10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Year Ended December 31, 2011

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _____________

Commission file number: 333-155428

REDWOOD MORTGAGE INVESTORS IX, LLC

(Exact name of registrant as specified in its charter)

Delaware	26-3541068
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

900 Veterans Blvd., Suite 500, Redwood City, CA	94063-1743
(Address of principal executive offices)	(Zip Code)

(650) 365-5341

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:	None
Securities registered pursuant to Section 12(g) of the Act:	Units of Membership Interests

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[   ] YES    [X] NO

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[   ] YES    [X] NO

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 such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] YES    [   ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] YES    [   ] NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer [   ]	Accelerated filer [   ]
Non-accelerated filer   [   ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[   ] YES    [X] NO

The registrant’s units of membership interests are not publicly traded and therefore have no market value.  The registrant is currently conducting the ongoing initial public offering of its units pursuant to a Registration Statement on Form S-11, which are being sold at $1.00 per unit.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Prospectus, dated June 8, 2009, and the supplement to the prospectus, included as part of the Post Effective Amendment No. 5 to the Registration Statement on Form S-11 (SEC File No. 333-155428) filed with the SEC on January 30, 2012, are incorporated by reference in the following sections of this report:

·   Part I – Item 1 – Business

·   Part III – Item 11 – Executive Compensation

·   Part III – Item 13 – Certain Relationships and Related Transactions, and Director Independence

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REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Index to Form 10-K

December 31, 2011

	Part I
		Page No.
Item 1	– Business	4
Item 1A	– Risk Factors	11
Item 1B	– Unresolved Staff Comments (Not applicable)	30
Item 2	– Properties (Not included as company owns no properties)	30
Item 3	– Legal Proceedings	30
Item 4	– Mine Safety Disclosures	30
	Part II
Item 5	– Market for the Registrant’s Units, Related Unitholder Matters and
	Issuer Purchases of Equity Securities	31
Item 6	– Selected Financial Data (Not included as smaller reporting company)	32
Item 7	– Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 7A	– Quantitative and Qualitative Disclosures About Market Risk (Not included as smaller reporting company)	37
Item 8	– Consolidated Financial Statements and Supplementary Data	38
Item 9	– Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	62
Item 9A	– Controls and Procedures	62
Item 9B	– Other Information	62
	Part III
Item 10	– Directors, Executive Officers and Corporate Governance	62
Item 11	– Executive Compensation	64
Item 12	– Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters	65
Item 13	– Certain Relationships and Related Transactions, and Director Independence	65
Item 14	– Principal Accountant Fees and Services	65
	Part IV
Item 15	– Exhibits and Financial Statement Schedules	66
Signatures		67
Certifications		69

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Part I

Forward-Looking Statements

Certain statements in this Report on Form 10-K which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding the company’s expectations, hopes, intentions, beliefs and strategies regarding the future. Forward-looking statements include statements regarding future interest rates and economic conditions and their effect on the company and its assets, trends in the California real estate market, estimates as to the allowance for loan losses, estimates of future member redemptions, 2012 annualized yield estimates and beliefs relating to the impact on the company from current economic conditions and trends in the financial and credit markets. Actual results may be materially different from what is projected by such forward-looking statements. Factors that might cause such a difference include unexpected changes in economic conditions and interest rates, the impact of competition and competitive pricing and downturns in the real estate markets in which the company has made loans. All forward-looking statements and reasons why results may differ included in this Form 10-K are made as of the date hereof, and we assume no obligation to update any such forward-looking statement or reason why actual results may differ.

Item 1 – Business

Overview

Redwood Mortgage Investors IX, LLC (the “company”), a Delaware limited liability company, was organized in October 2008, to engage in business as a mortgage lender for the primary purpose of making loans secured by deeds of trust on California real estate. Loans are arranged and serviced by Redwood Mortgage Corp., a California corporation (“RMC”).

On November 18, 2008, the company filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (SEC) in connection with an offering of up to 150,000,000 units of its membership interests, at $1 per unit, to the public in its primary offering and 37,500,000 units, at $1 per unit, to its members pursuant to its distribution reinvestment plan. In June 2009, the SEC declared the company’s Registration Statement effective and the company commenced its initial public offering. The offering is ongoing and it may continue until June 8, 2012, unless prior to such date, we file a new registration statement, in which event the offering will continue until the earlier of the effective date of the new registration statement or December 5, 2012. In October, 2009, we accepted subscriptions for, and held an initial closing on, subscriptions in excess of the minimum offering amount, and $1,013,204 was released from the escrow account to the company. Upon the admission of the additional members, we refunded to our initial member, Gymno Corporation, its $10,000 capital contribution and withdrew it as the initial member.

