FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Period Ended September 30, 1997
- ---------------------------- ----------------------- --------------------------
Commission file number 33-30427
- ---------------------------- ----------------------- --------------------------
REDWOOD MORTGAGE INVESTORS VII
- --------------------------------------------------------------------------------
(exact name of registrant as specified in its charter)
California 94-3094928
- -------------------------- -----------------------------------------------------
(State or other jurisdiction of I.R.S. Employer
incorporation of organization) Identification No.
650 El Camino Real, Suite G, Redwood City, CA. 94063
- --------------------------------------------------------------------------------
(address of principal executive office)
(415) 365-5341
- --------------------------------------------------------------------------------
(Registrants telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES XX NO
-------- ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES NO NOT APPLICABLE X
------------- ------------- ------------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuers class of
common stock, as of the latest date.
NOT APPLICABLE
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
ASSETS
<CAPTION>
Sept 30, 1997
(unaudited) 1996
--------------- --------------
<S> <C> <C>
Cash $185,165 $755,089
--------------- --------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 14,097,623 12,036,293
Accrued Interest on Mortgage Investments 373,069 264,495
Advances on Mortgage Investments 42,914 41,203
Accounts receivables, unsecured 107,817 337,242
---------------
--------------
14,621,423 12,679,233
Less allowance for doubtful accounts 264,720 228,647
--------------- --------------
14,356,703 12,450,586
---------------
--------------
Real estate owned, acquired through foreclosure, held for sale 856,577 1,468,345
Investment in partnership 298,237 242,394
--------------- --------------
$15,696,682 $14,916,414
=============== ==============
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
Notes payable - bank line of credit $2,591,816 $1,175,000
Accounts payable and accrued expenses 1,845 1,472
Deferred Interest 0 154,598
-------------- --------------
2,593,661 1,331,070
-------------- --------------
Partners Capital
Limited partners capital, subject to redemption (Note 4E):
Net of formation loan receivable of $357,794 and $429,163 for
September 30, 1997, and December 31, 1996, respectively 13,091,043 13,573,366
General partners capital 11,978 11,978
--------------
--------------
Total Partners Capital 13,103,021 13,585,344
-------------- --------------
Total Liabilities and Partners Capital $15,696,682 $14,916,414
============== ==============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1997
AND 1996 (unaudited)
9 months ended 9 months ended 3 months ended 3 months ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
(unaudited) (unaudited) (unaudited) (unaudited)
<CAPTION>
Revenues:
<S> <C> <C> <C> <C>
Interest on mortgage investments $1,184,702 $1,180,937 $418,203 $402,259
Interest on bank deposits 5,266 4,461 1,673 1,610
Late Charges 3,946 13,817 1,020 5,451
Miscellaneous 12,122 20,779 3,166 14,614
------------ ------------- ------------ -------------
1,206,036 1,219,994 424,062 423,934
------------ ------------- ------------ -------------
Expenses:
Interest on note payable-bank 142,691 127,066 59,877 38,407
Mortgage Servicing Fees 51,621 97,268 19,993 32,733
Amortization of organization costs 0 368 0 0
Clerical costs through Redwood Mortgage 28,621 30,758 9,285 10,464
Professional Fees 22,882 17,637 3,156 473
Provision for doubtful accounts and
losses on
real estate acquired through 324,027 285,591 122,705 127,930
foreclosure
Printing, Supplies and Postage 8,123 0 2,643 0
Other 5,576 13,647 1,807 2,543
------------ ------------- ------------ -------------
583,541 572,335 219,466 212,550
------------ ------------- ------------ -------------
Net income $622,495 $647,659 $204,596 $211,384
============ ============= ============ =============
Net income: to General Partners (1%) $6,225 $6,476 $2,046 $2,113
Net income: to Limited Partners (99%) $616,270 $641,183 $202,550 $209,271
============ ============= ============ =============
$622,495 $647,659 $204,596 $211,384
============ ============= ============ =============
Net income per $1000 invested by Limited
Partners for entire period:
- where income is reinvested and $45.27 $44.78 $14.87 $14.71
compounded
------------ ------------- ------------ -------------
- where partner receives income in monthly
distributions $44.39 $43.92 $14.80 $14.63
------------ ------------- ------------ -------------
<FN>
See accompanying notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1996 (audited) and
NINE MONTHS ENDED SEPTEMBER 30, 1997 (unaudited)
<CAPTION>
PARTNERS CAPITAL
-----------------------------------------------------------------------
LIMITED PARTNERS CAPITAL
-----------------------------------------------------------------------
Capital
Account Unallocated Formation
Limited Syndication Loan
Partners Costs Receivable Total
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Balances at December 31, 1993 $13,596,915 $(187,807) $(693,471) $12,715,637
Formation loan collections 0 0 65,166 65,166
Net income 918,018 0 0 918,018
Allocation of syndication costs (80,190) 80,190 0 0
Early withdrawal penalties (34,001) 10,529 23,366 (106)
Partners withdrawals (560,753) 0 0 (560,753)
-------------- --------------- --------------- --------------
Balances at December 31, 1994 13,839,989 (97,088) (604,939 13,137,962
Formation loan collections 0 0 80,542 80,542
Net income 902,840 0 0 902,840
Allocation of syndication costs (80,190) 80,190 0 0
Early withdrawal penalties (10,690) 3,310 7,346 (34)
Partners withdrawals (435,917) 0 0 (435,917)
