The lateral drying front observed during film formation from latex dispersions with a T-g of the polymer around room temperature is composed of three three distinct lines. The lines are characterized by a decrease in turbidity, a renewed sharp increase in turbidity, and a more gradual decrease in turbidity at the end of what can be called a "halo". Microcracks with herringbone morphology develop at the first line, where the turbidity decreases. If macrocracks are present, these nucleate close to the end of the halo. At the line, where the turbidity sharply increases, one also observes an increase in stress birefringence. The substructure of the drying front is characteristically different from the structures described previously for films drying from hard particles. In particular, the renewed increase in turbidity cannot be explained as pore-opening, but rather is the consequence of a coarsening of the pore network after the particles jump into contact. A capillary instability sets in, by which the small pores collapse under the polymer/water interfacial energy, while the larger pores expand correspondingly. The instability (related to the Rayleigh instability of liquid jets) makes the films appear turbid. Also, the induced mechanical heterogeneity prevents straight macrocracks from penetrating into the halo because crack deflection and crack branching would result, which is energetically unfavorable.