BILL ANALYSIS Ó
SENATE COMMITTEE ON VETERANS AFFAIRS
Senator Ben Hueso, Chair
BILL NO: AB 526 HEARING DATE: 6/11/13
AUTHOR: Melendez
VERSION: 4/1/2013
FISCAL: Yes
VOTE: Majority
SUBJECT
Military service: financial protection benefits for reserve
component members
DESCRIPTION
Summary:
Adds financial protections for Reserve and California National
Guard servicemembers, their spouses and legal dependents,
expands scope of eligibility for protections.
Existing law:
Helps protect National Guard and federal military reservists
from the adverse effects of military deployment by providing
various financial protections with regard to court proceedings,
credit contract obligations, rental agreements, taxes, health
insurance, eviction protection, and fees related to recording a
power of attorney, termination of mobile telephone contracts,
academic tuition, state bar membership, vehicle leases, and
residential utility service.
Financial protections provided under Military and Veterans (MVC)
§409.3 apply to:
" National Guard members mobilized onto temporary state
active duty by the Governor (MVC 143 or 146) or federal
active duty (Title 10 or Title 32, U.S. Code);
" Federal reservists mobilized onto federal active duty
under Title 10, US Code.
Broader protections, including prohibition on interest accrual
on deferred obligations, provided under MVC §§800, apply only
to:
" National Guard members and federal reservists mobilized
onto federal active duty "as a part of the Iraq and
Afghanistan conflicts."
This bill:
1. Deletes the requirement that the servicemember must have
served in support of a conflict in Afghanistan or Iraq - any
active duty service is now eligible.
2. Adds utility payment obligations to the list of
obligations which may be deferred during active duty.
3. Requires that the servicemember deliver to the lender a
copy of his or her activation or deployment order and any
other information that substantiates the duration of the
servicemember's military service.
4. Defines reservist and military service:
(a) "Reservist" means either of the following:
(1) A member of the militia, as defined in Section 120,
called or ordered into state military service pursuant to
Section 143 or 146, or in federal or state military
service pursuant to Title 10 or 32 of the United States
Code.
(2) A reservist of the United States Military Reserve who
has been ordered to full-time federal active duty by the
President of the United States pursuant to Title 10 of
the United States Code.
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(b) "Military service" means either of the following:
(1) Full-time active state service or full-time active
federal service of a service member who is a member of
the militia, as described in paragraph (1) of subdivision
(a).
(2) Full-time active duty of a service member who is a
reservist, as described in paragraph (2) of subdivision
(a), for a period of 30 consecutive days.
5. Deletes the requirement that active duty service after
the close of the Iraq or Afghanistan conflicts or active
duty prior to the effective date of Section 809 be
excluded.
BACKGROUND
Recent History of State Financial Protections
The State's intent to provide increased financial protections
for servicemembers called to active service can be found in
several places in California Law.
In response to the events of September 11, 2001, the California
Military Department sponsored AB 1433 (Horton), which borrowed
heavily from federal law. This bill enabled National Guard
members serving in state or federal status and other military
reservists performing federal duty to receive financial
protections consistent with those found within the federal
Soldiers and Sailors Civil Relief Act (SSCRA). These protections
were placed in MVC §§400-420.
In 2005, the Legislature enacted AB 306 (Baca) to amend MVC
§§800-810, which originally had been enacted in 1991 to address
service in the first Gulf War (Desert Storm). This bill expanded
and enhanced financial protections of existing federal and state
laws for members called to active duty due to ongoing conflicts
in Iraq (Iraqi and Afghanistan.
Both the §§400 and §§800 portions of the MVC provide for
deferment of loans and other obligations during a reserve
servicemember's call to active military service; however these
sections are inconsistent in three ways: (1) applicability, (2)
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the process of obtaining deferrals, and (3) repayment of
deferred loans and obligations. This discrepancy inadvertently
financially penalizes members who must defer a portion or the
entirety of their loan or obligation under MVC §409.3.
For a concise three-way comparison of eligibility and benefits
under MCV §§800, MVC §409.3, and federal 50 USC 591, see the
chart at the end of this analysis.
The Military Department estimates that one-third of deploying
California National Guard members use MVC §§800 annually to
defer home mortgages and car loans. They estimate that less than
10% of deploying National Guard members use §409.3 annually.
Legal staff states that they are only aware of approximately 50
members deferring obligations under §409.3 during the last year.
