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 March 31, 2000
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Commission file number 33-30427
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REDWOOD MORTGAGE INVESTORS VII
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(exact name of registrant as specified in its charter)
California 94-3094928
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(State or other jurisdiction of I.R.S. Employer
incorporation of organization) Identification No.
650 El Camino Real, Suite G, Redwood City, CA. 94063
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(address of principal executive office)
(650) 365-5341
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(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>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
BALANCE SHEETS
MARCH 31, 2000 (unaudited) AND DECEMBER 31, 1999 (audited)
ASSETS
December 31,
March 31, 2000 1999
(unaudited) (audited)
------------------ ----------------
<S> <C> <C>
Cash $204,497 $388,770
------------------ ----------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 12,281,853 11,011,660
Accrued Interest on Mortgage Investments 451,403 357,177
Advances on Mortgage Investments 29,101 31,669
Accounts receivables, unsecured 163,941 163,085
------------------ ----------------
12,926,298 11,563,591
Less allowance for doubtful accounts 828,563 828,563
------------------ ----------------
12,097,735 10,735,028
------------------ ----------------
Real estate in process of acquisition, to be sold 0 525,510
Real estate owned, acquired through foreclosure, held for sale 840,932 307,931
Prepaid expenses 2,816 0
------------------ ----------------
$13,145,980 $11,957,239
================== ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Notes payable - bank line of credit $2,200,000 $800,000
Accounts payable and accrued expenses 32,234 32,234
Deferred Interest 115,709 115,709
--------------- --------------
$2,347,943 947,943
--------------- --------------
Partners' Capital
Limited Partners' capital, subject to redemption (Note 4E):
Net of Formation Loan receivable of $140,885 and $165,499 for
2000 and 1999, respectively 10,786,059 10,997,318
General Partners' capital, 11,978 11,978
--------------- --------------
Total Partners' Capital 10,798,037 11,009,296
--------------- --------------
Total Liabilities and Partners' Capital $13,145,980 $11,957,239
=============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999 (unaudited)
THREE MONTHS ENDED MARCH 31
---------------------------------------------
<S> <C> <C>
2000 1999
------------------- ----------------
Revenues:
Interest on Mortgage Investments $305,263 $416,849
Interest on bank deposits 697 858
Late charges 318 645
Other 1,553 2,001
------------------- ----------------
307,831 420,353
------------------- ----------------
Expenses:
Mortgage servicing fees 20,221 31,563
Interest on note payable - bank 27,123 47,227
Clerical costs through Redwood Mortgage 7,146 7,967
Asset management fee 8,198 3,827
Provision for doubtful accounts and losses
on real estate acquired through foreclosure 0 81,531
Professional services 8,452 20,933
Printing, supplies and postage 1,262 3,464
Other 1,863 3,296
------------------- ----------------
74,265 199,808
------------------- ----------------
Net Income $233,566 $220,545
=================== ================
Net income: To General Partners(1%) $2,336 $2,205
To Limited Partners (99%) 231,230 218,340
------------------- ----------------
$233,566 $220,545
=================== ================
Net income per $1,000 invested by Limited Partners for entire period:
-where income is reinvested and compounded $20.74 $17.93
=================== ================
-where partner receives income in monthly distributions $20.60 $17.83
=================== ================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
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 THREE MONTHS ENDED MARCH 31, 2000 (unaudited)
PARTNERS' CAPITAL
-----------------------------------------------------
LIMITED PARTNERS' CAPITAL
-----------------------------------------------------
<S> <C> <C> <C>
Capital
Account- Formation
Limited Loan
Partners Receivable Total
--------------- --------------- --------------
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 21,972 21,972
Net Income 231,230 0 231,230
Early withdrawal penalties (3,844) 2,642 (1,202)
Partners' withdrawals (463,259) 0 (463,259)
--------------- --------------- --------------
Balances at March 31, 2000 $10,926,944 $(140,885) $10,786,059
=============== =============== ==============
See accompanying notes to financial statements
</TABLE>
<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 THREE MONTHS ENDED MARCH 31, 2000 (unaudited)
PARTNERS' CAPITAL
-------------------------------------------------
GENERAL PARTNER'S CAPITAL
-------------------------------------------------
Capital Account
