Waive their debt. That's the request by Sen. Charles Schumer to the Federal Emergency Management Agency after FEMA insisted that some Sandy victims repay aid money they received after the storm. And now he's working on legislation to make sure money that's already been spent doesn't need to be repaid. Amanda Farinacci filed the following report.

Cheryl Schafer hasn't lived in her Hunter Avenue home since Hurricane Sandy flooded the basement and first floor.

Fighting stage-four breast cancer, she's been unable to make rebuilding the house a priority.

She's been renting an apartment with money from the Federal Emergency Management Agency, but there's a problem.

"They gave us about $18,000, and they want $13,000 back,” said Schafer.

FEMA says the money was sent in error.

The agency has mailed letters to more than 3,000 people like Schafer all over the city, hoping to recover about $7,000 from each victim FEMA says shouldn't have been paid in the first place.

But in most cases, the money is already gone.

Schafer, burdened by medical bills and a mortgage on the house she can't live in, doesn't know how she'll pay it back.

Schumer says she shouldn't have to and he's drafting legislation to make that possible:

"FEMA was the one responsible for wrongly distributing the funding so we are here to say these homeowners should not be penalized for FEMA's mistake,” he said.

Schumer's legislation would waive disaster assistance debt and require FEMA to return any repayments victims may have already made.

A similar law was in place following Hurricane Katrina, but it expired after it was no longer needed.

The overpayments represent yet another controversy for FEMA.

A report on “60 Minutes” Sunday alleged that property damage reports were forged to deny insurance payments to storm victims.

A top FEMA official acknowledged that the agency received "signals" of fraud two years ago, but nothing was done.

In the "60 Minutes" interview, FEMA's Brad Kieserman said engineering reports that originally blamed flood waters for severe structural home damage were later changed to say there was no damage.

He added FEMA has known about the evidence for more than a year.

"I'm not going to sit here and conceal the fact that it happened cause in the last three weeks. I've seen evidence of it," said Kieserman. "I think that there were signals based on what I've seen. Signals in late 2013, early 2014, that there were problems that survivors were experiencing with engineering, with the claims process, with appeals. But those were signals. I'm doing everything I can in the midst of negotiations to try to make that right."

Gillibrand and Schumer, along with New Jersey Senators Robert Menendez and Cory Booker, say Senate committee hearings must be held to get to the bottom of FEMA's actions and to examine its relationship with the National Flood Insurance Program.

Brooklyn Borough President Eric Adams and Councilman Mark Treyger are urging borough residents who were denied their claims to resubmit.

They are also calling on State Attorney General Eric Schneiderman to appoint a special monitor to oversee future claims applications.

A criminal investigation by the attorney general's office is already underway.

Storm victims on Staten Island are incensed about the agency's demand for repayments.

"They're the ones that are doing all the conniving and they're trying to push it back to homeowners that are already destitute,” said Sandy victim Joseph Herrnkind.

FEMA's Inspector General is investigating.