Real estate investor Marjorie Oster was pleased when she snagged what looked like a good deal through a Miami-Dade County foreclosure court auction: a four-bedroom house in Cutler Bay, with a swimming pool, for about $95,000.

But when her husband drove by the next day to check on the property, he saw “someone cleaning the pool, a lawn service cutting the grass and a note it was being tented for termites,” said Oster, a Miami resident who has been in real estate for 15 years.

It turns out the house she thought she had purchased had been sold in a short sale the week before to someone else — Osberto Jimenez, a 40-year-old Cuban-born truck driver. The law firm handling the foreclosure for the lender mishandled the paperwork and never canceled the auction sale.

“So we both own the same house and I’m frustrated as hell,” said Oster. “Someone screwed up.”

New attorneys representing CitiMortgage say that “someone” was David Stern’s beleagured law office, which originally represented the lender. Citi ultimately pulled the case from Stern’s offices and gave it to Shapiro and Fishman, another large South Florida foreclosure firm that represents banks and loan servicers.

Both law offices, along with two others, are under investigation by the Florida Attorney General. They’re accused of engaging in shoddy pratices, including fabricating documents. Shapiro and Fishman has defended its practices and said it did nothing wrong. Jeffrey Tew, the attorney representing Stern, declined to comment.

Stern, who at one point claimed he processed 20 percent of the state’s foreclosures through a staff of more than 1,000, has been forced to lay off the vast majority of his employees as his biggest clients continue to abandon him. Citi spokesman Mark Rodgers declined to comment specifically on the Cutler Bay double sale, but said the company stopped referring new foreclosures to Stern in September and now has removed all of its business from the firm.

Federal lawmakers, listening to testimony at a Senate Banking Committee hearing this week, said ongoing and widespread problems with loan servicing and foreclosures indicated a “significant weakness” in the entire system. Attorneys general in 50 states continue to investigate reports of servicers and foreclosure firms like Stern’s “robo-signing” hundreds of thousands of affidavits without reviewing them.

“We are seeing more instances of mistakes being made,” said Darryl Wilson, a professor and real estate expert at Stetson University‘s College of Law. “That’s why you keep seeing moratoriums [on foreclosures] coming up.”

At Wednesday’s Senate hearings, some federal regulators urged mortgage guarantors Fannie Mae and Freddie Mac to suspend foreclosure proceedings while homeowners looked for new mortgages or tried to work out loan modifications.

In the situation with the Cutler Bay house, attorney Leora B. Freire, with Shapiro and Fishman, said Stern’s office didn’t notify the courts to take the house out of the foreclosure auction after the short sale had been processed.

Oster and Citi reached an agreement Wednesday, Freire said, vacating Oster’s sale, which allows Jimenez to keep the house. Oster said she would be refunded her money, paid some interest, and have her legal fees covered.

Documents show Oster bought the property for cash on Oct. 6 and received a certificate of title. Seven days earlier, Jimenez executed a warranty deed and took out a $123,000 mortgage in a short sale approved by CitiMortgage and the previous owners.

The tsumani of negative news about Stern’s operation had Oster fearing she never would see her money again. She said she contacted the office numerous times for more than a month, but attorneys either would never return her calls or couldn’t tell her what had happened to her payment.

“I just wanted out because it was David Stern’s firm,” she said.

Mortgage giants Fannie Mae and Freddie Mac, who comprised the majority of Stern’s referrals, pulled all of their cases from the firm over the past two months. Shapiro and Fishman, however, remain on Fannie’s referral list.

Darryl Wilson, a professor and real estate expert at Stetson University’s College of Law, said that while selling the same house twice was “quite strange,” it does happen – and increasingly more so lately, as lenders, attorneys and the courts scramble to push a huge number of foreclosures through the pipeline. “There needs to be a lot more diligence and patience in dealing with these cases,” he said.

While there is no specific statute addressing double sales, Wilson said basic common law suggests that the first person buying the property would have the first rights to it. But the outcome could vary according to the specifics in each case, Wilson said.

Jimenez, who came from Cuba five years ago, said he always assumed he would get to keep his home because he bought it first. He already has started renovating the kitchen, and has decorated the front yard with holiday lights.

“I knew things would get resolved. I did everything legal,” he said.

Diane Lade can be reached at dlade@SunSentinel.com or 954-356-4295.