General Partners Total 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 21,972
Net income 2,336 233,566
Early withdrawal penalties 0 (1,202)
Partners' withdrawals (2,336) (465,595)
------------------ -------------------
Balances at March 31, 2000 $11,978 $10,798,037
================== ===================
See accompanying notes to financial statements
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (unaudited)
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------
<S> <C> <C>
2000 1999
-------------- ---------------
Cash flows from operating activities:
Net income $233,566 $220,545
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts 0 81,531
Provision for losses on real estate held for sale 0 0
Early withdrawal penalty credited to income (1,202) (1,401)
(Increase) decrease in accrued interest & advances (91,658) 104,805
Increase (decrease) in accounts payable and accrued expenses 0 7,174
Increase (decrease) in deferred interest on Mortgage Investments 0 (131,743)
(Increase) decrease in prepaid expenses (2,816) 0
-------------- ---------------
Net cash provided by operating activities 137,890 280,911
-------------- ---------------
Cash flows from investing activities:
Principal collected on mortgage investments 130,227 942,300
Mortgage Investments made (1,400,420) (2,478,115)
Additions to Real Estate held for sale (8,347) (2,456)
Dispositions of Real Estate held for sale 0 35,993
Investment in Partnership 0 0
Proceeds from unsecured Accounts Receivable 0 0
-------------- ---------------
Net cash provided by (used in) investing activities (1,278,540) (1,502,278)
-------------- ---------------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank 1,400,000 1,587,337
Formation loan collections 21,972 14,648
Partners withdrawals (465,595) (461,465)
-------------- ---------------
Net cash provided by (used in) financing activities 956,377 1,140,520
-------------- ---------------
Net increase (decrease) in cash (184,273) (80,847)
Cash - beginning of period 388,770 461,544
-------------- ---------------
Cash - end of period $204,497 $380,697
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 2000,
$773,484 including $139,515 in early withdrawal penalties, had been repaid
leaving a balance of $140,885. 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
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
MARCH 31, 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 March 31, 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 March 31, 2000, the
average mortgage investment to appraised value of security at the time the loans
were consummated was 62.35%. 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. At March 31, 2000, one additional property
became Real Estate owned. It was valued at fair value of $525,510 based on a
current appraisal. The $525,510 is net of a reduction in value of $230,040.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 2000 and 1999, including the aforementioned real
estate owned:
March 31, December 31
--------------- ----------------
2000 1999
--------------- ----------------
Costs of properties $1,189,612 $1,182,701
Reduction in value (348,680) (349,260)
--------------- -----------------
Fair value reflected
in financial statements $840,932 $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 March 31, 2000 and December 31, 1999 was as follows:
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
March 31 December 31
2000 1999
--------------- ----------------
Impaired mortgage investments $152,231 $152,231
Unspecified mortgage investments 598,803 598,803
Accounts receivable, unsecured 77,529 77,529
--------------- ----------------
$828,563 $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
MARCH 31, 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 March 31, 2000 and for the years ended 1999, and 1998, totalled $43,838,
$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 $20,221, $127,440 and
$128,493 were incurred for three months through March 31, 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 $8,198, $44,524 and
$16,141 for the three months through March 31, 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
MARCH 31, 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
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 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 $163,941 at March 31, 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
MARCH 31, 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
March 31, 2000 and December 31, 1999 were $2,200,000 and $800,000, respectively,
and the interest rate was 9.25% (9.00% 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:
March 31, December 31,
2000 1999
--------------- ----------------
Net assets - Partners' Capital per
financial statements $10,798,037 $11,009,296
Formation loan receivable 140,885 165,499
Allowance for doubtful accounts 828,563 828,563
-------------- ---------------
Net assets tax basis $11,767,485 $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 $12,281,853.
