“Regarding MERS and why they have a big problem with no quick solution. This is because MERS is the Beneficiary of the Security only and they nothing to do with the Note and are not a party to the Note.

The problem is that an Assignment is worthless if it only transfers the Deed of Trust without the Note. So to get around this major problem, MERS simply ignores it which has worked up until now because no one really understood the role of MERS.

Now that the cat is out of the bag, every Assignment they record is fraudulent and in fact separates the Note from the Security.”

SAXON MORTGAGE SERVICES, INC., et al., Plaintiffs, v. RUTHIE B. HILLERY, et al., Defendants.

No. C-08-4357 EMC,(Docket No. 7)


Almost a year later, on or about June 20, 2008, MERS, acting as nominee for New Century, assigned the deed of trust to Consumer. In the assignment, MERS claimed to assign not only the deed of trust but also the promissory note itself (i.e., the debt owed by Ms. Hillery to New Century for the loan that was extended to her). See Compl., Ex. D (assignment, recorded on 7/21/08). However, there is no evidence of record that New Century ever assigned MERS the promissory note or otherwise gave MERS the authority to assign the note.


There is evidence that the deed of trust was transferred to Consumer. As noted above, New Century designated MERS the beneficiary of the deed and gave MERS broad authority to act with respect to the property. See Compl., Ex. A (Deed at 3) (stating that MERS “has the right to exercise any or all of those interests [granted by Ms. Hillery] in this Security Instrument”). The Court thus assumes MERS had the power to assign the deed to Consumer, which it apparently [*15] did on or about June 20, 2008. See Compl., Ex. D (assignment, recorded on 7/21/08).

However, for there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. See Carpenter v. Longan, 83 U.S. 271, 274, 21 L. Ed. 313 (1872)(stating that “[t]he note and mortgage are inseparable; the former as essential, the latter as an incident”; adding that “[a]n assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity”); In re Leisure Time Sports, Inc. 194 B.R. 859, 861 (9th Cir. 1996) (stating that “[a] security interest cannot exist, much less be transferred, independent from the obligation which it secures” and that, “[i]f the debt is not transferred, neither is the security interest”); Kelley v. Upshaw, 39 Cal. 2d 179, 192, 246 P.2d 23 (1952) (stating that assigning only the deed without a transfer of the promissory note is completely ineffective); see also Restatement (3d) of Property (Mortgages) § 5.4 (stating that “[a] mortgage may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation that the mortgage secures”) (emphasis added). As Kelley establishes, this is true under California [*16] law which presumably applies here.

As noted above, MERS purportedly assigned both the deed of trust and the promissory note to Consumer. See Compl., Ex. D (assignment, recorded on 7/21/08). However, there is no evidence of record that establishes that MERS either held the promissory note or was given the authority by New Century to assign the note. Indeed, Consumer’s own complaint contains only an allegation about assignment of the deed of trust — and not the note. See Compl. P 17 (alleging that “New Century assigned its beneficial interest of the Deed of Trust to Plaintiff Consumer Solutions”).