RvW ~ The 'shadow inventory' is the term used in the biz for properties with non preforming loans that haven't been foreclosed as yet. I was told by a guy that he hasn't made payments for 3 years on his 4 rentals and his home although he's collecting the rent. I don't have a clue how many properties are in this same situation here in Kitsap but I hear similar stories every week. It's been suggested that the banks didn't start the foreclosures as they didn't want to flood the market with foreclosed properties but it may be that they were just overwhelmed and are just now starting to dig their way out as they weren't geared up for the volume of bad loans.
Cash is still king when it comes to buying foreclosed properties but have a good home inspection as some of the foreclosed properties have a lot of differed maintenance.