The following summarizes the status of the offering proceeds, at $1 per unit, as of December 31, 2011:

·   Proceeds from investors in applicant status at December 31, 2011 (later accepted by the managers):  $320,545

·   Proceeds from total units sold in the primary offering from October 5, 2009, through December 31, 2011:  $11,193,299

·   Proceeds under our distribution reinvestment plan from electing members: $254,594

·   Proceeds from premiums paid by RMC through December 31, 2011:  $120,295 (1)

(1) If a member acquired his units through an unsolicited sale, his capital account will be credited with his capital contribution plus the amount of the sales commissions, if any, paid by RMC that are specially allocated to the member.

The rights, duties and powers of the managers and members of the company are governed by the company’s operating agreement and the Delaware Limited Liability Company Act. The description of the company's operating agreement contained in these financial statements provides only general information. Members should refer to the company's operating agreement for a more complete description of the provisions.

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The managing members (“Managers”) of the company are RMC and its wholly-owned subsidiary, Gymno LLC, originally incorporated as Gymno Corporation (“Gymno”). Prior to September 30, 2011, The Redwood Group, Ltd., a California corporation (“Redwood Group”) owned all of the outstanding shares of RMC and acquired, as of September 30, 2011, all of the outstanding shares of Gymno Corporation in exchange for shares of Redwood Group’s common stock. Redwood Group then merged with and into RMC, which resulted in Gymno Corporation becoming a wholly-owned subsidiary of RMC. Gymno Corporation then converted into Gymno LLC, a California limited liability company, with Michael R. Burwell, the majority owner and President of RMC, as its managing member. The address of the company and the managers is 900 Veterans Blvd., Suite 500, Redwood City, California 94063.

The managers are solely responsible for managing our business, subject to the rights of the members to vote on specified matters. Any one of the managers acting alone has the power and authority to act for and bind the company. Members representing a majority of the outstanding units may, without the concurrence of the managers, vote to:  (i) dissolve the company, (ii) amend the operating agreement, subject to certain limitations, (iii) approve or disapprove the sale of all or substantially all of the assets of the company or (iv) remove or replace one or all of the managers or elect additional or new managers.

Profits and losses are allocated among the members according to their respective capital accounts monthly after 1% of the profits and losses are allocated to the managers. The allocation to the managers (combined) may not exceed 1%. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Members may elect to have all or a portion of their monthly distributions reinvested in additional units, subject to the availability of units under the distribution reinvestment plan. Members may withdraw from the distribution reinvestment plan with written notice. No provision for federal and state income taxes (other than an $800 state minimum tax) is made in the financial statements since income taxes are the obligation of the members if and when income taxes apply. Investors should not expect the company to provide tax benefits of the type commonly associated with limited liability company tax shelter investments.

There are substantial restrictions on transferability of units and accordingly an investment in the company is non-liquid.  Members have no right to withdraw from the company or to obtain the return of their capital account for at least one year from the date of purchase of units. In order to provide a certain degree of liquidity, we have adopted a unit redemption program, whereby after the one year period, a member may redeem all or part of their units, subject to certain limitations.

We commenced active operations and began originating/funding loans in October 2009. The amount of loans the company funds or acquires will depend upon the number of units sold in the offering and the resulting amount of the net proceeds available for investment in loans. The company is scheduled to terminate in 2028, unless our term is extended by the vote of a majority in interest of the members or earlier sooner terminated as provided in the operating agreement.

Lending and Investment Guidelines, Objectives and Criteria

The company’s primary objectives are to make investments which will:

·   Yield a high rate of return from mortgage lending;

·   Preserve and protect our capital; and

·   Generate and distribute cash flow from operations/investments to members.

Loans are arranged and serviced by RMC. The company generally funds loans:

·   Secured by deeds of trust on real property located in California;

·   Having monthly payments of principal and interest at fixed rates, calculated on a 30-year amortization basis;

·   Having maturities of 5 years or less, not to exceed 15 years.