The March 31, 2000 fair value of these investments of $12,660,958 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
MARCH 31, 2000
NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At March 31,
2000, there were 46 Mortgage Investments outstanding with the following
characteristics:
Number of Mortgage Investments outstanding 46
Total Mortgage Investments outstanding $12,281,853
Average Mortgage Investment outstanding $266,997
Average Mortgage Investment as percent of total 2.17%
Average Mortgage Investment as percent of Partners' Capital 2.47%
Largest Mortgage Investment outstanding $1,500,000
Largest Mortgage Investment as percent of total 12.21%
Largest Mortgage Investment as percent of Partners' Capital 13.89%
Number of counties where security is located (all California) 12
Largest percentage of Mortgage Investments in one county 24.40%
Average Mortgage Investment to appraised value of security
at time loan was consummated 62.35%
Number of Mortgage Investments in foreclosure 0
The following categories of Mortgage Investments are pertinent at March 31, 2000
and December 31, 1999:
March 31, December 31,
------------------ ----------------
2000 1999
------------------ ----------------
First Trust Deeds $6,679,301 $6,077,532
Second Trust Deeds 4,953,334 4,272,714
Third Trust Deeds 649,218 661,414
------------------ ----------------
Total Mortgage Investments 12,281,853 11,011,660
Prior liens due other lenders 13,961,898 10,389,233
------------------ ----------------
Total debt $26,243,751 $21,400,893
================== ================
Appraised property value at
time of loan $42,087,820 $34,223,193
================== ================
Total investments as a percent
of appraisals 62.35% 62.53%
================== ================
Investments by Type of Property
Owner occupied homes $391,804 $340,864
Non-Owner occupied homes 2,765,747 2,347,394
Apartments 182,674 182,675
Commercial 8,941,628 8,140,727
------------------ ----------------
$12,281,853 $11,011,660
================== ================
<PAGE>
REDWOOD MORTGAGE INVESTORS VII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
Scheduled maturity dates of mortgage investments as of March 31, 2000 are as
follows:
Year Ending
December 31,
--------------------
2000 $4,347,437
2001 6,044,352
2002 893,704
2003 63,916
2004 145,882
Thereafter 786,562
------------------
$12,281,853
==================
The scheduled maturities for 2000 include approximately $2,383,468 in ten
Mortgage Investments which are past maturity at March 31, 2000. Interest
payments on most of these loans are current. $814,947 of these Mortgage
Investments were categorized as delinquent over 90 days.
Six mortgage investments with principal outstanding of $964,224 had interest
payments overdue in excess of 90 days. Six Mortgage Investments with principal
outstanding of $1,099,474 were considered impaired at March 31, 2000. That is
interest accruals are no longer recorded thereon.
The cash balance at March 31, 2000 of $204,497 was in three banks with an
interest bearing balances totalling $103,669. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $4,345. 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 March 31, 2000, draw down against this
facility was $2,200,000. As and when deposits in the Partnership's bank accounts
increase significantly beyond the insured limit, the funds are either placed in
new Mortgage Investments or used to pay-down on the line of credit balance.
<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 March
31, 2000, Partners' Capital totaled $10,798,037.
At March 31, 2000, the Partnership Mortgage Investments outstanding totalled
$12,281,853. This represents a decline of $927,333 from the December 31, 1998
Mortgage Investments balance. This reduction in Mortgage Investments outstanding
as of March 31, 2000 was chiefly due to cash proceeds from Mortgage Investment
repayments being used to fund withdrawals to the Limited Partners of $2,394,887,
during 1999, and three months through March 31, 2000. This was offset by an
increase in Note Payable-Bank of $287,337, reinvestment of earnings of $523,881,
reduction in accrued interest, other receivables and investment of cash. To a
certain extent, the reduction was also due to significant loan pay-offs towards
the latter part of 1999. 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 March 31, 2000, had credited the Partners accounts with income at an
average annualized (compounded) yield of 7.78%.
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 March 31, 2000 the Partnership Real Estate Owned account and the
investment in Partnership account had a combined balance of $840,932. These
accounts had combined balances of $397,396 and $307,931 for the years ended
December 31, 1998 and 1999, respectively. The General Partners anticipate that
the annualized yield for the coming 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 March 31, 2000, December 31,
1999 and December 31, 1998, the balances were $2,200,000, $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 March 31, 2000, the Partnership is current
with its interest payments on the line of credit. For the years ended December
31, 1998, 1999 and three months period ended March 31, 2000, interest paid was
$170,867, $182,350 and $27,123, respectively, reflecting an overall average
utilization of the credit line of approximately $2,200,000.
