Also found in: Dictionary, Thesaurus, Medical, Legal, Wikipedia.
2. Due diligence a lender conducts to ensure that a potential borrower is able to repay the loan.
(1) To evaluate the risk of a situation,as in loan underwriting to determine the borrower's financial strength,ability to repay the debt in the event of an interruption of cash flow,and willingness to repay the debt as evidenced by the borrower's credit score or credit history. (2) To guarantee a sale, such as an investment banker who underwrites the sale of securities and will purchase any that do not sell on the open market. (3) To assume liability, such as an insurance company that underwrites a policy.