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, 2000
--------------------------------------------------------------------------------
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)
(650) 365-5341
--------------------------------------------------------------------------------
(Registrant's 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 issuer's class
of common stock, as of the latest date.
NOT APPLICABLE
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 2000 (unaudited) AND DECEMBER 31, 1999 (audited)
ASSETS
<TABLE>
<S> <C> <C>
September 30, December 31,
2000 1999
(unaudited) (audited)
----------------- ----------------
Cash $111,250 $388,770
----------------- ----------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 13,084,849 11,011,660
Accrued Interest on Mortgage Investments 490,847 357,177
Advances on Mortgage Investments 28,292 31,669
Accounts receivables, unsecured 161,349 163,085
----------------- ----------------
13,765,337 11,563,591
Less allowance for doubtful accounts 839,428 828,563
----------------- ----------------
12,925,909 10,735,028
----------------- ----------------
Real estate in process of acquisition, to be sold 0 525,510
Real estate owned, acquired through foreclosure, held for sale 818,996 307,931
----------------- ----------------
$13,856,155 $11,957,239
================= ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Notes payable - bank line of credit $3,500,000 $800,000
Accounts payable and accrued expenses 12,207 32,234
Deferred Interest 0 115,709
----------------- ----------------
$3,512,207 947,943
----------------- ----------------
Partners' Capital
Limited Partners' capital, subject to redemption (Note 4E):
Net of Formation Loan receivable of $99,583 and $165,499 for
2000 and 1999, respectively 10,331,970 10,997,318
General Partners' capital, 11,978 11,978
----------------- ----------------
Total Partners' Capital 10,343,948 11,009,296
----------------- ----------------
Total Liabilities and Partners' Capital $13,856,155 $11,957,239
================= ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2000
AND SEPTEMBER 30, 1999 (unaudited)
<TABLE>
NINE MONTHS THREE MONTHS ENDED
ENDED SEPTEMBER 30 SEPTEMBER 30
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
--------------- --------------- -------------- ---------------
Revenues:
Interest on Mortgage Investments $1,008,205 $1,323,660 $355,633 $421,475
Interest on bank deposits 1,391 2,406 429 1,137
Late charges 2,657 11,930 1,553 692
Other 14,412 6,063 4,971 1,995
--------------- --------------- -------------- ---------------
1,026,665 1,344,059 362,586 425,299
--------------- --------------- -------------- ---------------
Expenses:
Mortgage servicing fees 70,472 109,209 28,469 23,305
Interest on note payable - bank 170,181 172,455 86,314 54,432
Clerical costs through Redwood Mortgage
Corp. 20,310 22,795 6,385 7,190
Asset management fee 28,565 11,249 10,065 3,670
Provision for doubtful accounts and losses
on real estate acquired thru foreclosure 14,040 313,483 (1,594) 100,770
Professional services 28,324 20,321 7,474 700
Printing, supplies and postage 8,198 10,012 3,245 2,351
Other 3,373 5,106 259 1,063
--------------- --------------- -------------- ---------------
343,463 664,630 140,617 193,481
--------------- --------------- -------------- ---------------
Net Income $683,202 $679,429 $221,969 $231,818
=============== =============== ============== ===============
Net income: To General Partners (1%) $6,832 $6,794 $2,220 $2,318
To Limited Partners (99%) 676,370 672,635 219,749 229,500
--------------- --------------- -------------- ---------------
$683,202 $679,429 $221,969 $231,818
=============== =============== ============== ===============
Net income per $1,000 invested by Limited Partners for entire period:
-where income is reinvested and
compounded $63.29 $57.51 $20.61 $19.67
=============== =============== ============== ===============
-where partner receives income in
monthly distributions $61.58 $56.09 $20.47 $19.54
=============== =============== ============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1999 (audited) AND
THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (unaudited)
PARTNERS' CAPITAL
-----------------------------------------------------
LIMITED PARTNERS' CAPITAL
-----------------------------------------------------
<TABLE>
Capital
Account- Formation
Limited Loan
Partners Receivable Total
--------------- --------------- --------------
<S> <C> <C> <C>
Balances at December 31, 1996 $14,002,529 $(429,163) $13,573,366
Formation Loan collections 0 60,223 60,223
Net income 818,610 0 818,610
Early withdrawal penalties (40,258) 27,665 (12,593)
Partners' withdrawals (1,572,037) 0 (1,572,037)
--------------- --------------- --------------
Balances at December 31, 1997 $13,208,844 $(341,275) $12,867,569
Formation Loan collections 0 66,908 66,908
Net Income 838,105 0 838,105
Early withdrawal penalties (30,529) 20,980 (9,549)
Partners' withdrawals (1,826,304) 0 (1,826,304)
--------------- --------------- --------------
