Amended in Senate May 7, 2013

Amended in Senate April 4, 2013

Senate BillNo. 720


Introduced by Senator Correa

February 22, 2013


An act to amend Section 409.3 of the Military and Veterans Code, relating to military service.

LEGISLATIVE COUNSEL’S DIGEST

SB 720, as amended, Correa. Military service: benefits.

Existing law authorizes a service member to apply to the court for relief of an obligation, liability, tax, or assessment, as specified. Existing law authorizes, in the case of an obligation payable under its terms in installments under a contract for the purchase of real estate, or secured by a mortgage or other instrument, as specified, a stay of the enforcement of the obligation during the applicant’s period of military service and, from the date of termination of the period of military service or from the date of the application if made after the service, for a period equal to the period of the remaining life of the installment contract or other instrument plus a period of time equal to the period of military service of the applicant or any part of the combined period, as specified.

This bill would instead authorize, in the case of an obligation payablebegin delete under its termsend delete in installments under a contract for the purchase of real estate, or secured by a mortgage or other instrument, a deferment of the paymentsbegin insert dueend insert on the obligationbegin delete duringend deletebegin insert for a period of time equal toend insert the service member’s period of military service,begin delete or should the service member request such relief after the start of his or her current period of military service, or within 6 months thereafter, a deferment of such payments for a period of time equal to the period of military service starting from the date of application,end delete as specified. The bill would prohibit penalties from being imposed on the nonpayment of principal or interest during this period and interest from being charged or accumulated on the principal or interest on which the payment was delayed. The bill would also prohibit foreclosure or repossession of property on which payment has been deferred, as specified. The bill would require mortgage payments deferred during this period to be due and payable upon the occurrence of specified conditions. The bill would provide that a service member with a mortgage subject to an impound account for the payment of property taxes, special assessments, and certain insurance shall not be relieved from making monthly payments, as specified, and that a service member shall not be precluded from making payments toward mortgage payments deferred, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 409.3 of the Military and Veterans Code
2 is amended to read:

3

409.3.  

(a) A service member may, at any time during his or
4her most current period of military service or within six months
5thereafter, petition a court for relief in respect of any obligation
6or liability incurred by the service member before the effective
7date of the orders for his or her most current period of military
8service or in respect of any tax or assessment whether falling due
9before or during his or her most current period of military service.

10(b) The court shall set a hearing on the petition within 25 days
11from the date the petition is filed, unless the court shows good
12cause for extending the date of the hearing. The petition shall be
13served at least 10 days before the hearing. The respondent shall
14file and serve a response to the petition at least five days before
15the hearing.

16(c) The court shall not charge a filing fee or court costs for a
17petition filed pursuant to this section.

18(d) begin deleteThe court, after notice and hearing, if end deletebegin insertIf end insertthe courtbegin insert, after notice
19and hearing,end insert
finds the ability of the service member to comply
20with the terms of any such obligation or liability, or to pay the tax
21or assessment, has been materially affected by reason ofbegin delete orders
P3    1forend delete
his or her most current period of military service,begin insert the courtend insert
2 may grant the following relief:

3(1) In the case of an obligation payablebegin delete under its termsend delete in
4installments under a contract for the purchase of real estate, or
5secured by a mortgage or other instrument in the nature of a
6mortgage upon real estate, a deferment of the paymentsbegin insert dueend insert on the
7obligationbegin delete duringend deletebegin insert for a period of time equal toend insert the service member’s
8period of military service,begin delete or should the service member request
9such relief after the start of his or her current period of military
10service, or within six months thereafter, a deferment of such
11payments for a period of time equal to the period of military service
12starting from the date of applicationend delete
begin insert even if the service member
13requests such relief after the start of his or her current period of
14military service, subject to subdivision (a), and end insert
even if such
15payments extend beyond the termination of the current period of
16military service. The obligation shall be extended for the period
17of time that payments were deferred, and the deferredbegin delete principalend delete
18begin insert paymentsend insert shall be paid in equal installments during the combined
19period at the rate of interest on the unpaid balance as is prescribed
20in the contract, or other instrument evidencing the obligation, for
21installments paid when due, and subject to any other terms as may
22be just.

23(2) In the case of any other obligation, liability, tax, or
24assessment, a deferment of any payments on the obligation during
25the service member’s period of military service and, from the date
26of termination of the period of military service or from the date of
27application if made after the service, for a period of time equal to
28the period of military service of the applicant or any part of that
29period, subject to payment of the balance of principal and
30accumulated interest due and unpaid at the date of termination of
31the period of military service or the date of application, as the case
32may be, in equal periodic installments during the extended period
33at the rate of interest as may be prescribed for the obligation,
34liability, tax, or assessment, if paid when due, and subject to any
35other terms as may be just.

36(e) (1) When any court has granted a deferment as provided in
37this section, no fine or penalty shall accrue during the period the
38terms and conditions of the deferment are complied with by reason
39of failure to comply with the terms or conditions of the obligation,
40liability, tax, or assessment in respect of which the deferment was
P4    1granted, including penalties on the nonpayment of principal or
2interest during this period. Interest shall not be charged or
3accumulated on the principal or interest on which the payment was
4delayed. Foreclosure or repossession of property on which payment
5has been deferred shall not take place during the period specified
6in this section.

7(2) If a person has charged or accrued a fine or penalty in
8violation of paragraph (1), that person shall be liable for actual
9damages, reasonable attorney’s fees, and costs incurred by the
10injured party as a result of the violation.

11(f) Notwithstanding subdivision (d), any mortgage payments
12deferred pursuant to this section are due and payable upon the
13earlier of the following:

14(1) The sale of the property or other event specified in the
15documents creating the obligation permitting the lender to
16accelerate the loan, other than a deferment of payments authorized
17by this section.

18(2) Further encumbrance of the property other than for
19preservation or protection of the property.

20(3) The maturity of the obligation, as defined under the terms
21of the documents creating the obligation, or, if applicable, as
22extended pursuant to subdivision (d).

23(g) This section shall not relieve a service member with a
24mortgage subject to an impound account for the payment of
25property taxes, special assessments, mortgage insurance, and hazard
26insurance from making monthly payments of an amount that is at
27least sufficient to pay these amounts, unless the borrower and
28lender agree to a lesser amount.

29(h) This section shall not preclude a service member from
30making payments toward the mortgage payments deferred before
31the occurrence of any of the events in subdivision (d).

32(i) This section shall not permit a service member ordered to
33military service to obtain a delay, deferment, or stay on an
34obligation to pay child support. This section shall not preclude a
35service member ordered to military service from seeking a
36modification of an order to pay child support due to a reduction
37in income resulting from the order to service, or from seeking the
38imposition of the maximum interest rate provided by this chapter
P5    1on arrearages in child support payments existing before the order
2to service.



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