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 increased in 1998 to $128,493, in 1999 to $127,440 and to $20,221
during three months through March 31, 2000, chiefly due to an increase during
the 1998 year of the monthly loan service fee to 1/12% (1% per year). Asset
Management Fees increased to $16,141 in 1998, and to $44,524 in 1999. For the
three months through March 31, 2000, Management Fees paid was $8,198. 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 foreclosure each discussed
<PAGE>
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 March 31, 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 $0 for the first quarter of 2000, as provision for
doubtful accounts for the years ended December 31, 1997, 1998 and 1999,
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.
The February 18, 2000 issue of the "Alert" publication, published by the
California Chamber of Commerce, said the following about California's thriving
economy:
"Job gains grew in the fourth quarter of 1999, as the California economy
accelerated. For the year as a whole, employment grew by 2.9 percent,
considerably stronger than in the nation. This gain likely will be revised
upward to 3.3 percent, or so, in the benchmark revisions to be released in late
February.
State unemployment, at 4.9 percent in the last four months, is lower than in
more than 30 years. Tax revenues are flooding into Sacramento, in part because
of the strong economy, but also because of exercised stock options, strong
bonuses and huge realized stock market gains.
The state economy's strength has been widespread across major industries, but
concern about residential real estate is growing.
Housing permits were issued at an annual rate of 139,000 units through November
1999, well below almost everyone's expectations and the 220,000 units averaged
annually in the 1980s. Clearly, not enough housing is being built in the state.
High land prices, restrictive local land use policies, the re-emergence of the
slow growth/no growth movement, and federal environmental regulations are
constraining home building. As a result, affordability is declining at an
alarming rate.
The affordability of existing homes is low in San Diego and Orange counties and
extremely low almost everywhere in the San Francisco Bay Area. In what seems
like a paradox, an oversupply of expensive new homes is developing. This also
happened under similar circumstances in the late 1980s.
In areas of particularly high land prices and long permitting and other building
delays, building entry and mid-level housing becomes more difficult to "pencil
out". As developers turn increasingly to expensive housing, the supply of
expensive housing can quickly outstrip demand. Also, the affordability of new
homes can dip considerably below that of existing homes.
<PAGE>
In Orange County, for example, a relatively low 32 percent of households could
afford to buy the median-priced existing home sold in November; only 19 percent
could afford to buy the median-priced new home."
To the Partnership, the above evaluation of the California economy means an
increase in property values, job growth, personal income growth, etc., which all
translates into more loan activity, which of course, is healthy for the
Partnership's lending activity.
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 $18,523, $9,039, and $ 0, for the three
months period ended March 31, 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 three months through March 31, 2000, the
Partnership made distributions of earnings to Limited Partners after allocation
of syndication costs of $456,358, $490,841 and $116,993, respectively.
Distribution of Earnings to Limited Partners after allocation of syndication
costs for the years ended December 31, 1998, 1999 and three months through March
31, 2000 to Limited Partners' capital accounts and not withdrawn was $381,747,
$409,644 and $114,237, respectively. As of December 31 1998, December 31, 1999
and March 31, 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
three months through March 31, 2000, $381,458, $231,025 and $48,056, 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 March 31, 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 three
months through March 31, 2000, $1,019,017, $1,205,917 and $302,054,
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>
<TABLE>
Actual liquidation of both capital and earnings from year five (1994) through
year ten (1999) and three months ended March 31, 2000, is shown hereunder:
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 three months
1998 1999 through March 31, 2000
--------------- -------------- ---------------------------
Earnings $456,358 $490,841 $116,993
Capital *$1,400,475 *$1,436,942 *$350,110
--------------- -------------- ------------
Total $1,856,833 $1,927,783 $467,103
=============== ============== ============
* 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
quarterly and 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.
</TABLE>
<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 three months ended March 31, 2000. All such
compensation is in compliance with the guidelines and limitations set forth in
the Prospectus.