Balances at December 31, 1998 $12,190,116 $(253,387) $11,936,729
Formation Loan collections 0 75,138 75,138
Net Income 900,485 0 900,485
Early withdrawal penalties (18,553) 12,750 (5,803)
Partners' withdrawals (1,909,231) 0 (1,909,231)
--------------- --------------- --------------
Balances at December 31, 1999 $11,162,817 $(165,499) $10,997,318
Formation Loan collections 0 57,534 57,534
Net Income 676,370 0 676,370
Early withdrawal penalties (12,198) 8,382 (3,816)
Partners' withdrawals (1,395,436) 0 (1,395,436)
--------------- --------------- --------------
Balances at September 30, 2000 $10,431,553 $(99,583) $10,331,970
=============== =============== ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1999 (audited) AND
THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (unaudited)
PARTNERS' CAPITAL
-------------------------------------------------
Capital Account
General Total Partners'
Partners Capital
------------------ ----------------
Balances at December 31, 1996 $11,978 $13,585,344
Formation Loan collections 0 60,223
Net income 8,269 826,879
Early withdrawal penalties 0 (12,593)
Partners' withdrawals (8,269) (1,580,306)
------------------ ----------------
Balances at December 31, 1997 $11,978 $12,879,547
Formation Loan collections 0 66,908
Net income 8,466 846,571
Early withdrawal penalties 0 (9,549)
Partners' withdrawals (8,466) (1,834,770)
------------------ ----------------
Balances at December 31, 1998 $11,978 $11,948,707
Formation Loan collections 0 75,138
Net income 9,096 909,581
Early withdrawal penalties 0 (5,803)
Partners' withdrawals (9,096) (1,918,327)
------------------ ----------------
Balances at December 31, 1999 $11,978 $11,009,296
Formation Loan collections 0 57,534
Net income 6,832 683,202
Early withdrawal penalties 0 (3,816)
Partners' withdrawals (6,832) (1,402,268)
------------------ ----------------
Balances at September 30, 2000 $11,978 $10,343,948
================== ================
See accompanying notes to financial statements
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (unaudited)
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------
<S> <C> <C>
2000 1999
-------------- ---------------
Cash flows from operating activities:
Net income $683,202 $679,429
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts 3,940 258,478
Provision for losses on real estate held for sale 10,100 55,005
Early withdrawal penalty credited to income (3,816) (4,568)
(Increase) decrease in accrued interest and advances (130,293) 117,029
Increase (decrease) in accounts payable and accrued expenses (20,027) (9,996)
Increase (decrease) in deferred interest on Mortgage Investments (115,709) (131,743)
-------------- ---------------
Net cash provided by operating activities 427,397 963,634
-------------- ---------------
Cash flows from investing activities:
Principal collected on mortgage investments 4,067,472 7,059,108
Mortgage Investments made (6,140,661) (5,431,803)
Additions to Real Estate held for sale (47,089) (4,650)
Dispositions of Real Estate held for sale 58,359 103,696
Accounts Receivable Unsecured (disbursement) (1,321) (5,956)
Proceeds from unsecured Accounts Receivable 3,057 20,984
-------------- ---------------
Net cash provided by (used in) investing activities (2,060,183) 1,741,379
-------------- ---------------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank 2,700,000 (1,462,663)
Formation loan collections 57,534 55,880
Partners withdrawals (1,402,268 (1,420,186)
-------------- ---------------
Net cash provided by (used in) financing activities 1,355,266 (2,826,969)
-------------- ---------------
Net increase (decrease) in cash (277,520) (121,956)
Cash - beginning of period 388,770 461,544
-------------- ---------------
Cash - end of period $111,250 $339,588
============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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 Mortgage Corp., an
affiliate of the General Partners. At September 30, 1992, the offering had been
closed with contributed capital totalling $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 month's 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 Corp., 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
Corp. 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 Corp. had
borrowed $914,369 from the Partnership to cover sales commissions relating to
$11,998,359 limited partner contributions (7.62%). Through September 30, 2000,
$814,786 including $145,256 in early withdrawal penalties, had been repaid
leaving a Formation Loan balance of $99,583 which is due from an affiliate of
the General Partners' and has been deducted from Limited Partners' capital in
the balance sheet. As amounts are collected from Redwood Mortgage Corp., 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
SEPTEMBER 30, 2000
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 Mortgage Investment 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 substantially the valuation
method previously used on impaired Mortgage Investments..