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The cash flow and the income generated by the real property securing the loan factor into the credit decisions, as does the general creditworthiness, experience and reputation of the borrower. For loans secured by real property, other than owner occupied personal residences, such considerations though are subordinate to a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. The amount of the loan combined with the outstanding debt and claims secured by a senior deed of trust on the real property generally will not exceed a specified percentage of the appraised value of the property (the loan to value ratio or LTV) as determined by an independent written appraisal at the time the loan is made. The loan-to-value ratio generally will not exceed 80% for residential properties (including multi-family), 75% for commercial properties, and 50% for land. The excess of the value of the collateral securing the loan over our debt and any senior debt owing on the property, is the “protective equity.”

We believe our LTV policy gives us more potential protective equity than competing lenders who fund loans with a higher LTV. However, we may be viewed as an “asset” lender based on our emphasis on LTV in our underwriting process. Being an “asset” lender may increase the likelihood of payment defaults by borrowers. Accordingly, the company may have a higher level of loan-payment delinquency and loans designated as impaired for financial reporting purposes than that of lenders, such as banks and other financial institutions subject to federal and state banking regulations, which are typically viewed as “credit” lenders.

Recently adopted regulations and enacted federal legislation impact the lending to non-commercial residential borrowers by requiring the lender consider a borrower’s ability to meet payment obligations specified in the loan documents. The manager is monitoring developments and, if and when applicable will adjust underwriting and lending practices accordingly. Residential lending on owner occupied properties subject to the legislation and regulations generally has not been a significant portion of the loans made by the company.

The company’s investment criteria and policies are more fully described under the section entitled “Investment Objectives and Criteria,” on pages 61-67 of the company’s prospectus, dated June 8, 2009, which is incorporated herein by reference.

Secured Loan Portfolio

See Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for a detailed presentation on the secured loan portfolio, which presentation is incorporated by this reference into this Item 1.

Competition

The mortgage lending business is highly competitive, and the company will compete with numerous established entities, some of which have more financial resources and experience in the mortgage lending business. Major competitors in providing mortgage loans include banks, savings and loan associations, thrifts, conduit lenders, mortgage bankers, mortgage brokers, and other entities both larger and smaller than the company.

During the last several years many competitors, due to declines in real estate values, increases in loan delinquencies, foreclosures and/or liquidity issues have reduced or eliminated their real estate lending activity. Additionally, the declines in real estate values coupled with reduced overall sales and refinancing activity reduced the overall demand for loans. With the substantial real estate valuation declines that have taken place over the last several years far fewer borrowers have the ability to provide adequate security to back their loan requests. Underwriting standards have increased. Additionally, recent legislation has restricted loans that the company will consider funding. Competition from other lenders has declined with fewer active lenders in the market but fewer loan opportunities exist. Those loans that qualify for funding have become more difficult to find.  The company has been able to capitalize on the reduction in lenders as it has experienced a relative increase in capital available for lending.  As additional capital is raised we can compete in funding more as well as larger loans which will further reduce competition.

Regulations

We are subject to various federal, state and local laws and regulations that affect our business, described below. The description below and elsewhere in this Form 10-K, does not purport to be complete and is qualified in its entirety by reference to the applicable laws and regulations.

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Regulations Applicable to Mortgage Lenders and Servicers

We and RMC, which originates and services our loans, are heavily regulated by laws governing lending practices at the federal, state and local levels. In addition, proposals for further regulation of the financial services industry are continually being introduced.

These laws and regulations to which we and RMC are subject include those pertaining to:

·   real estate settlement procedures;

·   fair lending;

·   truth in lending;

·   compliance with federal and state disclosure requirements;

·   the establishment of maximum interest rates, finance charges and other charges;

·   secured transactions and foreclosure proceedings; and

·   privacy regulations providing for the use and safeguarding of non-public personal financial information of borrowers.

Some of the key federal and state laws affecting our business include:

·   Real Estate Settlement Procedures Act (RESPA).  RESPA primarily regulates settlement procedures for real estate purchase and refinance transactions on residential (1-4 unit) properties. It prohibits lenders from requiring the use of specified third party providers for various settlement services, such as appraisal or escrow services. RESPA also governs the format of the good faith estimate of loan transaction charges and the HUD-1 escrow settlement statement.

