With mounting evidence that hundreds of families in New Jersey and New York had their Superstorm Sandy insurance claims denied because of fraud, U.S. Sens. Bob Menendez and Cory Booker, along with New York Sens. Kristen Gillibrand and Charles Schumer are calling on the Senate Committee on Banking, Housing and Urban Affairs to hold Congressional oversight hearings to get to the bottom of the situation.

Governor Chris Christie, cabinet and staff tour the coast line to survey the damage caused by Hurricane Sandy followed by a press conference on the boardwalk in Seaside Park. on Friday, Nov. 9, 2012. (Governor's Office/Tim Larsen)

The four senators have sent a letter to the chairman and ranking member of the Senate Committee on Banking, Housing and Urban affairs "to further examine FEMA's handling of the Sandy claims process and its oversight of the private insurance companies that facilitate the program on its behalf.

In the letter, lawmakers said they found it shocking that FEMA officials received specific allegations of fraudulent activity that served as the basis for claimants being denied the coverage they had paid for, including residents who lost their homes. It's also alleged that FEMA officials either did not appropriately investigate these claims or simply looked the other way.

Menendez called the situation outrageous. He said a hearing was held when he served as chairman of the Subcommittee on Housing last July. At that time, FEMA Administrator Craig Fugate was questioned and indicated he was aware of stories about homeowners having been improperly denied insurance claims, and he indicated he would get to the bottom of it by launching an investigation. That probe, however, did not begin until 4 months later.

"New hearings are needed. FEMA has to account for this, and we've got to get to the bottom of how widespread this fraud is," Menendez said.

He stressed the most important this is "homeowners in New Jersey who have been hurt by the actions of the insurance companies that write for FEMA's flood insurance program, they need to be made whole. Where their damages truly were damages as a result of Sandy, they need to be compensated."

Menendez believes all homeowners currently in litigation, and even in cases that may have already been settled, need to be reviewed.

He also said FEMA must review the list of insurance and engineering companies that participated in the fraud.

"Those insurance companies and engineering companies should not be allowed to continue in the flood insurance program, otherwise the message is you can conduct this type of fraud, try not to pay what you should pay in damages, and you can go on your merry way and still do business, that cannot be the standard," Menendez said.

Menendez said he also wants clarification on why FEMA they did not realize earlier that insurance companies and engineering companies that were allegedly changing their reports to deny claimants their due proceeds.

"My focus is on getting New Jerseyans the money they deserve. To get them back in to their homes, to get their life back on track. I won't stop until the people who were harmed are made whole, and until we get to a system that doesn't ever do this again," he said. "This is going to continue to unfold and we're just going to have to be dogged about the process until everybody gets the justice they deserve."