At September 30, 2000, December 31, 1999 and December 31, 1998, reductions in
the cost of Mortgage Investments categorized as impaired by the Partnership
totalled $152,231, $152,231 and $38,634, 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, 2000,
the average mortgage investment to appraised value of security at the time the
loans were consummated was 59.77%. When a Mortgage Investment 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 property's estimated fair
value, less estimated costs to sell.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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, 2000 and 1999, including the aforementioned
real estate owned:
September 30, December 31,
----------------- -----------------
2000 1999
----------------- -----------------
Costs of properties $1,221,284 $1,182,701
Reduction in value (402,288) (349,260)
---------------- -----------------
Fair value reflected in
financial statements $818,996 $833,441
================ =================
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
Partnership's financial position because the methods indicated were essentially
those previously used by the Partnership.
F. 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.
G. 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.
H. 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 an amount considered by management to be adequate, with due
consideration to collateral value, to provide for unrecoverable accounts
receivable, including impaired Mortgage Investments, other 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, 2000 and December 31, 1999 was as follows:
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
September 30, December 31,
2000 1999
---------------- ----------------
Impaired mortgage investments $152,231 $152,231
Unspecified mortgage investments 609,668 598,803
Accounts receivable, unsecured 77,529 77,529
--------------- ----------------
$839,428 $828,563
=============== ================
I. 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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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
Redwood Mortgage Corp. receives 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 amount of the
Mortgage Investments through the period ending 6 months after the termination
date of the offering. Thereafter, commissions are limited to an amount not to
exceed 4% of the total Partnership assets per year. Such commissions are paid by
the borrowers, and are not an expense to the Partnership. Loan brokerage fees as
of September 30, 2000 and for the years ended 1999, and 1998, totalled $122,196,
$207,739 and $166,752, respectively.
B. Mortgage Servicing Fees
Redwood Mortgage Corp. also receives 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 $70,472, $127,440 and
$128,493 were incurred for nine months through September 30, 2000 and for years
ended 1999 and 1998, respectively.
C. Asset Management Fee
The General Partners receive a monthly fee for managing the Partnership's
Mortgage Investment portfolio and operations of up to 1/32 of 1% of the "net
asset value" (3/8 of 1% annual). Asset management fees were $28,565, $44,524 and
$16,141 for the nine months through September 30, 2000 and for the years ended
1999 and 1998, 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%.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
F. Operating Expenses
The General Partners or their affiliate (Redwood Mortgage Corp.) 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 Partnership's Mortgage
Investment portfolio.
Interest earned prior to admission was credited to partners in applicant status.
As Mortgage Investments were made, applicant subscriptions were transferred to
Limited Partner status to begin sharing in income from Mortgage Investments
secured by deeds of trust. The interest earned prior to admission 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.
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
E. Liquidity, Capital Withdrawals and Early Withdrawals
There are substantial restrictions on transferability of Units and accordingly
an investment in the Partnership is not liquid. Limited Partners had 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 which in all instances
had occurred as of September 30, 2000. 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 early and will be deducted from the Capital Account. Withdrawal after
the one-year holding period and before the five-year holding period was
permitted only upon the terms set forth above.
