A report released by the Boston Fed last week challenges the common arguments that attribute rising delinquencies to unaffordable mortgage payments.

"We find that the DTI ratio at the time of origination is not a strong predictor of future mortgage default," the report said.   "A simple theoretical model explains this result."

The economists estimated that a 10 percentage-point increase in the debt-to-income ratio increases the probability of 90-day delinquency by just seven to 11 percent.

Conversely, a one percentage-point increase in unemployment rate raises this probability by 10-20 percent, and a 10 percent fall in house prices raises it by more than half.

Their findings are important, given the fact that streamlined loan modification programs focus on getting a struggling borrower's housing payment down to a more traditional debt to income ratios.

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