BILL ANALYSIS
AB 2455
Page 1
Date of Hearing: March 23, 2010
ASSEMBLY COMMITTEE ON VETERANS AFFAIRS
Paul Cook, Chair
AB 2455 (Nava) - As Introduced: February 19, 2010
SUBJECT : Military service: benefits
SUMMARY : This bill would authorize members of the military to
defer payment on up to 2 loans on vehicles. This bill would also
provide that a spouse or legal dependent, or both, of a member
of the military is entitled to the deferral of payment benefits
accorded to a member, if the member is eligible for those
benefits.
EXISTING LAW authorizes members of the United States Military
Reserve and National Guard (members) who are called to active
duty as a result of the Iraq or Afghanistan conflicts to defer
payments on specified obligations for the period of active duty
including up to 2 loans subject to the Automobile Sales Finance
Act.
FISCAL EFFECT : Unknown.
COMMENTS : In 2003, the Service Members Civil Relief Act (SCRA)
was signed into federal law. This was a new federal statute
that revised the protections included in the outdated SSCRA to
reflect new economic realities. Previous legislation was
intended to augment the federal SCRA and provide financial
protection benefits to California's service members that are
superior to the benefits already granted them pursuant to SCRA.
When the existing law was put into practice, attorneys in the
Staff Judge Advocate Corps of the California National Guard
found that the law needed minor revisions to ensure that
"members" and their families are provided all of the intended
protections. Specifically, California National Guard legal
staff found ambiguity in the manner that vehicle loans were
subject to the Automobile Sales Finance Act, which led to some
"members" having their vehicle loan deferment request denied by
some financial institutions.
Additionally, it was found that by not extending the relief
provided to "members" to their family. The author believes the
true intent of "The California Military Families Financial
AB 2455
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Relief Act" can not be carried out when considering that the
companion statute to MVC 800-811 specifically extends the
protections and financial relief to a "member's" family,
possibly due to legislative oversight in omitting the family in
MVC 800-811.
Currently, MVC 800(a)(5) provides for the deferment of two
vehicle loans subject to Civil Code 2981. Civil Code 2981, as
written, applies to the sales contract of a motor vehicle
between a buyer and a seller. Subsequent case law (not related
to MVC issues), extended the benefits of Civil Code 2981 to
seller-assisted financing, such as when the car dealer finds a
lender for the buyer. Unfortunately, Civil Code 2981 does not
directly address the scenario whereby a buyer goes directly to
his own bank to obtain a car loan. Several financial
institutions have used this loophole to deny deferments to
"members" who obtain the loans directly from them.
The author has stated this correction to the statute is
necessary to ensure that members of the California National
Guard and Reserves, deployed to Iraq and Afghanistan, are able
to obtain the full benefit of the spirit of the law. The
existing California Military and Veterans Code 800(a)(5) is
intended to help "members" and their families avoid the
financial hardships that can occur with prolonged deployments
into a war zone. Due to the reference of Civil Code 2981 in MVC
800(a)(5), some financial institutions use a loophole that
allows them to exclude certain vehicle loans and are not
complying with the full intent of the law.
A companion statute within the MVC involving deferments of
obligations, 409.5, extends the benefits of MVC 406-409.4 to
the dependents of "members". The intent of the law is to
provide relief to "members" and their families. The failure to
extend all protections and benefits under 800-811 to the
spouses and legal dependents of "members" is inconsistent with
the spirit of the law.
The author goes on to state, "this amendment is critical as more
and more Californians are ordered to active duty in Iraq and
Afghanistan and their families suffer the hardships of
deployment. When a "members" is deployed and the family income
decreases due to the "members" making less on military pay
versus their civilian pay, many families are unable to maintain
all of their financial obligations, regardless of whether the
AB 2455
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obligation/loan is in the name of the "members" or the
spouse/legal dependent."
REGISTERED SUPPORT / OPPOSITION :
Support
California Credit Union League
California Military Department
Opposition
None on file.
Analysis Prepared by : Eric Worthen / V. A. / (916) 319-3550