Payment Waterfall · Real Estate Note Investors

Jan 30 (edited) • General 🌐

Payment Waterfall

Do servicers typically follow the Payment Waterfall when processing payments?

I have a NPL where the borrower was behind around 4 months delinquent and made a lump sum payment of 2 months worth of payments.

At the time of payment I had advanced around 5k worth of advances to include, taxes, FPI, and attorneys fees.

The servicer applied the payments to the next payment due and the following payment covering principle and interest like they were normal payments.

There was no late fee, zero applied to the arrears or advances, nor the additional interest accrued since the payment was made months later than scheduled.

Is this typical and should I be hitting up my servicer to get this corrected? I'm sure they already notified the borrower how the payments were applied.

At this point there is no penalty for the borrower continuing to pay late if the payments get applied as regular payments.

What am I missing? How would you go about handling this situation?

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