BILL ANALYSIS �
SB 720
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Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 720 (Correa) - As Amended: May 21, 2013
Policy Committee: JudiciaryVote:
9-0
Veterans Affairs 10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Extends to military reservists and National Guard members
ordered to active federal or state military service enhanced
financial protections provided to those military service
members called to active duty as part of the Iraq and
Afghanistan conflicts. The protections include:
a) No interest charged or accumulated during the period
when a payment of an obligation is deferred due to military
service, or
b) No foreclosure or repossession of property on which a
payment has been deferred.
2)Extends commensurate safeguards for financial institutions
regarding deferral of financial obligations, including:
a) Requiring mortgage payments deferred during this period
to be due and payable upon the occurrence of certain
specified conditions, such as the sale of the property.
b) Providing 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.
FISCAL EFFECT
SB 720
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Likely negligible state or local fiscal impact of expanded
eligibility for payment deferrals.
COMMENTS
1)Background . Current law permits military reservists and
National Guard members ordered to active federal or state
military service to defer certain loans and financial
obligations under two different provisions of the Military and
Veterans Code. Section 409.3 suspends enforcement of specified
civil liabilities, including financial obligations such as
mortgages, automobile loans, and installment contracts, for
service members during periods of active military service.
The relief afforded under this section is available only upon
application to a court, and at the conclusion of the period of
suspension, the maturity date of the financial obligation is
extended by the period of military service, and all unpaid
principal and accumulated interest is added to the principal
balance of the financial obligation.
Section 800 et seq., in contrast, permits service members
called to active duty specifically as part of the Iraq or
Afghanistan conflicts to defer payments on similar financial
obligations for a period of up to six months. Rather than
petitioning a court, a service member need only send a letter
to their lender requesting deferment of a financial obligation
in order to receive benefits under this provision.
Additionally, Military and Veterans Code Section 804 provides
that "[n]o interest shall be charged or accumulated on the
principal or interest on which the payment was delayed."
2)Purpose . SB 720 makes two changes regarding the financial
protections afforded deployed military reservists and National
Guardsman from California. First, it harmonizes certain
protections currently available under Section 800 et seq. with
those available under Section 409.3, by eliminating the
accrual of interest on deferred interest payable under
pre-existing financial obligations, such as mortgages and real
estate purchase installment contracts. Second, it
incorporates certain protections afforded financial
institutions under Section 800 et seq. into deferments
authorized under Section 409.3.
3)Related Legislation . AB 526 (Melendez), pending in Senate
Appropriations, extends certain financial protections to a
SB 720
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larger class of military reservists and National Guard
members, their spouses and legal dependents, and would add
utility bills to the current list of obligations subject to
deferment, which include mortgages, credit card payments,
installment accounts, vehicle loans, and property taxes.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081