After five years from the date of purchase of the Units. Limited Partners have
the right to withdraw from the Partnership, on an installment basis, generally
this is done over a five year period in twenty (20) quarterly installments. Once
a Limited Partner has been in the Partnership for the minimum five year period,
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 may liquidate all or part of a Limited Partner's
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. This withdrawal is subject to a 10% early withdrawal penalty applicable
to any sums withdrawn prior to the time when such sums could have been withdrawn
without penalty.
The Partnership will not establish a reserve from which to fund withdrawals and,
accordingly, the Partnership's capacity to return a Limited Partner's capital
account is restricted to the availability of Partnership cash flow. Furthermore,
no more than 20% of the total Limited Partners' capital accounts outstanding at
the beginning of any year, shall be liquidated during any calendar year.
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. Beginning with fiscal years after
1993, the guarantee expired.
NOTE 5 - LEGAL PROCEEDINGS
Legal actions against borrowers and other involved parties have been initiated
by the Partnership to help assure payments against unsecured accounts receivable
totalling $161,349 at September 30, 2000. The Partnership is a defendant, along
with numerous defendants including a developer, contractor and other lenders, in
a lawsuit involving the Partnership's attempt to recover it's investment in Real
Estate acquired through foreclosure.
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT
The Partnership has a bank line of credit secured by its Mortgage Investment
portfolio of up to $3,500,000 at .25% over prime. The balances outstanding as of
September 30, 2000 and December 31, 1999 were $3,500,000 and $800,000,
respectively, and the interest rate was 9.75% (9.50% prime + .25%). This line of
credit expires May 1, 2003.
NOTE 7 - 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:
September 30, December 31,
2000 1999
----------------- -------------
Net assets - Partners' Capital
per financial statements $10,343,948 $11,009,296
Formation loan receivable 99,583 165,499
Allowance for doubtful accounts 839,428 828,563
----------------- -------------
Net assets tax basis $11,282,959 $12,003,358
================= =============
In 1999, 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 8 - 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 $13,084,849.
The September 30, 2000 fair value of these investments of $13,062,558 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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At September
30, 2000, there were 35 Mortgage Investments outstanding with the following
characteristics:
Number of Mortgage Investments outstanding 35
Total Mortgage Investments outstanding $13,084,849
Average Mortgage Investment outstanding $373,853
Average Mortgage Investment as percent of total 2.86%
Average Mortgage Investment as percent of Partners' Capital 3.61%
Largest Mortgage Investment outstanding $1,841,612
Largest Mortgage Investment as percent of total 14.07%
Largest Mortgage Investment as percent of Partners' Capital 17.80%
Number of counties where security is located (all California) 11
Largest percentage of Mortgage Investments in one county 27.01%
Average Mortgage Investment to appraised value of security
at time loan was consummated 59.77%
Number of Mortgage Investments in foreclosure 0
The following categories of Mortgage Investments are pertinent at September 30,
2000 and December 31, 1999:
September 30, December 31,
------------------ -------------
2000 1999
------------------ -------------
First Trust Deeds $8,359,757 $6,077,532
Second Trust Deeds 4,651,921 4,272,714
Third Trust Deeds 73,171 661,414
------------------ -------------
Total Mortgage Investments 13,084,849 11,011,660
Prior liens due other lenders 9,393,048 10,389,233
------------------ -------------
Total debt $22,477,897 $21,400,893
================== =============
Appraised property value at
time of loan $37,608,400 $34,223,193
================== =============
Total investments as a percent
of appraisals 59.77% 62.53%
================== =============
Investments by Type of Property
Owner occupied homes $220,661 $340,864
Non-Owner occupied homes 1,511,274 2,347,394
Apartments 2,418,453 182,675
Commercial 8,934,461 8,140,727
----------------- ---------------
$13,084,849 $11,011,660
================== ===============
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Scheduled maturity dates of mortgage investments as of September 30, 2000 are as
follows:
Year Ending
December 31,
--------------------
2000 $1,973,127
2001 8,755,274
2002 1,030,846
2003 503,781
2004 130,446
Thereafter 691,375
------------------
$13,084,849
==================
The scheduled maturities for 2000 include approximately $1,899,956 in eight
Mortgage Investments which are past maturity at September 30, 2000. Interest
payments on most of these loans are current. $826,885 of these Mortgage
Investments were categorized as delinquent over 90 days.
