WASHINGTON, Feb 20 (Reuters) - The mortgage insurance terms that protect lenders from homeowner default will continue under the terms of a mortgage rescue plan, the regulator for Fannie Mae (FNM.P: Quote, Profile, Research) and Freddie Mac (FRE.P: Quote, Profile, Research) said on Friday.

"We intend that the Enterprises would seek to carry forward to the new loan the existing mortgage insurance contract," James Lockhart, the Director of the Federal Housing Finance Agency, wrote.

Fannie Mae and Freddie Mac, two government-controlled finance companies, are known as government-sponsored enterprises. Lockhart was writing to leaders of the mortgage insurance industry two days after President Barack Obama outlined a sweeping housing rescue plan.

A key business for mortgage insurers like PMI Group (PMI.N: Quote, Profile, Research), Radian Group Inc. (RDN.N: Quote, Profile, Research) and Genworth Financial Inc. (GNW.N: Quote, Profile, Research) is to protect Fannie Mae and Freddie Mac from the costs of defaulting home loans. The companies that specialize in that business have been strained by the current housing downturn and record foreclosures.

(Reporting by Patrick Rucker, Editing by Diane Craft)