Employment and income fraud are up 8.8 percent from third quarter 2010 and up 50 percent from third quarter 2009, according to a quarterly report by Interthinx.

Interthinx analysts say the growth can be attributed to borrower data that is misrepresented in order to hit debt-to-income standards lenders require in the face of immobile or declining real incomes.

The report also shows that the two riskiest states are Nevada and Arizona for the sixth consecutive quarter. California is the third riskiest state overall, with an index value of 197. It was particularly well represented in all the indices, containing half of the ten riskiest metropolitan statistical areas (MSA), seven of the top ten ZIP codes, and more than half of the top ten MSAs in the property valuation and employment/income indices.

Based on nongeographic risk profiling, fraud risk is greatest in loans with high loan-to-income ratios, meaning the ratio of loan amount to monthly income. Typically, fraud risk indices grow as the loan-to-income ratio jumps. This results in the highest indices occurring at loan-to-income values near or greater than 100.