Hi Dave. The landlord can and probably will pocket the money, but he/she is not legally entitled to do so. Unfortuantely, there is not much you can do about this. His mortgage company or other forces that be may be able to do something about it, but frankly, those people can barely handle their own affairs at this time. The best thing you can do for yourself is to find another place to rent and soon. Make sure your new landlord is current on their mortgage if their is one. Another option is to buy a home by jumping on the FHA mortgage train and getting yourself an $8,000 tax credit.