MQCC™ Lossless Principle

Borne out of nearly two decades (commencing at least as early as August 2001) of scientific-method-based research, discovery, development, commercialization, litigation testing and regulatory scrutiny of the “principles of ‘BlockChain’” (Bungay Unification of Quantum Processes Algorithm) for the world’s first Non-Bank, Non-Institutional, Non-Syndicated, Non-Regulated or Regulatory Exempt, Free Trading Securities and Related Financial Instruments; also known as a Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow Electronic Finance System on April 9, 2005; and subsequent registration thereof, of a subordinate Quality Management System, to ISO 9001:2000, on May 9, 2008; one benefit to participants in PEM® designated financial transactions is the concept of "lossless". "Lossless" is a core principle of the underlying conformity science and a peculiar quality characteristic of commerce in non-bank, non-institutional, non-syndicated, non-regulated or regulatory exempt and free trading finance transactions; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow finance transactions; when transacted in a "principles of 'BlockChain'" based-system.

Core concept of the MQCC™ Lossless Principle: "You Get What You Expect to Get"

The MQCC™ Lossless Principle, developed by Mr. Anoop Bungay, Founder of MQCC; Bungay International Inc. and the Private Equity Mortgage Institute PEMI®.

Within a functional organizational entity, when applicable end-to-end activity processes are converted to data equivalent structures (DES) or digital token representation (DTR) within an assumptionless, Quantum Unified Management System and the data flows from the point of origination (engagement) to the point of termination (customer delivery; goal achievement) in a manner that conforms to statutory, regulatory, process and customer requirements; nonconformity events resulting in unmitigable financial loss are virtually eliminated due to a continuous tripartite entanglement process of prevention, identification and corrective action. A corollary benefit is a quantum increase in organization efficiency.

Within the scope of private equity mortgage industry group, namely mortgage origination and mortgage banking (lending), the effect of the MQCC Lossless Principle directly affects the three (3) PEMI® Primary Risk Classes (see Risk section of PEMI® website)

• borrowers
• investor-lenders
• brokers (government licensed credit intermediaries)

resulting in the concepts of:

Lossless Borrowing

• non-predatory borrowing
  • a disclosure function pertaining to the flow of knowledge and its equivalent data representation

Lossless Investing (lending)

• conversion protocols for transforming secured debt instrument to secured asset title ownership from investee to investor.
  • a preservation function pertaining to monetary value and its equivalent data representation

Lossless Origination

• assumptionless, broker origination networks built in a "principles of 'BlockChain'" environment, with end-to-end conformity to statutory, regulatory, process and customer requirements resulting in prevention, identification and mitigation of nonconformity events resulting in financial loss.
  • a transmission function pertaining to private consumer financial information and its equivalent data representation

1. Lossless Borrowing

Individuals who borrow money through participation in non-bank, non-institutional, non-syndicated, non-regulated or regulatory exempt and free trading finance transactions; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow finance transactions may be exposed to loss caused by predatory lenders who provide false of misleading information resulting in the borrower agreeing to terms and conditions that are neither fair nor reasonable.

When transacted in a MQCC-Certified system, consumers (applicants, borrowers) have the confidence in knowing that there is full disclosure in the transaction in order to prevent loss caused by acts of investor-lender predation.

Real World Benefit: The borrower gets the mortgage that they accepted, with the terms and conditions that they agreed to.

2. Lossless Origination

Individuals who own, manage (designated person) or are employed as brokers (government licensed credit intermediaries) and seek to trade in non-bank, non-institutional, non-syndicated, non-regulated or regulatory exempt and free trading finance transactions; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow finance transactions may be exposed to loss caused by nonconformity events including:

• sub-broker/agent conduct
• incompetence
• poor quality of service
• ineffective control
• ineffective training
• improper requisite information collection and validation
• broker/sub-broker fraud detection

Resulting in errors and omissions claims, regulatory complaints or negative publicity.

With MQCC-Certified Systems, originators (Top Management, Employees, Agents and Shareholders) will be able to assure that all employees and agents in their business operations work in a manner that conforms to statutory, regulatory, process or customer requirements in order to prevent loss caused nonconformity events.

Real World Benefit: The broker manages a system of sub-brokers who function in a transparent environment where errors, omissions or other nonconformity events are virtually eliminated due to an overarching system of control.