Two mortgage investments with principal outstanding of $137,277 had interest
payments overdue in excess of 90 days. Six Mortgage Investments with principal
outstanding of $1,099,474 were considered impaired at September 30, 2000. That
is interest accruals are no longer recorded thereon.
The cash balance at September 30, 2000 of $111,250 was in two banks with
interest bearing balances totalling $104,244. The balances remained within the
FDIC insurance limits (up to $100,000 per bank). The Partnership's main bank is
the same financial institution that has provided the Partnership with the
$3,500,000 limit line of credit. At September 30, 2000, draw down against this
facility was $3,500,000.
<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, 2000, Partners' Capital totaled $10,343,948.
At September 30, 2000, the Partnership Mortgage Investments outstanding totalled
$13,084,849. This represents a decline of $124,337 from the December 31, 1998
Mortgage Investments balance. This reduction in Mortgage Investments outstanding
as of September 30, 2000 was chiefly due to cash proceeds from Mortgage
Investment repayments being used to fund withdrawals to the Limited Partners of
$3,335,417, during 1999, and nine months through September 30, 2000. This was
offset by an increase in Note Payable-Bank of $1,587,337 reinvestment of
earnings of $746,652, reduction in accrued interest, other receivables and
investment of cash. Mortgage investments decreased from $13,449,741 from 1997 to
$13,209,186 in 1998, a decrease of $240,555 chiefly due to the ability of the
General Partners to reduce amounts of real estate owned by $289,743, convert
it's partnership interest to cash of $346,017, reinvestment of earnings of
$390,213, offset by payments to withdrawing Limited Partners $1,856,833, a
reduction of outstanding Note Payable - Bank of $1,112,663 and investment of
cash. The Partnership began funding Mortgage Investments on December 27, 1989,
and as of September 30, 2000, had credited the Partners accounts with income at
an average annualized (compounded) yield of 7.84%.
Since the Fall of 1999, mortgage interest rates have been rising due primarily
to economic forces and by the Federal Reserve raising its core interest rates.
New Mortgage Investments will be originated at higher interest rates which could
increase the average return across the entire Mortgage Investment 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. Although the rates charged by the
Partnership are influenced by the level of interest rates in the market, the
General Partners do not anticipate that rates charged by the Partnership to its
borrowers will change significantly from the beginning of 2000 over the next 12
months. As of September 30, 2000 the Partnership Real Estate Owned account and
the investment in Partnership account had a combined balance of $818,996. These
accounts had combined balances of $397,396 and $307,931 for the years ended
December 31, 1998 and 1999, respectively. The increase in the Partnership Real
Estate Owned account is the result of the acquisition of a property through
foreclosure. The General Partners anticipate that the annualized yield for the
new year, 2000, will be higher than the previous year.
The Partnership has a line of credit with a commercial bank secured by its
Mortgage Investments to a limit of $3,500,000, at a variable interest rate set
at one-quarter percent above the prime rate. As of September 30, 2000, December
31, 1999 and December 31, 1998, the balances were $3,500,000, $800,000 and
$1,912,663, respectively. This line of credit expires on May 01, 2003. 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, 2000, the Partnership is
current with its interest payments on the line of credit. For the years ended
December 31, 1998, 1999 and nine months period ended September 30, 2000,
interest paid was $170,867, $182,350 and $170,181, respectively.
The Partnership's 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-three years. Mortgage
Servicing Fees in 1998 were $128,493, in 1999 were $127,440 and during nine
months through September 30, 2000 were $70,472. These Mortgage Servicing Fees
were declining as the outstanding mortgage loan portfolio balances declined.
Asset Management Fees increased to $16,141 in 1998, and to $44,524 in 1999. For
the nine months through September 30, 2000, Management Fees paid was $28,565. In
1997, the General Partners waived or partially waived this fee to the
Partnership and increased the Asset Management Fee to its allowed amount of 3/8
of 1% in 1999 and 2000. All other expenses fluctuated in a very close range
except for Interest on Note Payable - bank and Provision for Doubtful Accounts
and losses on Real Estate acquired through
<PAGE>
foreclosure each discussed elsewhere in this Management Discussion and Analysis
of Financial Condition and Results of Operations. 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. As of September 30, 2000, there were no properties in foreclosure.