-------------- --------------- --------------- --------------
Balances at December 31, 1995 14,216,032 (13,588) (517,051) 13,685,393
Formation loan collections 0 0 62,225 62,225
Net income 850,508 0 0 850,508
Allocation of syndication costs (13,588) 13,588 0 0
Early withdrawal penalties (37,345) 0 25,663 (11,682)
Partners withdrawals (1,013,078) 0 0 (1,013,078)
-------------- --------------- --------------- --------------
Balances at December 31, 1996 14,002,529 0 (429,163) 13,573,366
Formation loan collections 0 0 48,447 48,447
Net income 616,270 0 0 616,270
Early withdrawal penalties (33,356) 0 22,922 (10,434)
Partners withdrawals (1,136,606) 0 0 (1,136,606)
-------------- --------------- --------------- --------------
Balances at September 30, 1997 $13,448,837 $0 $(357,794) $13,091,043
============== =============== =============== ==============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1996 (audited) and
NINE MONTHS ENDED SEPTEMBER 30, 1997 (unaudited)
<CAPTION>
PARTNERS CAPITAL
------------------------------------------------------------------------------
GENERAL PARTNERS CAPITAL
----------------------------------------------------------
Capital Account Unallocated Total
General Partners Syndication Costs Partners
Total Capital
------------------ ------------------- ------------ ----------------
<S> <C> <C> <C> <C>
Balances at December 31, 1993 $11,978 $(1,897) $10,081 $12,725,718
Formation loan collections 0 0 0 65,166
Net income 9,273 0 9,273 927,291
Allocation of syndication costs (810) 810 0 0
Early withdrawal penalties 0 106 106 0
Partners withdrawals (8,463) 0 (8,463) (569,216)
------------------ ------------------- ------------ ----------------
Balances at December 31, 1994 11,978 (981) 10,997 13,148,959
Formation loan collections 0 0 0 80,542
Net income 9,120 0 9,120 911,960
Allocation of syndication costs (810) 810 0 0
Early withdrawal penalties 0 34 34 0
Partners withdrawals (8,310) 0 (8,310) (444,227)
------------------ ------------------- ------------ ----------------
Balances at December 31, 1995 11,978 (137) 11,841 13,697,234
Formation loan collections 0 0 0 62,225
Net income 8,591 0 8,591 859,099
Allocation of syndication costs (137) 137 0 0
Early withdrawal penalties 0 0 0 (11,682)
Partners withdrawals (8,454) 0 (8,454) (1,021,532)
------------------ ------------------- ------------ ----------------
Balances at December 31, 1996 11,978 0 11,978 13,585,344
Formation loan collections 0 0 0 48,447
Net income 6,225 0 6,225 622,495
Early withdrawal penalties 0 0 0 (10,434)
Partners withdrawals (6,225) 0 (6,225) (1,142,831)
------------------ ------------------- ------------ ----------------
Balances at September 30, 1997 $11,978 $0 $11,978 $13,103,021
================== =================== ============ ================
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A Califonira Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<CAPTION>
Sept 30, 1997 Sept 30, 1996
(unaudited) (unaudited)
---------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Net income $622,495 $647,659
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of organization costs 0 368
Provision for doubtful accounts and for losses on real estate held for 324,027 285,591
sale
Early withdrawal penalty credited to income (10,434) (7,212)
(Increase) decrease in accrued interest & advances (110,285) 879,720
Increase (decrease) in accounts payable and accrued expenses 373 0
(Increase) decrease in amount due from or to Redwood Mortgage 0 0
Increase (decrease) in deferred interest on Mortgage Investments (154,598) 0
---------------- ----------------
Net cash provided by operating activities 671,578 1,806,126
---------------- ----------------
Cash flows from investing activities:
Principal collected on mortgage investments 4,145,994 8,206,061
Mortgage Investments made (6,207,324) (7,112,114)
Additions to Real Estate held for sale (131,707) (480,921)
Dispositions of real estate held for sale 684,946 379,163
Investment in partnership (55,843) (684)
---------------- ----------------
Net cash provided by (used in) investing activities (1,563,934) 991,505
---------------- ----------------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank 1,416,816 (2,000,000)
Formation loan collections 48,447 65,916
Partners withdrawals (1,142,831) (649,905)
---------------- ----------------
Net cash provided by (used in) financing activities 322,432 (2,583,989)
---------------- ----------------
Net increase (decrease) in cash (569,924) 213,642
Cash - beginning of period 755,089 514,840
---------------- ----------------
Cash - end of period $185,165 $728,482
================ ================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
NOTE 1 - ORGANIZATION AND GENERAL
Redwood Mortgage Investors VII, (the Partnership) is a California Limited
Partnership, of which the General Partners are D. Russell Burwell, Michael R.
Burwell and Gymno Corporation, a California corporation owned and operated by
the individual General Partners. The Partnership was organized to engage in
business as a mortgage lender for the primary purpose of making Mortgage
Investments secured by Deeds of Trust on California real estate. Mortgage
Investments are being arranged and serviced by Redwood Home Loan Co., dba
Redwood Mortgage, an affiliate of the General Partners. At September 30, 1992,
the offering had been closed with contributed capital totaling $11,998,359 for
limited partners.
A minimum of 2,500 units ($250,000) and a maximum of 120,000 units
($12,000,000) were offered through qualified broker-dealers. As Mortgage
Investments were identified, partners were transferred from applicant status to
admitted partners participating in Mortgage Investment operations. Each months
income is allocated to partners based upon their proportionate share of partners
capital. Some partners have elected to withdraw income on a monthly, quarterly
or annual basis.
