“Talks between the Federal Emergency Management Agency and hundreds of Hurricane Sandy victims cheated out of insurance money have hit a major setback, according to people familiar with the negotiations.

At a status hearing Tuesday in Brooklyn Federal Court, a tentative deal to pay each of the nearly 700 claimants an average settlement of $112,000 has collapsed, sources said.

Lawyers and congressional aides tracking the talks said Homeland Security Department General Counsel Stephen Bunnell overruled a FEMA decision to offer homeowners additional funds equal to 25% of payouts to cover legal fees and other expenses.”

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survived by sandy destroyed by fema

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