Home fire and Saxon Mortgage insurance decisions

CW in Illinois said: “We had a garage fire on 12/1/08 that spread to our house in which we lost everything we had, good news is we got out unharmed. We have insurance and have hired a local restoration company to repair and rebuild. Our insurance has cut us a check in my name, my husbands name and Saxon Mortgage Services to repair our home and garage.

We notified Saxon of the fire immediatley and were never told of a loss draft packet we needed to fill out or that we needed wait for before beginning repairs but now that they have the check they want to use that money to pay off our loan (we are not late on our loan payments) in the amount of $66,097.00 the insurance check was for over $120,000.00 that would not leave us enough money to pay for the repairs that have already been completed not to mention the estimate for the repairs is $160,000.00.

The loss draft packet was requested by us (when they finally told us that we needed this packet in early Jan.) they were contacted 3 times by my husband via phone and 3 times via phone by me each time being told that it was sent out but we never received it finally on 2/17/09 we received it via fax and email but by this time demo was already completed and repairs had begun. Saxon was aware of the ongoing repairs as we sent them the bids and the contracts from the repair company we hired.

Have you heard of anything like this before? We need help or a direction to go in because if Saxon does pay off the loan we will not have a home to live in because we can’t afford to pay for the restorations, don’t know how we will come up with the money for the work that has already been done. Our home is still stickered as “uninhabitable” so we can’t live there we are about half way done with the restorations but have no money to pay for them if Saxon does this. Can they do this?”