A. Sales Commissions - Formation Loan
Sales commissions ranging from 0% (Units sold by General Partners) to 10%
of the gross proceeds were paid by Redwood Mortgage, an affiliate of the General
Partners that arranges and services the Mortgage Investments. To finance the
sales commissions, the Partnership was authorized to loan to Redwood Mortgage an
amount not to exceed 8.3% of the gross proceeds provided that the Formation Loan
for the minimum offering period could be 10% of the gross proceeds for that
period. The Formation Loan is unsecured and is being repaid, without interest,
in ten installments of principal, over a ten year period commencing January 1,
1992. At December 31, 1992, Redwood Mortgage had borrowed $914,369 from the
Partnership to cover sales commissions relating to $11,998,359 limited partner
contributions (7.62%). Through September 30, 1997, $556,575 including $98,400 in
early withdrawal penalties, had been repaid leaving a balance of $357,794. The
formation loan, which is due from an affiliate of the General Partners, has
been deducted from Limited Partners capital in the balance sheet. As amounts are
collected from Redwood Mortgage, the deduction from capital will be reduced.
B. Other Organizational and Offering Expenses
Organizational and offering expenses, other than sales commissions,
(including printing costs, attorney and accountant fees, and other costs), were
paid by the Partnership. Such costs were limited to 10% of the gross proceeds of
the offering or $500,000 whichever was less. The General Partners were to pay
any amount of such expenses in excess of 10% of the gross proceeds or $500,000.
Organization costs of $10,102 and syndication costs of $415,692 were
incurred by the Partnership. The sum of organization and syndication costs,
$425,794, approximated 3.55% of the gross proceeds contributed by the Partners.
Both the Organization and Syndication Costs have been fully amortized and
allocated to the Partners.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Accrual Basis
Revenues and expenses are accounted for on the accrual basis of accounting
wherein income is recognized as earned and expenses are recognized as incurred.
Once a loan is categorized as impaired, interest is no longer accrued thereon.
B. Management Estimates
In preparing the financial statements, management is required to make
estimates based on the information available that affect the reported amounts of
assets and liabilities as of the balance sheet date and revenues and expenses
for the related periods. Such estimates relate principally to the determination
of the allowance for doubtful accounts, including the valuation of impaired
mortgage investments, and the valuation of real estate acquired through
foreclosure. Actual results could differ significantly from these estimates.
C. Mortgage Investments, Secured by Deeds of Trust
The Partnership has both the intent and ability to hold the mortgage
investments to maturity, i.e., held for long-term investment. They are therefore
valued at cost for financial statement purposes with interest thereon being
accrued by the simple interest method.
Financial Accounting Standards Board Statements (SFAS) 114 and 118
(effective January 1, 1995) provide that if the probable ultimate recovery of
the carrying amount of a mortgage investment, with due consideration for the
fair value of collateral, is less than the recorded investment, and related
amount due and the impairment is considered to be other than temporary, the
carrying amount of the investment (cost) shall be reduced to the present value
of future cash flows. The adoption of these statements did not have a material
effect on the financial statements of the Partnership because that was the
valuation method previously used on impaired loans.
At September 30, 1997, December 31, 1996, 1995 and 1994, reductions in the
cost of loans categorized as impaired by the Partnership totalled $9,595,
$9,595, $0 and $10,000 respectively. The reduction in stated value was
accomplished by increasing the allowance for doubtful accounts.
As presented in Note 10 to the financial statements as of September 30,
1997, the average mortgage investment to appraised value of security at the time
the loans were consummated was 62.73%. When a loan is valued for impairment
purposes, an updating is made in the valuation of collateral security. However,
such a low loan to value ratio tends to minimize reductions for impairment.
D. Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents
include interest bearing and non-interest bearing bank deposits.
E. Real Estate Owned, Held for Sale
Real estate owned, held for sale, includes real estate acquired through
foreclosure, and is stated at the lower of the recorded investment in the
property, net of any senior indebtedness, or at the propertys estimated fair
value, less estimated costs to sell.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
The following schedule reflects the costs of real estate acquired through
foreclosure and the recorded reductions to estimated fair values, less estimated
costs to sell as of September 30, 1997, December 31, 1996 and 1995:
<TABLE>
Sept, 30, December 31,
--------------- ---------------------------------
1997 1996 1995
--------------- ------------- --------------
<S> <C> <C> <C>
Costs of properties $1,066,280 $1,655,786 $1,410,571
Reduction in value 209,703 187,441 62,574
---------------
------------- --------------
Fair value reflected in financial statements $856,577 $1,468,345 $1,347,997
=============== ============= ==============
</TABLE>
Effective January 1, 1996, the Partnership adopted the provisions of
statement No 121 (SFAS 121) of the Financial Accounting Standards Board,
Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to
be disposed of. The adoption of SFAS 121 did not have a material impact on the
Partnerships financial position because the methods indicated were essentially
those previously used by the Partnership.
F. Investment in Partnership (see note 5)
The Partnership accounts for its investment in a partnership as an
investment in real estate, which is at the lower of costs or fair value, less
estimated costs to sell. At September 30, 1997, cost is considered less than
fair value and the investment is stated at cost in the financial statements.
G. Income Taxes
No provision for Federal and State income taxes is made in the financial
statements since income taxes are the obligation of the partners if and when
income taxes apply.
