Whether the landlord is using your rent to pay the mortgage is irrelevant. Doesn't matter. He might want to use your rent payments to buy a TV, or go on vacation. Or put it into savings, or a retirement account. Doesn't matter.
The lease is the lease. If you're living there, you owe the rent. "It seems pointless to pay rent when they are not paying the mortgage" doesn't hold up. You're paying the rent in order to have a place to live. That's the point.
As Ron and Debbie say, you should be looking for a new place. But inform your landlord of that. Just from reading your question, it looks as though your landlord was trying his best to stay current. He's been trying to sell for 8 months, and managed to stay current on the mortgage up until 60 days ago. You say the landlord has "refused to put any money into repairs, etc for months." That's right. He was trying to stay current on the mortgage. Doing his best.
If you stop paying your rent, you'll be in default of your rental agreement. The landlord could start eviction proceedings and your non-payments could be reflected on your credit report. Also, as a practical matter, the landlord may be able to work out some loan modification with the lender and retain his home. Your failing to pay the rent would make that far more difficult. And it'd mean that even if the landlord were successful, you could be evicted.
Pay your rent.
Start looking for a new place. And discuss the situation with your landlord.
You need to find out if AZ law requires the landlord to put your deposit and first month's rent in a separate account.
Practically speaking, although you are contractually obligated to pay rent, if your landlord is also legally required to segregate your deposits and cannot provide proof of same, it only seems reasonable for you to withhold rent.
I am not an attorney and don't have a clue about Nevada landlord tenant law so you may want to talk to a well qualified realtor in your area that specializes in Property Management. Give them a call to find out what your 'rights" are as far as proof of your deposits. Also they can help you find your next "rental" unless you're now ready to buy.
If you're not yet ready to buy, you may want to take Dave Ramsey's Financial Peace University to get yourself on the right path. You can find a course here:
Hope this helps!
Debbie Albert, PA
Coldwell Banker Residential