The five most common retrade triggers: appraisal at less than the loan-sized value, Phase I recommending Phase II , PCA flagging significant deferred maintenance, operating result missing the underwriting ( vacancy or NOI ), and material market-condition shift invoked through the MAC clause . Each can be partially defended at the term-sheet stage.
Retrade triggers and term-sheet defenses
Appraisal-driven retrade: appraisal comes in below the value used to size the loan, triggering an LTV-driven proceeds reduction. Defense: negotiate an LTV cushion (e.g., proceeds hold up to 5% appraisal variance), pre-engage the appraiser through lender's panel, and provide strong comp set in the financing memo.
Phase I to Phase II retrade: the Phase I recommends Phase II testing, triggering a 4-to-8-week delay and potential lender concern. Defense: order the Phase I early (week 1), provide complete site-use history to the consultant, and budget for Phase II contingency.
PCA deferred-maintenance retrade: the PCA flags immediate-need repairs above an underwriting threshold, triggering an additional reserve requirement or proceeds reduction. Defense: pre-walk the property with a contractor before the PCA, address visible immediate-need items, and budget for reserve.
Operating-result retrade: the next month's or quarter's actual operating result misses the underwriting (occupancy drop, NOI miss, anchor-tenant non-renewal). Defense: lock the term sheet on the trailing-twelve-month base; address any near-term lease expirations or known operational issues in the package upfront.
MAC retrade: the lender invokes the MAC clause based on a market-condition shift. Defense: tighten the MAC at the term-sheet stage to enumerate specific events and exclude general market conditions.
Lender-internal retrade: the lender's own credit appetite shifts (concentration limit hit, capital constraint, sector pull-back). This is the hardest to defend against because it is outside the borrower's control. The placement firm's mitigation is bake-off depth, having two-to-three credible alternates ready to step in.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Semiannual Risk Perspective · Office of the Comptroller of the Currency · 2025-12