H. Organization and Syndication Costs
The Partnership bears its own organization and syndication costs (other
than certain sales commissions and fees described above) including legal and
accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage
fee and filing fees. Organizational costs of $10,102 were capitalized and were
amortized over a five year period. Syndication costs of $415,692 were charged
against partners capital and were allocated to individual partners consistent
with the Partnership Agreement.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
I. Allowance for Doubtful Accounts
Mortgage Investments and the related accrued interest, fees and advances
are analyzed on a continuous basis for recoverability. Delinquencies are
identified and followed as part of the Mortgage Investment system. A provision
is made for doubtful accounts to adjust the allowance for doubtful accounts to
an amount considered by management to be adequate, with due consideration to
collateral value, to provide for unrecoverable accounts receivable, including
impaired mortgage investments, unspecified mortgage investments, accrued
interest and advances on mortgage investments, and other accounts receivable
(unsecured). The composition of the allowance for doubtful accounts as of
September 30, 1997, December 31, 1996 and 1995 was as follows:
<TABLE>
Sept, 30, December 31,
--------------- ---------------------------------
1997 1996 1995
--------------- ------------- --------------
<S> <C> <C> <C>
Impaired mortgage investments $9,595 $9,595 $0
Unspecified mortgage investments 163,839 19,052 50,000
Accounts receivable, unsecured 91,286 200,000 150,000
--------------- ------------- --------------
$264,720 $228,647 $200,000
=============== ============= ==============
</TABLE>
J. Net Income Per $1,000 Invested
Amounts reflected in the statements of income as net income per $1,000
invested by Limited Partners for the entire period are actual amounts allocated
to Limited Partners who have their investment throughout the period and have
elected to either leave their earnings to compound or have elected to receive
monthly distributions of their net income. Individual income is allocated each
month based on the Limited partners pro rata share of Partners Capital.
Because the net income percentage varies from month to month, amounts per $1,000
will vary for those individuals who made or withdrew investments during the
period, or select other options. However, the net income per $1,000 average
invested has approximated those reflected for those whose investments and
options have remained constant.
K. Reclassifications and Changes in Presentation
Certain reclassifications not affecting net income have been made to prior
year amounts to conform to the current year presentation. In addition, the
formation loan which was previously categorized as an asset, has been deducted
from Limited Partners capital until collected from Redwood Mortgage, an
affiliate of the General Partners.
NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES
The following are commissions and/or fees which will be paid to the General
Partners and/or related parties.
A. Mortgage Brokerage Commissions
For services in connection with the review, selection, evaluation,
negotiation and extension of Mortgage Investments in an amount up to 12% of the
principal through the period ending 6 months after the termination date of the
offering. Thereafter, mortgage brokerage commissions are limited to an amount
not to exceed 4% of the total Partnership assets per year. The mortgage
brokerage commissions are paid by the borrowers, and thus, not an expense of the
Partnership.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
B. Mortgage Servicing Fees
Monthly mortgage servicing fees of up to 1/8 of 1% (1.5% annual) of the
unpaid principal, or such lesser amount as is reasonable and customary in the
geographic area where the property securing the Mortgage Investment is located.
Mortgage servicing fees of $51,621, $97,267, $33,394 and $0 were incurred for
nine months period ended September 30, 1997, and for years 1996, 1995 and 1994,
respectively.
C. Asset Management Fee
The General Partners receive a monthly fee for managing the Partnerships
Mortgage Investment portfolio and operations equal to 1/32 of 1% of the net
asset value (3/8 of 1% annual). Management fees of $0, $0, $0 and $10,008 were
incurred for nine months period ended September 30, 1997, and for years 1996,
1995 and 1994, respectively.
D. Other Fees
The Partnership Agreement provides for other fees such as reconveyance,
Mortgage assumption and Mortgage extension fees. Such fees are incurred by the
borrowers and are paid to parties related to the General Partners.
E. Income and Losses
All income is credited or charged to partners in relation to their
respective partnership interests. The partnership interest of the General
Partners (combined) is a total of 1%.
F. Operating Expenses The General Partners or their affiliate (Redwood
Mortgage) are reimbursed by the Partnership for all operating expenses actually
incurred by them on behalf of the Partnership, including without limitation,
out-of-pocket general and administration expenses of the Partnership, accounting
and audit fees, legal fees and expenses, postage and preparation of reports to
Limited Partners. Such reimbursements are reflected as expenses in the
Statements of Income.
G. General Partners Contributions
The General Partners collectively or severally were to contribute 1/10 of
1% in cash contributions as proceeds from the offering were admitted to limited
Partner capital. As of December 31, 1992 a General Partner, GYMNO Corporation,
had contributed $11,998, 1/10 of 1% of limited partner contributions in
accordance with Section 4.02(a) of the Partnership Agreement.
NOTE 4 - OTHER PARTNERSHIP PROVISIONS
A. Applicant Status
Subscription funds received from purchasers of units were not admitted to
the Partnership until appropriate lending opportunities were available. During
the period prior to the time of admission, which ranged between 1-120 days,
purchasers subscriptions remained irrevocable and earned interest at money
market rates, which were lower than the return on the Partnerships Mortgage
Investment portfolio.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
Interest earned prior to admission was credited to partners in applicant
status. As Mortgage Investments were made and partners were transferred to
regular status to begin sharing in income from Mortgage Investments secured by
deeds of trust, the interest credited was either paid to the investors or
transferred to Partners Capital along with the original investment.
B. Term of the Partnership
The term of the Partnership is approximately 40 years, unless sooner
terminated as provided. The provisions provide for no capital withdrawal for the
first five years, subject to the penalty provision set forth in (E) below.
Thereafter, investors have the right to withdraw over a five-year period, or
longer.
C. Election to Receive Monthly, Quarterly or Annual Distributions
Upon subscriptions, investors elected either to receive monthly, quarterly
or annual distributions of earnings allocations, or to allow earnings to
compound for at least a period of 5 years.
D. Profits and Losses
Profits and losses are allocated among the Limited Partners according to
their respective capital accounts after 1% is allocated to the General Partners.
