The servicer must apply scheduled payments, including late charges (if applicable), in the order specified in the security instrument. When multiple payments are received, each payment must be applied separately. Ensure payments for all mortgage loans are credited upon receipt and that each portion of the payment is accounted for in its records. Apply all funds as intended by the borrower, when applicable. Funds intended by the borrower for first lien mortgage loans must not be reallocated as payment towards any subordinate lien. The servicer must follow the procedures in Applying a Mortgage Loan Payment in F-1-09, Processing Mortgage Loan Payments and Payoffs for specific instructions related to this topic.
For more information please see: C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments.