First it was a meltdown then it was a crisis now it’s truning into a bloodbath. I talked to some subprime lenders this morning and everyone is scared. The fallout is everywhere. The biggest of course is the end of the 2/28 and 3/27 ARM’s. For those not familiar with these loans, the 
2/28 is a two year ARM which adjusts every year after the initial two years. The caps are pretty high and the lure is in the lower initial interest rate. A 3/27 would be the same but over three years. These loans also had pre-payment penalties for the initial lower rate term. The lowest adjustable rate term is now five years.
There’s been a lot of coverage on this on topic other blogs here, here and here. With my current work load I just haven’t had time to digest everything and make a comment. All I know is the pendulum has been swinging the other direction for some time now and I think it just picked up a whole lot of momentum.