E. Liquidity, Capital Withdrawals and Early Withdrawals
There are substantial restrictions on transferability of Units and
accordingly an investment in the Partnership is illiquid. Limited Partners have
no right to withdraw from the partnership or to obtain the return of their
capital account for at least one year from the date of purchase of Units. In
order to provide a certain degree of liquidity to the Limited Partners after the
one-year period, Limited Partners may withdraw all or part of their Capital
Accounts from the Partnership in four quarterly installments beginning on the
last day of the calendar quarter following the quarter in which the notice of
withdrawal is given, subject to a 10% early withdrawal penalty. The 10% penalty
is applicable to the amount withdrawn as stated in the Notice of Withdrawal and
will be deducted from the Capital Account and the balance distributed in four
quarterly installments. Withdrawal after the one-year holding period and before
the five-year holding period will be permitted only upon the terms set forth
above.
Limited Partners also have the right after five years from the date of
purchase of the Units to withdraw from the partnership on an installment basis,
generally over a five year period in twenty (20) quarterly installments or
longer. Once this five year period expires, no penalty will be imposed if
withdrawal is made in twenty (20) quarterly installments or longer.
Notwithstanding the five-year (or longer) withdrawal period, the General
Partners will liquidate all or part of a Limited Partners capital account in
four quarterly installments beginning on the last day of the calendar quarter
following the quarter in which the notice of withdrawal is given, subject to a
10% early withdrawal penalty applicable to any sums withdrawn prior to the time
when such sums could have been withdrawn pursuant to the five-year (or longer)
withdrawal period.
The Partnership will not establish a reserve from which to fund withdrawals
and, accordingly, the Partnerships capacity to return a Limited Partners
capital account is restricted to the availability of Partnership cash flow.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
F. Guaranteed Interest Rate For Offering Period
During the period commencing with the day a Limited Partner was admitted to
the Partnership and ending 3 months after the offering termination date, the
General partners guaranteed an interest rate equal to the greater of actual
earnings from mortgage operations or 2% above The Weighted Average cost of Funds
Index for the Eleventh District Savings Institutions (Savings & Loan & Thrift
Institutions) as computed by the Federal Home Loan Bank of San Francisco
monthly, up to a maximum interest rate of 12%. The guarantee amounted to $12,855
and $5,195 in 1990 and 1991, respectively. In 1992 and 1993, actual realization
exceeded the guaranteed amount each month. None thereafter was subject to the
guarantee. This guarantee is now no longer applicable.
NOTE 5 - INVESTMENT IN PARTNERSHIP
The Partnerships interest in land, acquired through foreclosure, located
in East Palo Alto with costs totalling $298,237 has been invested with that of
two other Partnerships (total cost to date, primarily land, of $1,258,649) in a
partnership which is in the process of obtaining approval for constructing
approximately 63 single family homes for sale. Redwood Mortgage Investors V, VI
and VII have first priority on return of investment plus interest thereon, in
addition to a share of profits realized.
NOTE 6 - LEGAL PROCEEDINGS
The Partnership is not a defendant in any legal actions. However, legal
actions against borrowers and other involved parties have been initiated by the
Partnership to help assure payments against unsecured accounts receivable
totalling $107,817 at September 30, 1997.
Management anticipates that the ultimate results of these cases will not
have a material adverse effect on the net assets of the Partnership, with due
consideration having been given in arriving at the allowance for doubtful
accounts.
NOTE 7 - NOTE PAYABLE BANK - LINE OF CREDIT
The Partnership has a bank line of credit secured by its Mortgage
Investment portfolio of up to $3,000,000 at .50% over prime. The balances
outstanding as of December 31, 1995, 1996 and September 30, 1997, were
$2,000,000, $1,175,000 and $2,591,816 respectively, and the interest rate at
September 30, 1997 was 9.00%% (8.50% prime + .50%).
NOTE 8 - INCOME TAXES
The following reflects a reconciliation from net assets (Partners Capital)
reflected in the financial statements to the tax basis of those net assets:
<TABLE>
Sept, 30, December 31,
--------------- -----------------------------------
1997 1996 1995
--------------- -------------- ---------------
<S> <C> <C> <C>
Net assets - Partners Capital per financial $13,103,021 $13,585,344 $13,697,234
statements
Formation loan receivable 357,794 429,163 517,051
Allowance for doubtful accounts 264,720 228,647 200,000
-------------- ---------------
===============
Net assets tax basis $13,725,535 $14,243,154 $14,414,285
=============== ============== ===============
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
In 1996, approximately 69% of taxable income was allocated to tax exempt
organizations i.e., retirement plans. Such plans do not have to file income tax
returns unless their unrelated business income exceeds $1,000. Applicable
amounts become taxable when distribution is made to participants.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of financial instruments:
(a) Cash and Cash Equivalents - The carrying amount equals fair value. All
amounts, including interest bearing, are subject to immediate withdrawal.
(b) The Carrying Value of Mortgage Investments - (see note 2 (c)) is
$14,097,623. The September 30, 1997, fair value of these investments of
$14,337,814 is estimated based upon projected cash flows discounted at the
estimated current interest rates at which similar loans would be made. The
applicable amount of the allowance for doubtful accounts along with accrued
interest and advances related thereto should also be considered in evaluating
the fair value versus the carrying value.