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, earnings and capital
payout requirements. Excess cash flow will be invested in new Mortgage
Investment opportunities when available, used to reduce the Partnership credit
line or other Partnership business.
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 $434,495,
$423,054, $329,057 and $14,040, as provision for doubtful accounts for the years
ended December 31, 1997, 1998 and 1999 and nine months ended September 30, 2000,
respectively. The provision for doubtful accounts was decreased $11,441 to
$423,054 in 1998 and by $93,997 to $329,057 in 1999. These decreases reflect
reduced expected REO anticipated losses and improved collections of secured and
unsecured receivables.
Extracts from recent publications regarding California's economy, population,
employment and real estate said:
"In the next 10 years we (California) will again add approximately 5 million
people, but with far less building activity. In the decade after that we will
add another 7 million people with a similar pace of building activity. This
mismatch between demand and supply will not only manifest itself in home
appreciation, but also crowding in existing housing - something one now
experiences not only in old city quarters like Europe and Asia but increasingly
now in places like Manhattan and San Francisco...California's unemployment rate,
currently at 5 percent will hold steady at this level for the next 12 months
whereas the U.S. unemployment rate rises from 4.1% this year to 4.4% next year."
(Source: UCLA Anderson Forecast, September, 2000)
"- Only 31 percent of Californians can afford to buy a median-priced home, the
California Association of Realtors said yesterday.
That figure, calculated for September, compared to a 53 percent affordability
rating nationwide and was down from the same period a year ago, when 36 percent
of state residents could afford to buy a home.
The median price of a single-family home in September was $248,020, the Associa-
tion reported last month." (Source: Redwood City Daily News, November 3,
2000)
"Interest Rates - a really toss up - if the economy does indeed continue to slow
the Feds will keep a "steady as we go" course but if they sense a heating up
they will inch up rates again.
Of course, for all of us in the Bay Area we will be focused on the high tech
industries and real estate. As with most emerging industries some of the high
tech players will survive and do very well - think Cisco, Sun, Oracle, Intel,
Exodus, America OnLine/Time Warner and others with a dream and no business plan
will fall out. As for real estate we have seen gains of from 35-105 percent over
the last few years. Next year appreciation will slow down to more historical
valuations but the demand will still be strong. The key for sellers will be to
price their homes "properly" (don't live in the market of six months ago -
today's market has slowed down somewhat and is different). The key for buyers is
to accept that the demand is still strong and that prices are not "out of line"
- people said that 2 years ago, 1 year ago, six months ago.
<PAGE>
Perhaps in America we find ourselves after 10 years "on hold" - a time to take
stock and smell the roses we have bloomed. And that's not all bad. (Source:
The Independent published by Redwood City Almanac, October 28, 2000)
To the Partnership, low unemployment, an increasing population, home
appreciation, and relatively stable interest rates all bode well for the
California and San Francisco Bay Area real estate markets, our underlying
mortgage loan collateral.
The Partnership's interest in land located in East Palo Alto, CA, was acquired
through foreclosure. The investment was previously classified as Investment in
Partnership in the Financial Statements and has been reclassified into Real
Estate Owned. The Partnership's basis of $21,855, $9,039, and $ 0, for the nine
months period ended September 30, 2000 and for the years ended December 31, 1999
and 1998, respectively, has been invested with that of two other Partnerships.
The Partnership is continuing to explore remediation options available to
mitigate the pesticide contamination, which affects the property. This pesticide
contamination appears to be the result of agricultural operations by prior
owners, and is unrelated to the Arsenic Contamination for which a major chemical
company remains responsible. The General Partners do not believe at this time
that remediation of the pesticide contaminants will have a material adverse
effect on the financial condition of the Partnership. The General Partners are
attempting to subdivide this land into two parcels and exploring the ability to
obtain new zoning for this property.