COMMENT
Committee staff comments :
1. AB 526 amends MVC§§ 800, 803, and 811 of, and repeals §
809. This bill does not conflict with SB 720 (Correa), which
modifies somewhat similar benefits and eligibility for
mobilized reservists under § 409.3.
2. This helps align state policy with federal national
security policy. The major conflicts in Iraq and Afghanistan
are winding down, but are unlikely to be the last. Many of
the stresses mentioned above occur with any mobilization
into active service regardless of the location or type of
service. Therefore, it makes sense to extend these
protections to servicemembers without regard to the
particular conflict or location in which they serve.
3. Utility obligations are similar to the types of
obligations already deferrable under existing law (i.e.,
obligations secured by mortgage or deed of trust, credit
cards and other retail installment payments, vehicle loans,
and property taxes). Some existing protections regarding
utility bills is provided in MVC § 827, The California
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Military Families Financial Relief Act, which was added in
2005 via AB 1166 (Frommer). These protections pertain to
utility shutoffs and repayment plans associated with
accounts in arrears.
Related legislation :
SB 720 (Correa, pending, 2013)
" Provides that servicemembers - mobilized onto temporary
state active duty by the Governor (under MVC 143 or 146) or
federal active duty (under Title 10 or Title 32, U.S. Code)
- are eligible under existing law to defer loans and
obligations, but now can do so without being financially
penalized by having to pay interest on deferred interest at
the end of their deferment.
" Ensures that the protections afforded to financial
institutions in MVC §§800 are incorporated into MVC §409.3.
Additionally, making clarifying amendments to MVC §409.3
will ensure the protections provided by this section for
deployed Servicemembers shall be interpreted consistently by
both members and financial institutions.
POSITIONS
Sponsor: Author
Support:
American Legion - Department of California
AMVETS - Department of California
California Association of County Veterans Service Officers
California State Commanders Veterans Council
Vietnam Veterans of America - California State Council
Oppose: None received
Analysis by: Wade Cooper Teasdale
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Comparison Chart of MVC §§800, MVC §409.3, and 50 USC 591
-----------------------------------------------------------------
| | MVC §§800 | MVC §409.3 | 50 USC 591 |
|---------+-----------------+------------------+------------------|
|Eligibili|National Guard |National Guard |Applies to Active |
|ty |and Reserve |members who are |Duty members |
| |members called |called to active | |
| |to Iraq and |state service or |(Rarely utilized |
| |Afghanistan. |active federal |as full-time, |
| | |service for a |active component |
| | |period in excess |Servicemembers |
| | |of seven days in |very rarely |
| | |any 14-day |suffer material |
| | |period. |impact due to a |
| | | |deployment.) |
| | |and | |
| | | | |
| | |Reserve | |
| | |Servicemembers | |
| | |who have been | |
| | |called to | |
| | |full-time federal | |
| | |active duty for a | |
| | |period in excess | |
| | |of seven days in | |
| | |any 14-day | |
| | |period. | |
|---------+-----------------+------------------+------------------|
|Length |The lesser of |The period of the |The period of the |
|of |180 days (6 |Servicemembers' |Servicemembers' |
|Deferment|months) or the |active military |active military |
| |period of active |service. |service |
| |duty plus 60 | |(deployment). |
| |calendar days. | | |
|---------+-----------------+------------------+------------------|
|Process |Servicemember |Servicemember |Servicemember |
|to Defer |must send a |must petition the |must apply to |
| |signed letter to |court and show |court for relief |
| |their lender, |they have been |and prove that |
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| |under penalty of |materially |they have been |
| |perjury, |affected by their |materially |
| |requesting a |most current |affected by |
| |deferment of |period of |reason of |
| |financial |military service |military service. |
| |obligations. |in order to defer | |
| | |a loan or | |
| | |obligation. | |
|---------+-----------------+------------------+------------------|
|Method |The maturity |Extends the |Same as §409.3. |
|of |date of the loan |maturity date of | |
|Repayment|is extended by |the loan by the | |
| |the deferred |period of | |
| |amount (in |military service | |
| |essence the 6 |and, at the end | |
| |months of |of the deferment, | |
| |payments |rolls the unpaid | |
| |deferred are |principal and | |
| |paid at the end) |accumulated | |
| |and no interest |interest into the | |
| |is charged or |principle balance | |
| |accumulated on |of the loan or | |
| |the principal or |obligation. | |
| |interest on |(Servicemember | |
| |which the |pays interest on | |
| |payment was |the deferred | |
| |deferred. |interest.) | |
| | | | |
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