During the 1997 Asian Financial Crisis, the non ñperforming loan in the property sector accounted for more than 30 percent. It was an alarmingly high exposure for one sector and it was said to have a crippling effect on the banking sector. Scores of property were auctioned and gravely affected the property industry. This paper discusses the problem of non-performing loans in the property sector in Malaysia during the 1997 Asian Financial Crisis . It evaluates the role of the national asset management company, Danaharta, solely set up to stabilize the banking and the property industry. Evidences from the central bank will be used to assess the effectiveness of Danaharta in handling the non ñperforming loans. It also discusses how the non-performing loans were negotiated with the banks, how the loan were restructured and the economics of such transactions. Finally, it evaluates the impact of Danaharta in managing the Non- Performing Loans in the Property Sector in Malaysia