...

Jonathan Nachmani, a managing director with Madison Capital, a commercial real estate investment and finance firm, said hundreds of billions in office building loans were coming due in the next two years. He said banks hadn't been selling loans en masse because they didn't want to take losses and there wasn't enough interest from big investors.

"It's because nobody wants to touch office," said Mr. Nachmani, who oversees acquisitions for the firm.

...

Michael Hamilton, one of the heads of the real estate practice at O'Melveny & Myers, said he had been involved with a number of deals in which banks were quietly giving borrowers a year to find a buyer for a property -- even if it meant a building was sold at a substantial discount. He said that the banks were interested in avoiding a foreclosure and that borrowers benefited by getting to walk away from a mortgage without owing anything.

"What I have been seeing is the cockroaches are starting to come out," said Mr. Hamilton. "The general public does not have a sense of the severity of the problem."''