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, 1998, 1999 and nine months through September 30, 2000, the
Partnership made distributions of earnings to Limited Partners after allocation
of syndication costs of $456,358, $490,841 and $339,362, respectively.
Distribution of Earnings to Limited Partners after allocation of syndication
costs for the years ended December 31, 1998, 1999 and nine months through
September 30, 2000 to Limited Partners' capital accounts and not withdrawn was
$381,747, $409,644 and $337,008, respectively. As of December 31 1998, December
31, 1999 and September 30, 2000, Limited Partners electing to withdraw earnings
represented 53%, 54% and 52% of the Limited Partners capital.
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, 1998, 1999 and for the
nine months through September 30, 2000, $381,458, $231,025 and $142,975, 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
their investment to raise cash. The trend the Partnership is experiencing in
withdrawals by Limited Partners electing a one year liquidation program
represents a small percentage of Limited Partner capital as of December 31,
1998, December 31, 1999 and September 30, 2000, respectively and is expected by
the General Partners to commonly occur at these levels.
Additionally, for the years ended December 31, 1998, December 31, 1999 and nine
months through September 30, 2000, $1,019,017, $1,205,917 and $925,297,
respectively, were liquidated by Limited Partners who have elected a liquidation
program over a period of five years or longer. 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 have been liquidated. After
year eleven, liquidation generally subsides and the Partnership capital again
tends to increase.
<PAGE>
Actual liquidation of both capital and earnings from year five (1994) through
year ten (1999) and nine months ended September 30, 2000, is shown hereunder:
<TABLE>
Years ended December 31,
<S> <C> <C> <C> <C>
1994 1995 1996 1997
--------------- -------------- -------------- ----------------
Earnings $263,206 $270,760 $336,341 $399,379
Capital *$340,011 *$184,157 *$722,536 *$1,212,916
--------------- -------------- -------------- ----------------
Total $603,217 $454,917 $1,058,877 $1,612,295
=============== ============== ============== ================
For the nine months
1998 1999 through September 30,2000
--------------- -------------- ------------------------------
Earnings $456,358 $490,841 $339,362
Capital *$1,400,475 *$1,436,942 *$1,068,272
--------------- -------------- --------------
Total $1,856,833 $1,927,783 $1,407,634
=============== ============== ==============
</TABLE>
* These amounts represent gross of early withdrawal penalties.
The Year 2000 was considered by most to be a challenge for the entire world with
respect to the conversion of existing computerized operations. The Partnership
relies on Redwood Mortgage Corp., third parties and various software vendors for
its hardware and software needs. Since year 2000 has come, we have not
experienced any computer hardware breakdowns. We assume that our testing and
upgrading of computer hardware prior to year 2000 identified all hardware areas
of concern. Computer software programs are all operational with only minor
problems being experienced with some programs. These problems are being
addressed by the appropriate software vendors or software programmers. All
annual computerized functions have not yet been run, however testing of the
operations has taken place. We do not expect any significant problems.
The costs of updating our computer systems were substantially borne by the non
affiliated software vendors and the in house system conversion costs to the
Partnership were marginal.
Year 2000 issues do not appear to have affected, in any significant manner, any
industries or businesses in the marketplace in which the Partnership places its
loans. We believe that year 2000 issues are a non-event and will have little if
any future effect on the Partnership, its affiliates or the people and
businesses with which it associates.
The foregoing analysis of year 2000 issues includes forward-looking statements
and predictions about possible or future events, results of operations, and
financial condition. As such, this analysis may prove to be inaccurate because
of assumptions made by the General Partners or the actual development of future
events. No assurance can be given that any of these statements or predictions
will ultimately prove to be correct or substantially correct.
<PAGE>
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
As indicated above in Item 10, the Partnership has no officers or directors. The
Partnership is managed by the General Partners. There are certain fees and other
items paid to management and related parties.
A more complete description of management compensation is found in the
Prospectus, pages 12-13, under the section "Compensation of the General partners
and the Affiliates", which is incorporated by reference. Such compensation is
summarized below.
The following compensation has been paid to the General Partners and Affiliates
for services rendered during the nine months ended September 30, 2000. All such
compensation is in compliance with the guidelines and limitations set forth in
the Prospectus.
