The country's largest real estate investment trust, Chase Manhattan Mortgage and Realty Trust, has defaulted on $38 million in notes that were due May 1.

The REIT announced this week it had insufficient funds to pay off $36.7 million of 7 7/8 percent senior notes plus $1.4 million in accrued interest.

The trust issued a statement saying it was continuing to pursue "various alternatives" and was considering "the feasibility of some form of rearrangement of its debt." The trust said it was having discussions with various creditors and that during the discussions no payments of pricipal or interest would be made on any of its debts.

Treasurer and chief financial officer Harvey Rosenblatt said no decision had been made to file for bankruptcy.

The turst's financial position has eased somewhat recently. Losses in the first quarter of this year were cut ot $5.6 million on revenues of $8.2 million, compared with losses of $82.3 million on revenues of $12.3 million in the same period of 1977.

Chase Manhattan Bank was one of the trust's founders in 1970 and serves as adviser to it, but otherwise is not affiliated with it. The trust reportedly owes the bank $150 million as well as varying amounts to 26 others creditors.

Though the bank had no cemment on whether it planned to force the trust into bankruptcy, a REIT analyst speculated that creditors would stand to lose more than they would gain by forcing it now. Instead they would probably do better to wait it out and allow the upswing in the real estate market to help cut losses, he said.

At the moment the trust has $66 million in properties and $144 million in mortgage loans that are not producing income.

Its biggest single property is Palmas del Mar, a resort complex in Puerto Rico that remains largely empty. The developers built costly amenities such as a golf course and boutiques but then were unable to see condominiums they were planning to build in the complex.

Its Staten Island Mall shopping center has been foreclosed. The trust also invested heavily in Florida condos.

According to Bernard Solas, resarch in New York, REITs with approximately $1.6 billion in assets have been forced into bankruptcy in the wake of the 1974-75 real estate recession.

But the picture is brightening somewhat. Solas said major New York banks were able to reduce their loans outstanding to REITs with by a third last year. Their indebtedness still stands at nearly $2.5 billion and 71 percent of the loans were listed as nonperforming or not paying principal or interest.

Some of the large nonperforming real estate loans listed by Audit Invesment Research as of the end of 1977 were: Chase Manhattan, $1.36 billion; Citibank, $969million; Bankers Trust, $971 million; and Manufacturers Hanover, $372 million.