3. Lossless Investing (lending)

3.1 Statutory, Regulatory or Process Nonconformity Risk

Individuals who seek to invest or lend in non-bank, non-institutional, non-syndicated, non-regulated or regulatory exempt and free trading finance transactions; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow finance transactions may be exposed to loss caused by nonconformity events including:

• sub-broker/agent conduct
• incompetence
• poor quality of service
• ineffective control
• ineffective training
• improper requisite information collection and validation
• broker/sub-broker fraud detection
• insufficient security documentation or registration (a legal function)
• absence of requisite fiduciary standard of care

Resulting in loss of payment income, investment principle, aggravation, loss of time and loss of peace of mind.

With MQCC-Certified Systems, PEM® investor-lenders classified as "private lenders", for whom a fiduciary standard of care is owed by an originating mortgage broker is assured that their Broker or Agent operates in a manner that conforms to statutory, regulatory, process or investor-lender requirements in order to prevent loss caused nonconformity events. If the PEM® investor-lender is unrepresented, they may license the MQCC-Certified Systems to control their internal operations to the same standard as PEMI® Charter-holders.

Real World Benefit: The investor-lender does not experience an unmitigable loss caused by statutory, regulatory or process nonconformity.

3.2 - Default Enforcement (Foreclosure) Risk

Canada Revenue Agency reminds investor-lenders who invest in mortgages that, in the case of repossession of a property; "At the time of repossession, you do not have a capital gain or loss. Any gain or loss will be postponed until you sell the property." MQCC's system advances this principle and educates its PEM® investor-lenders that real-property (land) is permanent and immovable in nature and, unlike a typical chattel asset, real property is not a depreciating asset, so in the PEM® world, if a mortgagee repossess a property, the investor is ALWAYS recommended to voluntarily retain ownership of the property and enjoy the financial benefits of appreciation (either passive, by natural market conditions; or, active, by renovations, subdivision, development) and cashflow, by renting the property and earning current cash as rental income. In the world of PEM® mortgages, foreclosure is not a liability.

Real World Interpretation: Loss is often an investor-lender's choice.

3.3 - Involuntary Loss

PEM® may experience an involuntary loss due to items out of their control, including super-priority of business or other tax obligations by mortgagors; this is a rare event, but must be recognized.

3.4 - Tax Treatment of Loss

In Canada, Investors-Lenders who engage in private equity mortgage lending and become registered on title as "mortgagees" are treated differently by Canada Revenue Agency CRA than those investors who invest in other forms of investment, ie: public capital markets. NOTICE: PEMINSTITUTE is not granting advice; this is only a copy-paste and a lay-interpretation of tax issues. Please obtain your own professional legal advice.

Other mortgage foreclosures and conditional sales repossessions

You may have held a mortgage on a property but had to repossess the property later because you were not paid all or a part of the amount owed under the mortgage. In this case, you may have to report a capital gain or loss.

The following rules apply to mortgage foreclosures and also, apply when property is repossessed under a conditional sales agreement.

If, as a mortgagee (a person who lends money under a mortgage), you repossess a property because the mortgagor failed to pay you the money owed under the mortgage, you are considered to have purchased the property. At the time of repossession, you do not have a capital gain or loss. Any gain or loss will be postponed until you sell the property. Source

Real World Interpretation: If worse comes to worst and you enforce your security interest through a foreclosure process then, as a registered mortgagee, normally you have the right to take possession of the asset in lieu of repayment of the mortgage; when this happens your principal is now converted from a debt instrument asset to a title ownership asset. In this case, if the property is worth less than the combined value of the loans on the property, then Canadian Revenue Agency permits the investor-lender to retain ownership of the asset, enjoy the benefits of ownership (ongoing monthly rental income, increased value due to property improvement, increased value due to property development) until such time as the investor chooses to sell the property at a value higher than the original investment, resulting in a capital gain. In "private equity mortgage" lending, loss is often a choice. CAVEAT: as with all things, there are uncertainties that are not mitigated by third party tools (ie: property insurance, title insurance), namely: super-priority of withholding taxes due to CRA by business owners - but this is a rare event and can be mitigated at the time of underwriting; see your tax advisor, accountant or C-PEM®-P for professional advice.

