BILL ANALYSIS
SENATE COMMITTEE ON VETERANS AFFAIRS
JEFF DENHAM, CHAIRMAN
Bill No: AB 2455
Author: Nava
Version: As Introduced
Hearing Date: June 22, 2010
Fiscal: No
SUBJECT OF BILL
Amending California Military Families Financial Relief Act
PROPOSED LAW
1. Amends Military and Veterans' Code (MVC) section
800 to make state level Soldiers' and Sailors' Civil
Relief Act (SSCRA) protections apply to all auto loans
and not only "seller-assisted" auto loans.
2. Guarantees that financial protections protect the
service member's family.
EXISTING LAW AND BACKGROUND
1. During the American Civil War Congress passed a
moratorium on civil actions against northern troops.
Certain southern states are said to have done the same
for their armies.
2. In World War 1 Congress passed the Soldiers' and
Sailors' Civil Relief Act of 1918 to protect service
members from losing at home what they were fighting
for on the front. The law gave courts the authority
to make equitable decisions involving military
personnel who had no ability, or a compromised
ability, to meet obligations at home.
3. In 1940 Congress renewed the expired Soldiers' and
Sailors' Civil Relief Act, now commonly called
(SSCRA).
4. In 1942, due to the courts improperly carrying out
the will of Congress, the SSCRA was amended to correct
errors of the Federal Courts and to give stronger
protections to those serving the United States of
America.
5. As some business owners found new ways to attempt
to avoid the SSCRA law, Congress and state
legislatures have consistently returned to defend
service members by strengthening the law. In 1991
further amendments were passed in response to the
experience of Desert Shield/Desert Storm personnel.
6. In 2002 SSCRA protections (the Veterans Benefits
Act of 2002, Public Law 107-330. Section 305) were
extended to National Guard members activated under
Title 32 if activated for federal reasons. [Note:
Federal active duty is usually activated under Title
10 of the United States Code (U.S.C.). Usually Title
32 is state activation of the National Guard.
However, after 9/11 state National Guard units were
activated for state service in such places as airports
and bridges but the activation was done by and paid
for by the Federal Government.]
7. In December 2003, President Bush signed a revised
version of the SSCRA, now known as the Federal Service
Members Civil Relief Act (SCRA), which again extended
SSCRA protections.
8. Existing law provides financial and legal
protections to military members, reservists, and
members of the National Guard that are called to
active duty with respect to rental agreements,
security deposits, eviction, installment contracts,
credit card interest rates, mortgage interest rates,
mortgage foreclosure, civil judicial proceedings, and
income tax payments (Service Members Civil Relief Act
of 2003, Public Law 108-189).
9. Since 2001, the California National Guard (CNG) has
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responded to the needs of the state by deploying
thousands of Soldiers and Airmen throughout the state
for a multitude of missions, many lasting for months
and some for years. Many of these Guard members must
leave their studies in order to respond to state
emergencies. Some may be required to perform duty for
over 15 or more consecutive days (as was the case with
California's recent wildfires).
10. After September 11, 2001 California also
strengthened SSCRA. In 2002, the Military Department
sponsored AB 1433 (Horton)*, which was chaptered into
law and repealed California MVC 399 and 399.5 and
added Chapter 7.5 "Protections," commencing with 400
through 420. AB 1433 codified into state law many
aspects of the Federal SSCRA including eviction
protection, capping interest rates at 6%, obligations
secured by real or personal property, and protection
on installment loan credit.
11. The passage of AB 1433 provided
financial protection for military members performing
military service in regards to court proceedings,
credit contract obligations, rental agreements, taxes
(except income taxes), and health/medical insurance,
as well as eviction protection for the military
members' families. These new provisions enabled
National Guard members that are serving in state or
federal status and other military reservists
performing federal duty to receive financial
protections consistent with those found within the
federal SSCRA.
