Bank Underwriting Law and Legal Definition

Bank underwriting means credit analysis preceding the granting of a loan. Bank Loan Underwriters prevent losses to banks by evaluating credit risk whenever customers apply for loans before making decisions on whether to give the loans.

It is based on credit information furnished by the borrower, such as:

1) employment history, salary and financial statements;

2) publicly available information, such as the borrower's credit history, which is detailed in a credit report; and

3) the lender's evaluation of the borrower's credit needs and ability to pay.

Bank underwriting also refer to the purchase of corporate bonds, commercial paper, government securities, municipal general-obligation bonds by a commercial bank or dealer bank for its own account or for resale to investors.