A detailed rationale for application of the term "lossless" in a non-bank, non-institutional, non-syndicated, non-regulated or regulatory exempt and free trading finance; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow finance setting for an investing and lending application, was explained in a letter from Mr. A. K. (Anoop) Bungay, Founder of MQCC™ and the Private Equity Mortgage Institute PEMI® to some professionals employed or functioning as lawyers licensed by members of the International Conference of Legal Regulators (ICLR) or advisors to securities commissions that are members of International Organization of Securities Commissions (IOSCO).

ORIGIN OF DEFINITION and APPLICATION OF USE of "LOSSLESS" in an Investing Application: "Lossless Investing"

NOTICE: The below document is modified with some inclusions of additional material not found in the original letter, identified by square brackets [ ].

June 2019

To [REDACTED]

As developer of world’s first global electronic peer-to-peer "cryptofinancial" network trading in Non-Bank, Non-Institutional, Non-Syndicated, Non-Regulated or Regulatory Exempt, Free Trading Securities and Related Financial Instruments; also known as Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow Electronic Finance securities and related instruments on April 9, 2005 (www.privatelender.org); and as developer of the information technology enabling subsequent registration thereof, of a subordinate National Standard of Canada (and International equivalent in 119 countries) Quality Management System, namely, ISO 9001:2000, on May 9, 2008; yours sincerely (Anoop Bungay) is uniquely qualified to provide legal-grade, regulatory-grade, legislative-grade advice on terminology related to this subject matter.

Specifically, expertise lies in:

• Vocabulary, Terminology
• Taxonomy, Ontology
• Principles, Concepts, Core Processes
• Identities, Reference Architecture
• Information Technology applications
• National and International Standardization
• Governance, Audit
• System Conformity to Statutory, Regulatory and Competition Bureau (a Canada Law Enforcement Agency) requirements
• This is an incomplete list

Having personally provided formal and informal training to legal professionals employed by law enforcement authorities on the above subject matter, I could not let the week pass without assuring you and I that we are on the same team and that you and I are on the same page.

1 - Unlike with public financial markets, one of the peculiar yet inherent quality characteristics within "Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow", generally known as "peer-to-peer" finance and colloquially known as "direct" finance is the concept of "lossless investing".

2 - "Lossless investing" is a term derived out of the following pattern or practice, namely, when a person considers investing non-pooled, non-syndicated private equity capital into a financial debt instrument (loan) secured by a real estate asset.

3 - If the underlying asset is worth $100.00 and the loan is for $65.00 for a 12 month term with monthly payments; the investor-lender has a margin of security of $35.00 at the time of lending.

4 - With "peer-to-peer" or "direct" finance, there are two potential outcomes:

4.1 - The expected outcome is the loan payments are made on time and at the end of the term, the investor-lender is repaid the principle.

4.2 - In the worst case, the payments are not made or the principal is not repaid at maturity and the investor-lender is compelled to commence enforcement action to realize on the security.

4.2.1 - Enforcement actions have one of three basic outcomes:

4.2.1.1 - (a) the investor-lender is repaid the monies owed (including the cost of enforcement action) or,

4.2.1.2 - (b) the investor-lender has the right to possess title (ownership) of the asset and receive the benefits of ownership of the underlying asset in perpetuity, or,

4.2.1.3 - (c) the borrower quitclaims title to the asset in favor of the investor-lender, thereby avoiding or interrupting an enforcement action.

4.2.2 - The benefit of ownership, in the case of real estate, may include rental income, future development opportunities, or renovation and resale opportunities. These are not benefits that are typically found in investments made available to the participants in the non-peer-to-peer or public capital markets where, frankly speaking, there is no direct connection to a realizable asset; one with its own inherent value characteristics and potential income stream. Further, in Canadian public financial markets the concept of "loss" has a more complex meaning. For example, there is a type of loss named "unrealized loss" which is a concept specific to Investment Funds. Read National Instrument 81-106 Investment Fund Continuous Disclosure to learn more about this concept of loss.

6 - With "peer-to-peer" or "direct" finance, the loan agreement is, at its core, an agreement between investee-borrower and investor-lender where there is an express understanding that, in the worst case scenario, the borrower agrees (either voluntarily or by way of enforcement action) to relinquish title to the secured asset in favor of the lender in consideration for at least amount borrowed. Conversely, in the worst case scenario, the lender agrees (either voluntarily or by way of enforcement action) to accept title to the secured asset in favor of the lender in consideration for at least amount borrowed.

