The Supreme Court ruled yesterday that states may tax investments in Ginnie Maes, the government-backed bonds used to finance mortgage lending.

In a 9-0 decision, the court upheld an Illinois law that was challenged by Rockford Life Insurance Co.

Justice John Paul Stevens, writing for the court, said state taxation of Ginnie Maes does not have an adverse impact on the federal government's borrowing ability.

The term Ginnie Mae derives from the name Government National Mortgage Association (GNMA), the federal government corporation created in 1968 that issues the bonds.

The GNMA buys mortgages from private lenders, such as banks and savings and loans, packages them into securities called Ginnie Maes, and sells the certificates to investors. The agency guarantees the timely payment of principal and interest to the Ginnie Mae holders.

Stevens said Ginnie Maes do not carry a guarantee from the government that it will pay specified sums at specified dates for the bonds.

"The lack of a fixed and certain obligation by the United States in the Ginnie Mae context" means the bonds are not exempt under the Constitution from state taxation, he said.

"Obligations of the United States" -- such as government bonds and Treasury notes -- are exempt from state and local taxation.