BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2455|
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CONSENT
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
CONTINUED
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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that revised the protections included in the outdated the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
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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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