LAS VEGAS - Subprime lenders are beginning to report marked increases in the number of borrowers either failing to make their first mortgage payment or falling behind shortly afterward - a trend some say is the result of overly aggressive mortgage brokers misrepresenting borrower income or home values.

Over the last two months, first payment defaults rose 40% in Saxon Mortgage Service's $26 billion servicing portfolio, which includes loans from Saxon Capital, along with those from other lenders, according to David Dill, president of Saxon Mortgage Services. "The biggest problem we are seeing is lack of income, or a change in income," Dill said, speaking on a panel discussion at Information Management Network's Subprime ABS conference held here last week. "Something is awry in the broker network."

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