Underwriting

(redirected from underwritings)
Also found in: Dictionary, Medical, Legal.

Underwriting

Acting as the underwriter in the issue of new securities for a firm.

Underwriting

1. The process of placing a new issue with investors. Underwriting involves the issuing company using one or (usually) more companies who are each responsible for placing a certain amount of the new issue. The underwriting firms contact potential investors to gauge interest and sell the issue. Underwriters guarantee the price for a certain number of shares of the new issue. See also: Bracketing, Oversubscribed, Undersubsribed.

2. Due diligence a lender conducts to ensure that a potential borrower is able to repay the loan.

Underwriting.

Underwriting means insuring.

An insurance company underwrites your policy when it agrees to take the risk of insuring your life or covering your medical expenses in exchange for the premium you pay.

An investment bank underwrites an initial public offering (IPO) or a bond issue when it buys the shares or bonds from the issuer and takes the risk of having to sell them to individual or institutional investors to recover its investment.

underwriting

the acceptance by a financial institution of the financial risks involved in a particular transaction, for an agreed fee. For example, INSURANCE COMPANIES underwrite INSURANCE risks such as damage to property paying out monies to policy holders wholly or in part to cover bona fide claims for compensation; MERCHANT BANKS underwrite new SHARE ISSUES, guaranteeing to buy up any shares that are not sold in the open market, and BILLS OF EXCHANGE. See LLOYDS, EXPORT CREDIT GUARANTEE DEPARTMENT.

underwriting

the acceptance by a financial institution of the financial risks involved in a particular transaction for an agreed fee. For example, INSURANCE COMPANIES underwrite INSURANCE risks such as damage to property, paying out monies to policy holders wholly or in part to cover bona fide claims for compensation; MERCHANT BANKS underwrite new SHARE ISSUES, guaranteeing to buy up any shares that are not sold in the open market.

Underwriting

The process of making a final determination on approval or rejection of a loan application.

Underwriting involves verifying the information that has been obtained from the borrower and that served as the basis for qualification, as well as assessing information on the applicant's credit worthiness.

References in periodicals archive ?
In general, the IR functions were consistent, with UWPC serving as an effective indicator of aggregate underwriting standards.
Figure 8b shows that the mortgage interest rate (IMORT) rose (consistent with responses to a demand shock) and the indicator of underwriting tightness (UWPC) declined (consistent with responses to a shock to mortgage supply) in response to a positive shock to mortgage balances.
Again, that adds support for UWPC's serving as an indicator of underwriting tightness: as incomes rose, the likelihood of borrowers having payment problems receded; and as incomes also carried house prices upward, lenders may well have found it optimal to reduce their underwriting standards.
The estimated IR in Figure 10b suggests that higher mortgage interest rates were associated with lenders' tightening their underwriting standards.
Sensibly forecasting that the prices of houses, which collateralize residential mortgages, were likely to continue to rise, it then seems entirely rational for lenders to ease their underwriting standards when house prices rise.
Finally, Figure 12 displays the estimated responses to estimated shocks to (the estimated indicator of) underwriting, UWPC.
Unlike many conventional indicators, the underwriting indicator that we constructed, UWPC, tracks the increasingly lax underwriting in the mid-2000s, followed by the extreme tightening of effective underwriting standards during the financial crisis that began in 2007.
The brevity of the sample resulted in part from the absence of data before 1996 for at least two of the five input variables that we used to construct the indicator of underwriting, UWPC.
To the extent that underwriting then responded to forecasted house price growth, as the estimates suggest, those extrapolations might then be transmitted to underwriting standards as well.
For example, in the estimated VAR, for both house prices and for the underwriting indicator, the estimated coefficients on their own lags summed to more than one.
The Federal Reserve and the OCC Surveys of Banks' Underwriting Standards
In their separate surveys, the Federal Reserve and the OCC ask about banks' mortgage underwriting standards.