BILL ANALYSIS �
AB 2476
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Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON VETERANS AFFAIRS
Paul J. Cook, Chair
AB 2476 (Committee on Veterans Affairs) - As Introduced:
February 24, 2012
SUBJECT : Service member obligations or liabilities: rate of
interest
SUMMARY : Extends the period during which interest rates are
capped for servicemembers. Specifically, this bill : prohibits
an obligation or liability consisting of a mortgage, trust deed,
or other security in the nature of a mortgage, that is bearing
interest at a rate in excess of 6% per year and incurred by a
service member before that person's entry into service from
bearing interest in excess of 6% per year for one year after any
part of the period of military service.
EXISTING LAW provides legal rights, as specified, for service
members in regard to court proceedings, interest liabilities,
contracts, eviction proceedings, leases, tax and assessments,
life insurance policies, and health insurance.
Existing federal law, the Servicemembers Civil Relief Act (SCRA)
states:
An obligation or liability bearing interest at a rate in excess
of 6 percent per year that is incurred by a servicemember, or
the servicemember and the servicemember's spouse jointly, before
the servicemember enters military service shall not bear
interest at a rate in excess of 6 percent:
(A) During the period of military service and one year
thereafter, in the case of an obligation or liability
consisting of a mortgage, trust deed, or other security in
the nature of a mortgage; or
(B) During the period of military service, in the case of
any other obligation or liability.
A court may grant a creditor relief from these provisions.
Existing California law contains parallel provisions to the
SCRA:
AB 2476
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No obligation or liability bearing interest at a rate in
excess of 6 percent per year incurred by a service member
before that person's entry into service shall, during any
part of the period of military service, bear interest at a
rate in excess of 6 percent per year unless, in the opinion
of the court, upon application thereto by the obligee, the
ability of the service member to pay interest upon that
obligation or liability at a rate in excess of 6 percent
per year is not materially affected by reason of that
service, in which case the court may make that order as in
its opinion may be just.
FISCAL EFFECT : Unknown at this time.
COMMENTS : The passage of the federal Housing and Economic
Recovery Act in 2008 made a number of changes to the
Servicemembers Civil Relief Act (SCRA). One of the changes was
that servicemembers are protected from interest rates in excess
of 6 percent on mortgages during the period of service and for
one year after.
This bill would conform California law to the SCRA.
REGISTERED SUPPORT / OPPOSITION :
Support
California Mortgage Bankers Association
California Bankers Association
Opposition
None on file.
Analysis Prepared by : John Spangler / V. A. / (916) 319-3550