Entity Receiving Description of Compensation
Compensation and Services Rendered Amount
--------------------------- ----------------------------------------------------
I. Redwood Mortgage Mortgage Servicing Fee for
Corp. servicing Mortgage Investments $70,472
General Partners Asset Management Fee
&/or Affiliates for managing assets $28,565
General Partners 1% interest in profits $6,832
General Partners &/or Portion of early withdrawal penalties
Affiliates applied to reduce Formation Loan $8,382
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 Corp. Mortgage Brokerage Commissions for services in
connection with the review, selection, evaluation,
negotiation, and extension of the Mortgage Invest-
ments paid by the borrowers and not by the
Partnership $122,196
Redwood Mortgage Corp. Processing and Escrow Fees for services in
connection with notary, document preparation,
credit investigation, and escrow fees payable
by the borrowers and not by the Partnership $3,311
Gymno Corporation Inc.
Reconveyance Fee $783
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. . . . . . . . . . . . . . . . . . . . . . . . . . . $20,310
<PAGE>
MORTGAGE INVESTMENT PORTFOLIO SUMMARY AS OF SEPTEMBER 30, 2000
Partnership Highlights
Mortgage Investment to Value Ratios
First Trust Deeds $8,359,756.92
Appraised Value of Properties * 14,788,943.00
Total Investment as a % of Appraised Value 56.53%
First Trust Deed Mortgage Investments 8,359,756.92
Second Trust Deed Mortgage Investments 4,651,921.54
Third Trust Deed Mortgage Investments 73,170.73
------------------
$13,084,849.19
First Trust Deeds due other Lenders 8,393,048.00
Second Trust Deeds due other Lenders 1,000,000.00
------------------
Total Debt $22,477,897.19
Appraised Property Value * 37,608,400.00
Total Investment as a % of Appraised Value 59.77%
Number of Mortgage Investments Outstanding 35
Average Investment $373,852.83
Average Investment as a % of Net Assets 3.61%
Largest Investment Outstanding 1,841,612.18
Largest Investment as a % of Net Assets 17.80%
Loans as a Percentage of Total Mortgage Investments
First Trust Deed Mortgage Investments 63.89%
Second Trust Deed Mortgage Investments 35.55%
Third Trust Deed Mortgage Investments 0.56%
-----------------
Total 100.00%
Mortgage Investments by Type of
Property Amount Percent
Owner Occupied Homes $220,660.85 1.69%
Non Owner Occupied Homes 1,511,274.16 11.55%
Apartments 2,418,453.29 18.48%
Commercial 8,934,460.89 68.28%
----------------- -----------------
Total $13,084,849.19 100.00%
Statement of Conditions of Mortgage Investments
Number of Mortgage Investments in Foreclosure 0
*Values used are the appraisal values utilized at the time the mortgage
investment was consummated.
<PAGE>
Diversification by County
County Total Loans Percent
San Francisco $3,534,080.43 27.01%
Stanislaus 2,996,554.16 22.90%
Contra Costa 2,115,818.40 16.17%
San Mateo 1,652,451.52 12.63%
Alameda 824,722.00 6.30%
Placer 703,735.06 5.38%
Santa Clara 583,019.76 4.45%
Santa Cruz 474,847.08 3.63%
Sacramento 96,716.11 0.74%
Shasta 79,684.44 0.61%
Sonoma 23,220.23 0.18%
------------------- -----------
Total $13,084,849.19 100.00%
<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 three month period
ending September 30, 2000.
<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 9th day of November,
2000.
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 9th day of November, 2000.
Signature Title Date
/S/ D. Russell Burwell
----------------------------
D. Russell Burwell General Partner November 9, 2000
/S/ Michael R. Burwell
----------------------------
Michael R. Burwell General Partner November 9, 2000
/S/ D. Russell Burwell
----------------------------
D. Russell Burwell President of Gymno Corporation, November 9, 2000
(Principal Executive Officer);
Director of Gymno Corporation
/S/ Michael R. Burwell
---------------------------
Michael R. Burwell Secretary/Treasurer of Gymno November 9, 2000
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
