REYKJAVIK (AFP) - The International Monetary Fund (IMF) opposes a mortgage write-off plan put forth by the country's homeowner association to the Icelandic government, an official said.

"The IMF strongly opposes the mortgage write-off, which puts pressure on the government as the public is on the opposite side of the IMF," Svanborg Sigmarsdottir, a spokeswoman for Iceland's Debtor's Ombudsman, told AFP.

Iceland, whose economy all but collapsed after its major banks went under at the end of 2008, is now receiving conditional aid from the IMF.

The Icelandic Interest Association of Households recently put forth a plan to the government to write off Icelanders' mortgages by up to 20 percent.

"We want to convert foreign currency loans to loans in Icelandic kronur, for all households," association chairman Fridrik O. Fridriksson told AFP.

The government has not commented on the plan, Prime Minister Johanna Sigurdardottir only saying she was in talks with different groups, as well as financial institutions, to find a solution to foreclosures in Iceland.

Estimates from the homeowner's association put at between 20,000 and 40,000 the number of households unable or having difficulty to repay their mortgage payments.

Many of those took out home loans in foreign currencies when the country's economy was booming. They are now faced with the threat of losing their homes since a government-imposed six-month freeze on mortgage repayments expired at the end of September.

The fear of foreclosures has led to massive demonstrations by Icelanders demanding the government take action on the housing situation, and the government has held numerous meetings with opposition parties, financial institutions and associations in an attempt to find a solution.