·   Truth in Lending Act.  This federal act was enacted in 1968 for the purpose of regulating consumer financing and is implemented by the Consumer Financial Protection Bureau (CFPB). For real estate lenders, this act requires, among other things, advance disclosure of certain loan terms, calculation of the costs of the loan as demonstrated through an annual percentage rate (APR), and the right of a consumer in a refinance transaction on their primary residence to rescind their loan within three days following signing.

·   Home Ownership and Equity Protection Act (HOEPA) and California 4970.  HOEPA was passed in 1994 to provide additional disclosures for certain closed-end home mortgages. In 1995, the Federal Reserve Board issued final regulations governing “high cost” closed-end home mortgages with interest rates and fees in excess of certain percentage or amount thresholds. These regulations primarily focus on additional disclosure with respect to the terms of the loan to the borrower, the timing of such disclosures, and the prohibition of certain loan terms, including balloon payments and negative amortization.  The failure to comply with the regulations will render the loan rescindable for up to three years. Lenders can also be held liable for attorneys’ fees, finance charges and fees paid by the borrower and certain other money damages. Similarly in California, Assembly Bill 489, which was signed into law in 2001 and became effective as of July 1, 2002 as Business and Practices (B&P) Code 4970, provides for state regulation of “high cost” residential mortgage and consumer loans secured by liens on real property, which equal or exceed the Fannie Mae/Freddie Mac conforming loan limits or less, with interest rates and fees exceeding a certain percentage or amount threshold. The law prohibits certain lending practices with respect to high cost loans, including the making of a loan without regard to the borrower’s income or obligations. When making such loans, lenders must provide borrowers with a consumer disclosure, and provide for an additional rescission period prior to closing the loan.

·   Mortgage Disclosure Improvement Act.  Enacted in 2008, this act amended the Truth in Lending Act regulating the timing and delivery of loan disclosures for all mortgage loan transactions governed under RESPA.

·   Home Mortgage Disclosure Act.  This act was enacted to provide for public access to statistical information on a lenders’ loan activity. It requires lenders to disclose certain information about the mortgage loans it originates and purchases, such as the race and gender of its customers, the disposition of mortgage applications, income levels and interest rate (i.e. annual percentage rate) information.

·   Red Flags Rule.  Enacted in 2009, this rule requires lenders and creditors to implement an identity theft prevention program to identify and respond to account activity in which the misuse of a consumer’s personal identification may be suspected.

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·   Graham-Leach-Bliley Act.  This act requires all businesses which have access to consumers’ personal identification information to implement a plan providing for security measures to protect that information. As part of this program, we provide applicants and borrowers with a copy of our privacy policy.

·   Dodd-Frank Act. The act enhanced regulatory requirements on banking entities and other organizations considered significant to U.S. financial markets. The act also provides for reform of the asset-backed securitization market. We do not expect these particular regulatory changes will have a material direct effect on our business or operations. The act imposes significant new regulatory restrictions on the origination of residential mortgage loans, under sections concerning “Mortgage Reform and Anti-Predatory Lending.” For example, these provisions require when a consumer loan is made, the lender must make a reasonable and good faith determination, based on verified and documented information concerning the consumer’s financial situation, whether the consumer has a reasonable ability to repay a residential mortgage loan before extending the loan. The act calls for regulations prohibiting a creditor from extending credit to a consumer secured by a high-cost mortgage without first receiving certification from an independent counselor approved by a government agency. The act also adds new provisions prohibiting balloon payments for defined high cost mortgages.The Act also established the CFPB, giving it regulatory authority over most federal consumer lending laws, including those relating to residential mortgage lending.

Recent or Pending Legislation and Regulatory Proposals

The recent credit crisis has led to an increased focus by federal, state and local legislators and regulatory authorities on the entities engaged in financial-services industry (principally banks) generally and on the mortgage industry (principally as to residential lending to borrowers intending to occupy the residence). A broad variety of legislative and regulatory proposals are being considered and such proposals cover mortgage loan products, loan terms and underwriting standards, risk management practices and consumer protection, which could have a broader impact across the mortgage industry. In addition, the U.S. economy is currently experiencing a prolonged downturn in employment which has and will likely continue to cause increased delinquencies, continued home price depreciation and lower home sales. In response to these trends, the U.S. government and the Federal Reserve Board of Governors have taken several actions which are intended to increase economic activity and employment, stabilize the banking system, maintain lower interest rates, increase liquidity for lending institutions, and encourage activity in the housing market. These actions are intended to make it possible for qualified borrowers to obtain mortgage financing to purchase homes, refinance existing loans, avoid foreclosure on their homes, and to curb perceived lending abuses. It is too early to tell whether these legislative and regulatory initiatives, actions and proposals will achieve their intended effect or what impact they will have on our business and the mortgage industry generally.