NOTE 10 - ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At
September 30, 1997, there were 66 Mortgage Investments outstanding with the
following characteristics:
Number of Mortgage Investments outstanding 66
Total Mortgage Investments outstanding $14,097,623
Average Mortgage Investment outstanding $213,600
Average Mortgage Investment as percent of total 1.52%
Average Mortgage Investment as percent of Partners Capital 1.63%
Largest Mortgage Investment outstanding $1,400,000
Largest Mortgage Investment as percent of total 9.93%
Largest Mortgage Investment as percent of Partners Capital 10.68%
Number of counties where security is located(all California) 15
Largest percentage of Mortgage Investments in one county 21.00%
Average Mortgage Investment to appraised value of security at time
loan was consummated 62.73%
Number of Mortgage Investments in foreclosure 3
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
The following categories of mortgage investments are pertinent at September
30, 1997, December 31, 1996 and 1995:
<TABLE>
Sept. 30, December 31,
---------------- -------------------------------------
1997 1996 1995
---------------- --------------- ---------------
<S> <C> <C> <C>
First Trust Deeds $6,153,820 $4,199,552 $3,922,120
Second Trust Deeds 7,022,857 6,913,853 7,377,189
Third Trust Deeds 720,945 722,887 896,188
Fourth Trust Deeds 200,001 200,001 187,144
---------------- --------------- ---------------
Total mortgage investments 14,097,623 12,036,293 12,382,641
Prior liens due other lenders 21,487,463 22,069,554 30,575,850
---------------- --------------- ---------------
Total debt $35,585,086 $34,105,847 $42,958,491
================ =============== ===============
Appraised property value at time of loan $56,723,074 $51,863,991 $68,888,224
================ =============== ===============
Total investments as a percent of appraisals 62.73% 65.76% 62.36%
================ =============== ===============
Investments by Type of Property
Owner occupied homes $1,220,817 $1,742,767 $2,621,800
Non-Owner occupied homes 968,493 1,112,274 651,528
Apartments 1,961,990 1,325,872 1,828,877
Commercial 9,946,323 7,855,380 7,280,436
================ =============== ===============
$14,097,623 $12,036,293 $12,382,641
================ =============== ===============
</TABLE>
Scheduled maturity dates of mortgage investments as of December 31, 1996
are as follows:
Year Ending
December 31,
-------------------
1997 $2,234,127
1998 2,581,163
1999 2,339,825
2000 1,508,571
2001 1,093,216
Thereafter 4,340,721
===========
$14,097,623
===========
The scheduled maturities for 1997 include approximately $1,744,999 in loans
which are past maturity at September 30, 1997. Interest payment on most of these
loans are current. $841,895 of those loans were categorized as delinquent over
90 days.
Three loans with principal outstanding of $841,895 had interest payments
overdue in excess of 90 days. Two loans had impaired provisions totalling $9,595
at September 30, 1997.
The cash balance at September 30, 1997 of $185,165 was in one bank with an
interest bearing balance totalling $173,171. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $85,165.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
SEPTEMBER 30, 1997 (unaudited)
NOTE 11 - CHANGE IN PRESENTATION
The formation loan receivable from Redwood Mortgage, an affiliate of the
General Partners, has been categorized as a reduction in Limited Partners
Capital, the source of the funds. It was previously reflected as an asset. As
payments are received, or early withdrawal penalties realized, the formation
loan balance will be reduced and restored to Limited Partners Capital. The
total of the formation loan outstanding was $357,794, $429,163 and $517,051 at
September 30, 1997, December 31, 1996 and 1995, respectively.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On September 30, 1992, the Partnership had sold 119,983.59 units and its
contributed capital totaled $11,998,359 of the approved $12,000,000 issue, in
units of $100 each. As of that date, the offering was formally closed. At
September 30, 1997, Partners Capital totaled $13,103,021.
The Partnership began funding Mortgage Investments on December 27, 1989 and
as of September 30, 1997 had credited the Partners accounts with income at an
average annualized (compounded) yield of 8.14%.
Currently, mortgage interest rates are lower than those prevalent at the
inception of the Partnership. New Mortgage Investments are being originated at
these lower interest rates. The result is a reduction of the average return
across the entire portfolio held by the Partnership. In the future, interest
rates likely will change from their current levels. The General Partners cannot
at this time predict at what levels interest rates will be in the future. The
General Partners believe the rates charged by the Partnership to its borrowers
will not change significantly in the immediate future. Based upon the rates
payable in connection with the existing Mortgage Investments, the current and
anticipated interest rates to be charged by the Partnership, and current reserve
requirements, the General Partners anticipate that the annualized yield next
year will range only slightly higher from its current rate.
The Partnership has a line of credit with a commercial bank secured by its
Mortgage Investments to a limit of $3,000,000, at a variable interest rate set
at one half percent above the prime rate. Currently, it has borrowed $2,591,816.
This facility could increase as the Partnership capital increases. This added
source of funds helped in maximizing the Partnership yield by allowing the
Partnership to minimize the amount of funds in lower yield investment accounts
when appropriate Mortgage Investments are not currently available. Since most of
the Mortgage Investments made by the Partnership bear interest at a rate in
excess of the rate payable to the bank which extended the line of credit, once
the required principal and interest payments on the line of credit are paid to
the bank, the Mortgage Investments funded using the line of credit generate
revenue for the Partnership. As of September 30, 1997, the Partnership is
current with its interest payments on the line of credit. In 1994, the
Partnership incurred $135,790 of interest on note payables. The interest rate on
the line of credit was Prime + 3/4% and the Partnership was able to maintain a
positive spread between the cost of borrowing the funds and interest earned on
lending the funds. In 1995, the Partnership incurred $163,361 of interest on
note payables reflecting a small increase in the overall average credit balance
outstanding. The Partnership still maintained a positive spread between the cost
of borrowing the funds and the interest earned in lending the funds. In 1996,
interest payments decreased to $127,454 reflecting the Partnerships overall
smaller average outstanding credit line balance due primarily to a large number
of Mortgage Investment payoffs. For the nine months through September 30, 1997,
interest paid was $142,691 reflecting an overall greater utilization of the
credit line from the previous three years.
