(MONEY Magazine) – ( Investors seeking decent returns with moderate risk might look at Ginnie Maes -- mortgage-backed securities issued by the Government National Mortgage Association. Last summer, the Ginnie Mae market slumped as troubled S&Ls dumped billions of dollars of the securities to raise cash. But the market has stabilized, and newly issued Ginnie Maes were recently yielding 9.75% -- 1.3 percentage points more than Treasury notes of comparable maturities. ''In difficult times like these, Ginnie Maes have the two most important factors going for them,'' says Sheldon Jacobs, editor of the No-Load Fund Investor. ''They are guaranteed by the government, and their yields are attractive.'' Ginnie Maes are backed by pools of mortgages bought from lenders. Although the government guarantees repayment of the underlying mortgages, Ginnie Maes, like any fixed-income investment, lose market value when interest rates rise and gain value when they decline. But Ginnie Maes pose a special problem if rates fall. The reason is that along with interest from the security, you regularly get back a portion of your investment as homeowners pay off the mortgages in the pool. When rates drop, prepayments increase as owners refinance their homes, and your principal is returned at a faster clip. Chances are that you will have to invest the money at a lower rate than you were getting from your Ginnie Mae. Right now, however, after two years of relatively low mortgage rates, refinancing isn't considered much of a threat. Analysts say that it would take a decline in mortgage rates of at least two points, to 8%, to set off a new spate of refinancings. Individual Ginnie Maes cost $25,000, but you can invest for less through mutual funds, usually at a small sacrifice in yield. An advantage of Ginnie Mae funds, says Chet Ragavan, first vice president of Merrill Lynch Capital Markets, is that their diversification protects against ''prepayment surprises.'' Jacobs likes Vanguard Fixed Income GNMA (currently yielding 9.33%) because of its low management fees. He also recommends Lexington GNMA Income (yielding 8.87%), which had the best total return in its category (15.6%) in 1989. For other Ginnie Mae funds, see Fund Watch on page 50.