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Following is a brief description of several key initiatives, actions and proposals that may impact the mortgage industry:

·   Guidance on Nontraditional Mortgage Product Risks.  On September 29, 2006, the federal banking agencies issued guidance to address the risks posed by nontraditional residential mortgage products, that is, mortgage products that allow borrowers to defer repayment of principal or interest. The guidance instructs institutions to ensure that loan terms and underwriting standards are consistent with prudent lending practices, including consideration of a borrower’s ability to repay the debt by final maturity at the fully indexed rate and assuming a fully amortizing repayment schedule; requires institutions to recognize, for higher risk loans, the necessity of verifying the borrower’s income, assets and liabilities; requires institutions to address the risks associated with simultaneous second-lien loans, introductory interest rates, lending to subprime borrowers, non-owner-occupied investor loans, and reduced documentation loans; requires institutions to recognize that nontraditional mortgages, particularly those with risk-layering features, are untested in a stressed environment; requires institutions to recognize that nontraditional mortgage products warrant strong controls and risk management standards, capital levels commensurate with that risk, and allowances for loan and lease losses that reflect the collectibility of the portfolio; and ensure that consumers have sufficient information to clearly understand loan terms and associated risks prior to making product and payment choices. The guidance recommends practices for addressing the risks raised by nontraditional mortgages, including enhanced communications with consumers; promotional materials and other product descriptions that provide information about the costs, terms, features and risks of nontraditional mortgages; more informative monthly statements for payment option adjustable rate mortgages; and specified practices to avoid. In January 2008, in response to this federal guidance on non-traditional mortgage loans, California enacted SB 385 which requires lenders offering non-traditional mortgages on primary residential properties to provide additional disclosure information pertaining to the terms of the loan offered, as well as a comparison to other loan products that may be available in the marketplace. The California Department of Real Estate defines ‘non-traditional’ mortgages as those in which there is a deferral of either principal or interest in the loan.

·   Guidance on Loss Mitigation Strategies for Servicers of Residential Mortgages.On September 5, 2007, the federal banking agencies issued a statement encouraging regulated institutions and state-supervised entities that service residential mortgages to pursue strategies to mitigate losses while preserving homeownership to the extent possible and appropriate. The guidance encourages servicers to take proactive steps to preserve homeownership in situations where there are heightened risks to homeowners losing their homes to foreclosures. Such steps may include loan modification; deferral of payments; extensions of loan maturities; conversion of adjustable rate mortgages into fixed rate or fully indexed, fully amortizing adjustable rate mortgages; capitalization of delinquent amounts; or any combination of these actions. Servicers are instructed to consider the borrower’s ability to repay the modified obligation to final maturity according to its terms, taking into account the borrower’s total monthly housing-related payments as a percentage of the borrower’s gross monthly income, the borrower’s other obligations, and any additional tax liabilities that may result from loan modifications. Where appropriate, servicers are encouraged to refer borrowers to qualified non-profit and other homeownership counseling services and/or to government programs that are able to work with all parties and avoid unnecessary foreclosures. The guidance states that servicers are expected to treat consumers fairly and to adhere to all applicable legal requirements.

·   Housing and Economic Recovery Act of 2008.  Enacted in July 2008, this legislation, among other things, established new Fannie Mae, Freddie Mac and FHA conforming loan limits and established a new Federal Housing Finance Agency. It also established the new “HOPE for Homeowners Program” to refinance existing borrowers meeting eligibility requirements into fixed-rate FHA mortgage products. This act also provided for a comprehensive, nationwide licensing and registry system for mortgage originators. The federal direction to states to adopt national loan originator licensing standards has been implemented in California through the California Department of Real Estate (DRE) and the California Department of Corporations (DOC). Much of what has been adopted at the federal level has already been in effect in California under the DRE’s regulatory authority for a number of years.