The Partnerships income and expenses, accruals and delinquencies are within
the normal range of the General Partners expectations, based upon their
experience in managing similar Partnerships over the last twenty years.
Professional services were higher in 1993 and into 1994 as a result of a lawsuit
initiated to collect an outstanding debt. The debt was collected in 1994.
Borrower foreclosures, as set forth under Results of Operations, are a normal
aspect of partnership operations and the General Partners anticipate that they
will not have a material effect on liquidity. Cash is constantly being generated
from interest earnings, late charges, pre-payment penalties, amortization of
Mortgage Investments and pay-off on notes. Currently, cash flow exceeds
Partnership expenses and earnings payout requirements. As Mortgage Investment
opportunities become available, excess cash and available funds are invested in
new Mortgage Investments.
The General Partners regularly review the Mortgage Investment portfolio,
examining the status of delinquencies, the underlying collateral securing these
properties, the REO expenses and sales activities, borrowers payment records,
etc. Data on the local real estate market and on the national and local economy
are studied. Based upon this information and other data, loss reserves are
increased or decreased. Because of the number of variables involved, the
magnitude of the possible swings and the General Partners inability to control
many of these factors, actual results may and do sometimes differ significantly
from estimates made by the General Partners. Management provided $335,955 and
$306,779 as provision for doubtful accounts for the years ended December 31,
1994 and December 31, 1995. The decrease in the provision reflects the decrease
in the amount of REO, unsecured receivables and the decreasing levels of
delinquency within the portfolio. Additionally, the General Partners felt that
the bottom of the real estate cycle had been reached, reflecting a decreasing
need to set aside reserves for continuously declining real estate values as had
been the case in the early 1990s in the California real estate market.
<PAGE>
The Northern California recession reached bottom in 1993. Since then, the
California economy has been improving, slowly at first, but now, more
vigorously. A wide variety of indicators suggest that the economy in California
is strong in 1997, and the State is well - positioned for fast growth. This
improvement is reflective in increasing property values, in job growth, personal
income growth, etc., which all translates into more loan activity, which of
course, is healthy for the Partnerships lending activity.
At the time of subscription to the Partnership, Limited Partners made an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound earnings in their capital account. For the years
ended December 31, 1995, December 31, 1996 and nine months period to September
30, 1997, the Partnership made distributions of earnings to Limited Partners
after allocation of syndication costs of, $262,450, $327,887 and $284,956
respectively. Distribution of Earnings to Limited Partners after allocation of
syndication costs for the years ended December 31, 1995, December 31, 1996 and
nine months period ended September 30, 1997, to Limited Partners capital
accounts and not withdrawn was $640,390, $522,621, and $331,314 respectively. As
of December 31, 1995, December 31, 1996 and September 30, 1997, Limited Partners
electing to withdraw earnings represented 36.00%, 44.00% and 53% of the Limited
Partners outstanding capital accounts.
The Partnership also allows the Limited Partners to withdraw their capital
account subject to certain limitations (see liquidation provisions of
Partnership Agreement). For the years ended December 31, 1995, December 31,
1996, and nine months to September 30, 1997, $106,901, $412,798 and $423,351
were liquidated subject to the 10% penalty for early withdrawal. These
withdrawals are within the normally anticipated range that the General Partners
would expect in their experience in this and other Partnerships. The General
Partners expect that a small percentage of Limited Partners will elect to
liquidate their capital accounts over one year with a 10% early withdrawal
penalty. In originally conceiving the Partnership, the General Partners wanted
to provide Limited Partners needing their capital returned a degree of
liquidity. Generally, Limited Partners electing to withdraw over one year need
to liquidate investment to raise cash. The trend we are experiencing in
withdrawals by Limited Partners electing a one year liquidation program
represents a small percentage of Limited Partner capital as of December 31,
1995, December 31, 1996 and September 30, 1997, respectively and is expected by
the General Partners to commonly occur at these levels.
Additionally, for the years ended December 31, 1995, December 31, 1996 and
nine months to September 30, 1997, $97,801, $318,902 and $461,656 were
liquidated by Limited Partners who have elected a liquidation program over a
period of five years or longer. Once the initial five year hold period has
passed the General Partners expect to see an increase in liquidations due to the
ability of Limited Partners to withdraw without penalty. This ability to
withdraw after five years by Limited Partners has the effect of providing
Limited Partner liquidity which the General Partners then expect a portion of
the Limited Partners to avail themselves of. This has the anticipated effect of
the partnership growing, primarily through reinvestment of earnings in years one
through five. The General Partners expect to see increasing numbers of Limited
Partner withdrawals in years five through eleven, at which time the bulk of
those Limited Partners who have sought withdrawal will have been liquidated.
After year eleven, the gross figures generally should subside and the
Partnership capital again tends to increase.
