BILL ANALYSIS Ó SENATE COMMITTEE ON VETERANS AFFAIRS Senator Jim Nielsen, Chair 2015 - 2016 Regular Bill No: AB 2562 Hearing Date: 6/14/16 ----------------------------------------------------------------- |Author: |Committee on Veterans Affairs | |-----------+-----------------------------------------------------| |Version: |2/19/16 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Wade Teasdale | | | | ----------------------------------------------------------------- Subject: Military service: benefits DESCRIPTION Summary: Deletes references to specific dates on which a military reservist was called to active duty. (Note: Existing law provides certain financial protections to military reservists called onto active duty. Eligibility for some protections is limited, in part, by specified calendar dates of activation. This bill makes the protections available to any activated reservist, regardless of date of activation, who otherwise meets the definition of reservist, as defined.) Existing law: 1)Authorizes a reservist- who is called to active duty on and after January 1, 2014 - for the period of active duty plus 60 calendar days, or a total of 180 days, whichever is the lesser, to defer payments on: a. Mortgages; b. Credit cards; c. Retail installment accounts and contracts; d. Real property taxes and assessments; e. Vehicle leases; and f. Obligations owed to utility companies. AB 2562 (Committee on Veterans Affairs) Page 2 of ? 2)Also authorizes similar provisions to a reservist who was called to active duty before January 1, 2014, as a part of the Iraq and Afghanistan conflicts. This bill deletes references to the date a reservist is called to active duty, in both the definition of a reservist and the payment deferral provisions, BACKGROUND State financial protections for reservists 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 (CMD) 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 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) 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. In 2010, AB 2455 (Nava) was chaptered into law and made minor, technical corrections to MVC §§800-811. These corrections AB 2562 (Committee on Veterans Affairs) Page 3 of ? ensured that all car loans are eligible for deferment and also clarified those financial protections pursuant to MVC §§800-811 were to be extended to the Servicemember's spouse and/or legal dependents. In 2010, AB 2365 (Lieu) was enacted, allowing California National Guard members and Reservists to receive court awarded damages, including reasonable attorney fees and court costs, incurred while pursuing certain protections under sections of the MVC. In 2013, SB 720 (Correa) was chaptered into law and revised MVC §409.3 to align with its companion statutes in MVC §§800. These separate statutes both addressed deferment of loans and obligations upon a Servicemember's call to active military service; however they treated the repayment of the deferred loan or obligation differently. By reconciling and clarifying MVC §409.3 to be consistent with MVC §§800, both Servicemembers and financial institutions now benefit from a more clear and concise statute that protects the interests of both parties. Also in 2013, AB 526 (Melendez) was chaptered and expanded financial protections given to military reservists called to active duty as part of the Iraq and Afghanistan conflicts to all military reservists called to active duty on and after January 1, 2014. Additionally, this bill authorized the deferral of obligations owed to a utility company and added a requirement for the reservist to provide a copy of their active duty orders to their obligor for the period in which they are deferring a loan or obligation. COMMENT Author Comments : A reservist who is called to active duty on and after January 1, 2014, is authorized to defer payments on mortgages, credit cards, retail installment accounts and contracts, real property taxes and assessments, vehicle leases, and obligations owed to utility companies, for the period of active duty plus 60 calendar days, or 180 days, whichever is less. Similar provisions are authorized to a reservist who was called to active duty before January 1, 2014, as a part of the Iraq and Afghanistan conflicts. Assembly Bill 2562 deletes the references AB 2562 (Committee on Veterans Affairs) Page 4 of ? to the date a reservist is called to active duty, in both the definition of a reservist and the payment deferral provisions, thereby making the benefits available to any reservist who otherwise meets the definition. The current wording is a result of drafting to make it abundantly clear that the status quo would be preserved until the effective date of AB 236 (Melendez, 2013), which enhanced certain financial protections for servicemembers. This current wording has proven to be confusing to financial institutions. AB 2562 removes the obsolete section of existing code which covered the period before January 1, 2014 and removes the obsolete references to January 1, 2014, since that date has passed. The obsolete language renders this section confusing. This bill does not expand the universe of eligible servicemembers in terms of time or conflict or any other way. POSITIONS Sponsor: Author. Support: None on file. Oppose: None on file. -- END --