Entity Receiving
Compensation Description of Compensation
and Services Rendered Amount
- --------------------------------------------------------------------------------
I. Redwood Mortgage Mortgage Servicing Fee for servicing
Corp. Mortgage Investments $20,221
General Partners Asset Management Fee for
&/or Affiliates managing assets............................. $8,198
General Partners 1% interest in profits...................... $2,336
General Partners &/or Portion of early withdrawal penalties
Affiliates applied to reduce Formation Loan............ $2,642
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
Investments paid by the borrowers and not by
the Partnership ........................... $43,838
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...$1,949
Gymno Corporation Inc. Reconveyance Fee.............................. $74
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. $7,146
<PAGE>
MORTGAGE INVESTMENT PORTFOLIO SUMMARY AS OF MARCH 31, 2000
Partnership Highlights
Mortgage Investment to Value Ratios
First Trust Deeds $6,679,300.60
Appraised Value of Properties * 10,745,559.00
Total Investment as a % of Appraised Value 62.16%
First Trust Deed Mortgage Investments 6,679,300.60
Second Trust Deed Mortgage Investments 4,953,334.08
Third Trust Deed Mortgage Investments 649,218.59
------------------
$12,281,853.27
First Trust Deeds due other Lenders 12,193,339.00
Second Trust Deeds due other Lenders 1,768,559.00
------------------
Total Debt $26,243,751.27
Appraised Property Value * 42,087,820.00
Total Investment as a % of Appraised Value 62.35%
Number of Mortgage Investments Outstanding 46
Average Investment $266,996.81
Average Investment as a % of Net Assets 2.47%
Largest Investment Outstanding 1,500,000.00
Largest Investment as a % of Net Assets 13.89%
Loans as a Percentage of Total Mortgage Investments
First Trust Deed Mortgage Investments 54.38%
Second Trust Deed Mortgage Investments 40.33%
Third Trust Deed Mortgage Investments 5.29%
-----------------
Total 100.00%
Mortgage Investments by Type of
Property Amount Percent
Owner Occupied Homes $391,803.68 3.19%
Non Owner Occupied Homes 2,765,746.98 22.52%
Apartments 182,674.45 1.49%
Commercial 8,941,628.16 72.80%
-----------------
-----------------
Total $12,281,853.27 100.00%
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
Stanislaus $2,996,554.16 24.40%
San Mateo 2,869,677.71 23.37%
San Francisco 2,048,597.89 16.68%
Contra Costa 1,458,122.20 11.87%
Alameda 869,643.91 7.08%
Santa Clara 583,019.76 4.75%
Placer 573,627.54 4.67%
Santa Cruz 521,247.78 4.24%
Sonoma 158,605.39 1.29%
Sacramento 96,716.11 0.79%
Shasta 80,040.82 0.65%
Ventura 26,000.00 0.21%
------------------- -----------
Total $12,281,853.27 100.00%
<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 March 31, 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 12th day of May, 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 12th day of May, 2000.
Signature Title Date
/S/ D. Russell Burwell
- -----------------------------------
D. Russell Burwell General Partner May 12, 2000
/S/ Michael R. Burwell
- -----------------------------------
Michael R. Burwell General Partner May 12, 2000
/S/ D. Russell Burwell
- -----------------------------------
D. Russell Burwell President of Gymno Corporation, May 12, 2000
(Principal Executive Officer);
Director of Gymno Corporation
/S/ Michael R. Burwell
- -----------------------------------
Michael R. Burwell Secretary/Treasurer of Gymno May 12, 2000
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 204,497
<SECURITIES> 0
<RECEIVABLES> 12,926,298
<ALLOWANCES> 828,563
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,145,980
<CURRENT-LIABILITIES> 0
<BONDS> 0
2,347,943
0
<COMMON> 0
<OTHER-SE> 10,798,037
<TOTAL-LIABILITY-AND-EQUITY> 13,145,980
<SALES> 0
<TOTAL-REVENUES> 307,831
<CGS> 0
<TOTAL-COSTS> 47,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,123
<INCOME-PRETAX> 233,566
<INCOME-TAX> 0
<INCOME-CONTINUING> 233,566
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 233,566
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
