Owner financing with escrow - Late fees and accounting

[Mike Gentry]

If selling a home using owner financing, how would you account for the following example?  This is in Florida by the way

• Mortgage payment - $1000. 
• Loan - $800
• Escrow - $200
• Late fee - $80

Questions A. Lets say that the buyer makes partial payments of $700 for 3 months in a row.   

1. Does the late fee get paid first and then the balance go towards mortgage and escrow?
2. Does the negative amount get calculated into the amortization schedule and therefore have interest paid on it?
3. Since there isn't enough to cover even the loan amount, does it all go towards the loan or is it a percentage based upon mortgage payment?  (In this example it would be $560 loan, $140 escrow)

Questions B. Lets say that this continues for months at a time.

1. Does the amount owed increase by $300 each month until the maximum escrow is reached or does it get added regardless of cap?  (Meaning that if the contract says that when escrows reach $1200 more than is annually required, the monthly mortgage payment shall be reduced to an amount sufficient to pay taxes and insurance while maintaining that $1200 buffer)
2. Does the late fee get added each month even when a $1000 payment is made because there is an outstanding balance?

When answering use a 1a or 1b format to make it easy to follow.  Feel free to ask any questions that are needed to clarify. 

Thank you for your input.