7 - Notwithstanding ancillary risk mitigation factors including insured loss coverage in favor of the lender by a third-party insurance company due to fire, damage or other event; or loss coverage due to job-loss or medical disability or death; in matters of "peer-to-peer" or "direct" finance, when a loan is secured by an asset, the worse case risk event is conversion of the loan instrument to a title instrument equivalent to the value of the loan amount at the time of lending; and this is how the term "lossless investing" was derived.

8 - Corollaries, Cautions, Disclaimers and Notices:

8.1 - There is a corollary for the borrower: "lossless borrowing"; and the way to mitigate the risk is to assure that borrowers are not exposed to inexperienced or predatory investor-lenders. Office of the Shadow Banking Systems Ombudsperson OSBSO™ (www.osbso.org)

[8.2 - There is also a corollary for the broker (government licensed credit intermediary) "lossless origination"; visit broker.mortgagequote.ca to learn more.]

8.3 - The terminology and definition is not a replacement for professional advice or legal advice.

8.4 - An individual seeking to invest in real-estate secured Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow instruments should do so under the guidance of a trained fiduciary-class professional, for example, a Private Equity Mortgage Institute Chartered Private Equity Mortgage Professional (C-PEM®-P) at www.peminstitute.org.

8.5 - Due to the legal nature of real estate secured loans, obtaining independent legal advice is recommended.

8.6 - In certain jurisdictions, Investor-lenders may have additional risk mitigation options including securing a default judgement against a borrower; ask your C-PEM®-P process advise or your legal advisor for legal advice on this option.

8.7 - If an individual participates (as a borrower or an investor) in a Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow under the guidance of a government regulated or non-regulated intermediary and suffers a loss due to errors, omissions or statutory or regulatory nonconformity including: incompetency or below standard quality of service, the participants may have a cause of action to remedy losses. Visit the OSBSO™ or ask your legal advisor.

Trusting this is illuminating,[REDACTED]. The public regulated markets or private companies are trying to step into the original Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow world (bandwagon, if you will) and in some cases, to co-opt existing Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow terminology in a manner that is misdescriptive or deceptively misdescriptive [or does not conform to seminal business patterns or practice]. At present, MQCC stands by use of the terminology "lossless investing" in financial instruments that fit the quality characteristics of Peer-to-Peer (P2P)/Private/Crypto/Secret/Shadow financial instruments. You know what, you may be right, perhaps I might take you up on your suggestion of introducing myself to the [REDACTED].

Your thoughts are appreciated, hopefully I have triggered at the least, a curiosity.

Best,

END ORIGIN OF DEFINITION and APPLICATION OF USE of "LOSSLESS"

Additional Points:

For borrowers who build properties and have equity partners in their construction companies:

Unlike with the risks of becoming an equity investor in a real estate development project, you and your friends can enjoy the benefits of the MQCC Lossless™ Investing Program. The concept of lossless investing is a peculiarity of "private or non-bank lending" and not found in public capital markets or investment markets traditionally intermediated by institutional entities or regulated by public regulatory bodies. You already know this because you have experienced the process from the obverse, as a borrower; and once again, you know - from the perspective of a borrower with investment partners - BEFORE THE EQUITY (INVESTMENT) PARTNERS the LENDERS ALWAYS WIN.

MQCC also developed and commercialized the knowledge and technology protocols for implementing the principles of lossless investing; the MQCC Lossless™ Principle. MQCC investor-lenders enjoy the benefit of a system that assures lossless investing including:

• The world's only: Investor-Investee Principal - Asset Exchange IIPAE™ Program for applicable MQCC Investments
• errors and omissions liability coverage
• regulatory conforming end-to-end operations

Source: investor.mortgagequote.ca

MQCC Lossless principle is different from the MQCC LOSS-LESS™ Program

Trademark branded as MQCC LOSS-LESS™: MQCC™ Liability Occurrence Suppression System (LOSS) - Liability Exclusion System Standards (LESS)™; MQCC LOSS-LESS™ is a combination of system and standards that, when operating in a quantum-unified system (a "principles of 'BlockChain'" system), the organization will benefit from minimizing nonconformity; the meta-operating system is preferred by errors and omissions liability insurers.