All mortgage loan payments received by a servicer at the address where the borrower has been instructed in writing to make payments shall be credited, or treated as credited, on the business day received, to the extent that the borrower has provided sufficient information to credit the account. For all mortgage loans originated after January 1, 2011, except when inconsistent with Federal law or regulation or as provided in subdivision (d) of this section, such payments shall be credited by the servicer to the interest and principal due on the home loan before crediting the payments to taxes, insurance, or fees.

Requirements imposed by a servicer for making payments must be reasonable. A cut-off time at the end of the business day for receipt of a mailed check at the location specified by the servicer for receipt of such check is deemed to be reasonable.

If a borrower fails to comply with a servicer’s reasonable payments requirements that have been provided to the borrower in writing, the servicer shall credit any payment accepted by the servicer as soon as commercially practicable, but in no event later than 5 days after receipt.

Late payments must be credited to interest, principal, taxes, insurance and other fees before any late fee is collected.

If a servicer uses the scheduled method of accounting, any regularly scheduled payment made prior to the scheduled due date shall be credited no later than the due date or 30 days from the date of receipt, whichever is earlier.

If a servicer receives any payment on a mortgage loan and does not credit it or treat it as credited by the due date or within 30 days from the date of receipt, whichever is earlier, the servicer shall, within 10 business days of receipt, send the borrower notice by mail to the borrower’s last known address indicating the reason the payment was not credited or treated as credited to the account, and any actions the borrower needs to take to make the loan current. Such notice may instead be sent electronically in accordance with the requirements of article III of the Technology Law, if the borrower has previously opted for paperless billing.

A servicer shall establish written policies and procedures for payment overages and shortages, including unapplied funds and payments held in suspense accounts. If a servicer retains a partial payment in a suspense or unapplied funds account, the servicer shall, on accumulation of sufficient funds in any suspense or unapplied funds account to cover a periodic payment, treat such funds as a periodic payment and credit the periodic payment to the borrower’s loan.

(h) A servicer shall not apply funds from a suspense or unapplied funds account to pay fees until all unpaid principal, interest, and escrow amounts (if available) are paid and brought current or the loan is discharged or foreclosed.