<PAGE>
I. COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
The following compensation has been paid to the General Partners and
Affiliates for services rendered during the nine months ending September 30,
1997. All such compensation is in compliance with the guidelines and limitations
set forth in the Prospectus:
ENTITY RECEIVING DESCRIPTION OF COMPENSATION AMOUNT
COMPENSATION and SERVICES RENDERED
- ----------------------------------------------------------------- -------------
Redwood Mortgage Mortgage servicing fees for servicing
Mortgage Investments $51,621
General Partners Asset Management Fee for managing assets $0
&/or Affiliates
General Partners 1% interest in profits, losses and distributions
of cash available for distribution $6,225
II. FEES PAID BY BORROWERS ON MORTGAGE INVESTMENTS PLACED BY COMPANIES
RELATED TO THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS, NOT
OF THE PARTNERSHIP):
Redwood Mortgage Mortgage Brokerage Commissions for services in connection
with the review, selection, evaluation, negotiation, and
extension of the Mortgage Investment paid by the borrower
and not by the Partnership. $278,636
Redwood Mortgage Processing and Escrow Fees for services in connection
with notary, document preparation, credit investigation,
and escrow fees payable by the borrower and not by the
Partnership $4,908
III. IN ADDITION, THE GENERAL PARTNERS AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME.
<PAGE>
MORTGAGE INVESTMENT PORTFOLIO SUMMARY AS OF SEPTEMBER 30, 1997
Partnership Highlights
Mortgage Investment to Value Ratios
First Trust Deeds $6,153,820.20
Appraised Value of Properties * 13,327,913.00
Total Investment as a % of Appraisal 46.17%
First Trust Deed Mortgage Investments 6,153,820.20
Second Trust Deed Mortgage Investments 7,022,856.77
Third Trust Deed Mortgage Investments 720,945.11
Fourth Trust Deed Mortgage Investments ** 200,001.20
-----------------
$14,097,623.28
First Trust Deeds due other Lenders 20,365,203.00
Second Trust Deeds due other Lenders 979,402.00
Third Trust Deeds due other Lenders 142,858.00
-----------------
Total Debt $35,585,086.28
Appraised Property Value * 56,723,074.00
Total Investment as a % of Appraisal 62.73%
Number of Mortgage Investments Outstanding 66
Average Investment $213,600.35
Average Investment as a % of Net Assets 1.63%
Largest Investment Outstanding $1,400,000.00
Largest Investment as a % of Net Assets 10.68%
Loans as a Percentage of Total Mortgage Investments
First Trust Deed Mortgage Investments 43.65%
Second Trust Deed Mortgage Investments 49.82%
Third Trust Deed Mortgage Investments 5.11%
Fourth Trust Deed Mortgage Investments 1.42%
----------------
Total 100.00%
Mortgage Investments by Type of
Property Amount Percent
Owner Occupied Homes $1,220,817.34 8.66%
Non Owner Occupied Homes 968,493.37 6.87%
Apartments 1,961,989.64 13.92%
Commercial 9,946,322.93 70.55%
----------------
------------------
Total $14,097,623.28 100.00%
Statement of Conditions of Mortgage Investments
Number of Mortgage Investments in Foreclosure 3
*Values used are the appraisal values utilized at the time the mortgage
investment was consummated.
<PAGE>
Diversification by County
County Total Loans Percent
Alameda $2,960,083.12 21.00%
Santa Clara 2,495,411.23 17.70%
San Francisco 2,123,416.02 15.06%
Stanislaus 1,665,745.47 11.82%
San Mateo 1,314,969.73 9.33%
Contra Costa 1,289,095.68 9.14%
Solano 584,503.88 4.15%
Sonoma 370,045.84 2.62%
Monterey 357,134.44 2.53%
El Dorado 274,178.59 1.94%
Sacramento 264,487.53 1.88%
Santa Barbara 121,748.32 0.86%
Santa Cruz 103,882.60 0.74%
Ventura 91,000.00 0.65%
Shasta 81,920.83 0.58%
------------------- -----------
Total $14,097,623.28 100.00%
** Redwood Mortgage Investors VII, together with other Redwood
Partnerships, holds a second and a fourth trust deed against the secured
property. In addition, the principals behind the borrower corporation have given
personal guarantees as collateral. The overall loan to value ratio on this loan
is 76.52%. Besides the borrower paying a fixed interest rate of 12.25%, the
partnership and other lenders will also be entitled to share in profits
generated by the corporation with respect to the secured property. The
affiliates of the Partnership had entered into previous loan transactions with
this borrower which had been concluded successfully, resulting in additional
revenue beyond interest payments for the affiliates involved.
<PAGE>
PART 2
OTHER INFORMATION
Item 1. Legal Proceedings
None, where the Partnership is a defendant.
Please refer to Note 6 of Notes to Financial
Statements.
Item 2. Changes in the Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Not Applicable
(b) Form 8-K
The registrant has not filed any reports on
Form 8-K during the nine month period ending
September 30, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on the 12th day of
November, 1997.
REDWOOD MORTGAGE INVESTORS VII
By: /s/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, General Partner
By: /s/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, General Partner
By: Gymno Corporation, General Partner
By: /s/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, President
By: /s/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacity indicated on the 6th day of November, 1997.
Signature Title Date
/s/ D. Russell Burwell
- -----------------------
D. Russell Burwell General Partner November 6, 1997
/s/ Michael R. Burwell
- -----------------------
Michael R. Burwell General Partner November 6, 1997
/s/ D. Russell Burwell
- -----------------------
D. Russell Burwell President of Gymno Corporation, November 6, 1997
(Principal Executive Officer);
Director of Gymno Corporation
/s/ Michael R. Burwell
- -----------------------
Michael R. Burwell Secretary/Treasurer of Gymno November 6, 1997
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 185165
<SECURITIES> 0
<RECEIVABLES> 14621423
<ALLOWANCES> 264720
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15696682
<CURRENT-LIABILITIES> 0
<BONDS> 0
2593661
0
<COMMON> 0
<OTHER-SE> 13103021
<TOTAL-LIABILITY-AND-EQUITY> 15696682
<SALES> 0
<TOTAL-REVENUES> 1206036
<CGS> 0
<TOTAL-COSTS> 116823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 324027
<INTEREST-EXPENSE> 142691
<INCOME-PRETAX> 622495
<INCOME-TAX> 0
<INCOME-CONTINUING> 622495
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 622495
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
