The phrase “shadow inventory” came into existence to describe quantities of properties which were expected to appear as listings for sale, but, for some reason, did not.

In that context, there is no difference between any of the following:
1. REO not listed for sale
2. NOT, sale postponed, no short sale in progress
3. NOD, NOT not issued, no short sale in progress
4. delinquent, NOD not issued, no short sale in progress

They are all part of shadow inventory, since each of them is a -1 to the market.

Since only the servicer has details about category 4, nobody has the information required to accurately calculate shadow inventory.

And, it doesn’t matter much as long as the mark-to-market rules are suspended and the buyer incentives remain as they are (low interest rates, low down payments, down payment assistance, non-recourse loans). The shadow inventory will remain in the shadows, released to the market at a pace chosen by the owners of the impaired mortgages.

They will choose between one large immediate loss, and years of monthly losses, hopefully followed by a rebound in prices.