[Southack]

per your post #6 request: "Peter Schiff, head of Euro Pacific Capital, said the sector was in an unstoppable meltdown. "It's a self-perpetuating spiral: as sub-prime companies tighten lending they create even more defaults," he said..."

To wit: tightening new lending standards doesn't create "even more defaults" from existing debtors. They've already got their loans.

[Montana4Jesus]

Loans that were amortized on a 2 to 3 year fixed that are adjusting to a max 3% rate increase very soon. Yes, the tightening of guidelines will have a direct result in the level of default rates as those families will no longer be able to afford their mortgage payments and because of restricted guidelines and lack of equity, they're faced with some tough financial decisions.

[philman_36]

...tightening new lending standards doesn't create "even more defaults" from existing debtors.
I would agree with that. That seems obvious.
IMO the gist of the article was about the loans that are already outstanding and have a higher default rate and the problems that is creating to the banks who picked up the loan packages.
All help appreciated.