12. AB 306 of 2005 (Baca)**, also known as
the "California Military Families Financial Relief
Act", created MVC sections 800-810, which updated the
state's version of SSCRA to include all California
service members who served in the post 9/11 era,
whether Reserves or National Guard, as well as adding
protections on auto loans.
13. Other state legislation-
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a) California MVC 800-810 was codified by SB 1
(Calderon)*** in 1991 to provide emergency economic
relief to California residents called to active
military service during the Iraq-Kuwait crises. This
legislation augmented protections that were already
afforded under the federal statute known as the
Soldiers and Sailors Civil Relief Act (SSCRA) of 1940.
b) AB 1666 (Frommer) of 2005, the California Families
Financial Relief Act of 2005, addressed (among other
things) the following:
Waives county recorder fee for power of
attorney for recording a service member's agent
if that member is performing military service.
Allows for the cancellation of a cell
phone contract within 30 days if the member or
spouse sends a written notice to the cell phone
service provider.
Requires a full refund of tuition and
fees for college students ordered to military
service if they withdraw prior to the school's
withdrawal date.
Waiver of bar dues for the time period in
which the military member is serving military
duty.
Allows for past due or unpaid amounts on
a vehicle lease to be paid in equal installments
over the length of time the member served
military duty if a vehicle lease is terminated
pursuant to the federal Service Members Civil
Relief Act.
Allows qualified customers to receive up
to 180 days of shutoff protection for utilities
if income reduction is due to a member of the
family being activated to duty and the individual
notifies the public service provider of the need
for assistance.
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COMMENT
1. This bill is another in a long line of legislation
(federal and state) since 1942 that attempts to
protect those serving our country who otherwise are in
situations beyond their control. When reservists or
guardsmen are activated, they usually take a pay cut.
2. The Military Department (sponsor) says the change
of definition in auto loan is needed because "the true
intent of 'The California Military Families Financial
Relief Act' cannot be carried out".
3. Delinquency of spouses shows up on a service
member's credit report. Those extending credit are
not necessarily honoring relief legislation for
soldiers. For example, if a soldier has a family
vehicle in his/her spouse's name because she is at
home while the service member is deployed, even though
the family budget has still been impacted certain
entities maybe taking the opportunity to not comply
with the law using the excuse that the vehicle is in
the name of the spouse instead of the service member.
4. The problem, according to the Military Department,
is that "legal staff found ambiguity in the manner
that the vehicle loans were subject to the Automobile
Sales Finance Act".
5. The shortcomings of the existing legislation lies
in a definitional reference within MVC section 800.
Section 800 presently references the Civil Code
regarding auto loans; however, that code section
references specifically "The Automobile Sales Finance
Act," which covers only "seller-assisted" loans.
When a potential purchaser walks into an
auto-dealership without pre approval from a bank the
car dealer helps set up financing. This form of
financing is known as "seller-assisted" because the
dealer finds a lender.
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If a soldier got pre-approval from his or her bank or
credit union, there is no seller assisted financing
and, therefore, there is no protection for that
service member, or his or her family, under MVC 800.
6. Changing section 800 to refer to vehicles instead
of the Auto Sales Finance Act will allow every auto
loan of deployed soldiers to be protected under the
relief act.
PRIOR ACTIONS
AB 2455 (Nava)
Assembly Veterans 7-0
Assembly Floor 71-0 (Consent)
AB 306 (Baca)
Senator Cedillo "Aye" 9/6/2005
Senator Denham "Aye" 9/6/2005
Assemblywoman Negrete McLeod "Aye" 5/31/2005
Assemblyman Wyland "Aye" 5/31/2005
SUPPORT
Military Department (Sponsor)
CA Bankers Association
CA Credit Union League
CA State Commanders Veterans Council
National Guard Association of CA
OPPOSE
None received
*Jerome Horton served in the Assembly in 2002
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** Joe Baca, Jr. served in the Assembly in 2005.
***Charles Calderon served in the Senate in 1991
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