BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON VETERANS AFFAIRS
                             Senator Jim Nielsen, Chair
                                2015 - 2016  Regular 

          Bill No:             AB 2562        Hearing Date:    6/14/16
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          |Author:    |Committee on Veterans Affairs                        |
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          |Version:   |2/19/16                                              |
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          |Urgency:   |No                     |Fiscal:    |No               |
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          |Consultant:|Wade Teasdale                                        |
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                        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.







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          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  








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          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  








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          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.


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