The threat of foreclosure on a real estate contract (NM)...am I in ...

In December 2011 my fiance and I were looking to find a home, but both have poor credit. Our options led us into a real estate contract (or others may say owner financing). We needed 10% down and were able to do so. Now we have a title and contract in our names and all payments go through escrow for disbursement to the seller and the underlying mortgage (basically it is a wrap around mortgage). Contract states that payment is late after the 5th of the month and a $100 late fee will applied as well as $125 demand letter fee that is sent certified stating we are in default and have 30 days to get current.
Anyway, times have been tough, and for the past 4 or 5 months we have recieved the demand letter and have gotten current within the allowed 30 days including the $225 in fees. We can refinance at anytime but have 5-7 years per the contract, which I thought would be sufficient time to repair my credit. Unfortunately the seller texted me that the mortgage holder is looking into the late payments and may look into foreclosure. Is this an empty threat because I am getting current within the allowed time (ASAP actually), or should I be very concerned and talk my father in law into helping us refinance.
This should be the last month that this happens. We are on the up 'n' up and will be on time for May. Thanks for any input....

Source: http://www.worldlawdirect.com/forum/mortgages-refinancing-foreclosure/71002-threat-foreclosure-real-estate-contract-nm-am-i-danger.html

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