 2981, as written, applies to the sales  
          contract of a motor vehicle between a buyer and a seller.   
          Subsequent case law (not related to MVC issues), extended  
          the benefits of Civil Code Section 2981 to seller-assisted  
          financing, such as when the car dealer finds a lender for  
          the buyer.  Unfortunately, Civil Code Section 2981 does not  
          directly address the scenario whereby a buyer goes directly  
          to his own bank to obtain a car loan.  Several financial  
          institutions have used this loophole to deny deferments to  
          "members" who obtain the loans directly from them.

          The author's office has stated this correction to the  
          statute is necessary to ensure that members of the  
          California National Guard and Reserves, deployed to Iraq  
          and Afghanistan, are able to obtain the full benefit of the  


                                                               AB 2455

          spirit of the law.  The existing California Military and  
          Veterans' Code Section 800(a)(5) is intended to help  
          "members" and their families avoid the financial hardships  
          that can occur with prolonged deployments into a war zone.   
          Due to the reference of Civil Code Section 2981 in MVC  
          Section 800(a)(5), some financial institutions use a  
          loophole that allows them to exclude certain vehicle loans  
          and are not complying with the full intent of the law.

          A companion statute within the MVC involving deferments of  
          obligations, Section 409.5, extends the benefits of MVC  
          Sections 406-409.4 to the dependents of "members".  The  
          intent of the law is to provide relief to "members" and  
          their families.  The failure to extend all protections and  
          benefits under Sections 800-811 to the spouses and legal  
          dependents of "members" is inconsistent with the spirit of  
          the law.

          The author's office goes on to state, "this amendment is  
          critical as more and more Californians are ordered to  
          active duty in Iraq and Afghanistan and their families  
          suffer the hardships of deployment.  When a "members" is  
          deployed and the family income decreases due to the  
          "members" making less on military pay versus their civilian  
          pay, many families are unable to maintain all of their  
          financial obligations, regardless of whether the  
          obligation/loan is in the name of the "members" or the  
          spouse/legal dependent."

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  6/24/10)

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

           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,  


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            Bradford, Brownley, Buchanan, Caballero, Charles  
            Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De  
            La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,  
            Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,  
            Galgiani, Garrick, Hagman, Hall, Hayashi, Hernandez,  
            Hill, Huffman, Jeffries, Jones, Knight, Lieu, Bonnie  
            Lowenthal, Mendoza, Miller, Monning, Nava, Nestande,  
            Niello, Nielsen, Norby, Portantino, Ruskin, Salas,  
            Saldana, Silva, Skinner, Smyth, Solorio, Audra  
            Strickland, Swanson, Torlakson, Torres, Torrico, Tran,  
            Villines, Yamada
          NO VOTE RECORDED:  Bass, Gilmore, Harkey, Huber, Logue, Ma,  
            V. Manuel Perez, John A. Perez, Vacancy

          TSM:do  6/24/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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