The split note theory holds that when the promissory note and the mortgage are held by separate entities, the note holder may have the right to collect the debt but not the right to foreclose (since the mortgage secures the debt, and the note holder may not control the mortgage). Meanwhile, the mortgage holder has a security interest but no debt to enforce. This creates a standing defect — the foreclosing party must prove it holds both the note and the mortgage (or a valid assignment of each) at the time of filing.

No — it varies by state. Some states (e.g., Massachusetts, New York) have accepted the split note theory under certain circumstances. Other states (e.g., Florida, California) generally follow the rule that the mortgage follows the note and a person entitled to enforce the note has standing regardless of recorded assignments. However, even in states that reject the pure split note theory, the separation of note and mortgage still creates evidentiary problems for the lender — they must prove they hold both, and documentary gaps support summary judgment opposition.

MERS acts as nominee in the land records — it's the mortgagee of record for millions of loans. But MERS doesn't hold the notes. When MERS (or a servicer acting on MERS's behalf) attempts to foreclose, the question becomes: does MERS have standing to foreclose when it doesn't hold the note? Many courts say no. Even when MERS assigns the mortgage to the foreclosing plaintiff, the assignment must be valid — and many MERS assignments were robo-signed or executed without authority.