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·   New Regulations Establishing Protections for Consumers in the Residential Mortgage Market. In 2008, the Federal Reserve Board issued new regulations under the federal Truth-in-Lending Act and the Home Ownership and Equity Protection Act (HOEPA). For mortgage loans governed by HOEPA, the new regulations further restrict prepayment penalties, and enhance the standards relating to the consumer’s ability to repay. For a new category of closed-end “higher-priced” mortgage loans, the new regulations restrict prepayment penalties, and require escrows for property taxes and property-related insurance for most first lien mortgage loans. For all closed-end loans secured by a principal dwelling, the new regulations prohibit the coercion of appraisers; require the prompt crediting of payments; prohibit the pyramiding of late fees; require prompt responses to requests for pay-off figures; and require the delivery of transaction-specific Truth-in-Lending Act disclosures within three business days following the receipt of an application. The new regulations also impose new restrictions on mortgage loan advertising for both open-end and closed-end products. In general, the new regulations are effective October 1, 2009, with certain exceptions.

·   Proposed Amendments to the U.S. Bankruptcy Code.  Since 2008, proposed legislation has been introduced before the U.S. Congress for the purpose of amending Chapter 13 in order to permit bankruptcy judges to modify certain terms in certain mortgages in bankruptcy proceedings, a practice commonly known as cramdown. Presently, Chapter 13 does not permit bankruptcy judges to modify mortgages of bankrupt borrowers. While the breadth and scope of the terms of the proposed amendments to Chapter 13 differ greatly, some commentators have suggested that such legislation could have the effect of increasing mortgage borrowing costs and thereby reducing the demand for mortgages throughout the industry. It is too early to tell when or if any of the proposed amendments to Chapter 13 may be enacted as proposed and what impact any such enacted amendments to Chapter 13 could have on the mortgage industry. Some local and state governmental authorities have taken, and others are contemplating taking, regulatory action to require increased loss mitigation outreach for borrowers, including the imposition of waiting periods prior to the filing of notices of default and the completion of foreclosure sales and, in some cases, moratoriums on foreclosures altogether.

General Economic Conditions

In testimony given on February 14, 2012, Secretary of the Treasury Timothy Geithner stated, “Three years after the worst financial crisis since the Great Depression, our economy is gradually getting stronger. Over the last two and a half years the economy has grown at an annual rate of 2.5 percent, exceeding growth in the year prior to the recession. Private employers have added 3.7 million jobs over the past 23 months, including more than 400,000 manufacturing jobs. Growth has been led by exports, which have grown 25 percent in real terms over the last two and one-half years, and by business investment in equipment and software, which has risen by 33 percent during the same period. While the economy is regaining strength, we still face significant economic challenges. Unemployment, at 8.3 percent, is still far too high, and the housing market remains weak. The damage inflicted by the crisis presents difficulties for consumers and businesses alike. In addition, the debt crisis in Europe and the slowing of major economies elsewhere in the world present potential impediments to our economic growth.”

Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System in a speech on February 10, 2012 said, “Though some progress has been made in reversing the losses in jobs and income sustained during the last recession, the pace of expansion has been frustratingly slow and the unemployment rate remains very high by historical standards. The state of the housing sector has been a key impediment to a faster recovery. The state of housing and mortgage markets may also be holding back the recovery of our financial system and the normalization of credit conditions. Mortgage delinquencies surged between 2007 and 2009 and remain high, imposing losses on lenders, mortgage insurers, and investors. Although some of the losses were the result of poorly underwritten mortgages, an increasing share of losses has arisen from prime mortgages originally fully documented with significant down payments, have defaulted due to the weak economy and housing market.”

Chairman Bernanke further stated, “The large imbalance of supply and demand has been reflected in a drop in home prices of historic proportions. Nationally, house prices have plunged about 30 percent in nominal terms from their peak and 40 percent in real, or inflation-adjusted, terms. In contrast to the situation for owner-occupied homes, rental markets around the country have strengthened somewhat. In particular, vacancy rates for rental properties have declined and now stand near the lower end of their range over the past eight years. Not surprisingly, rents have been increasing and the construction of apartment buildings has picked up. With home prices falling and rents rising, it could make sense in some markets to turn some of the foreclosed properties into rental properties.”

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These statements by two of our country’s economic leaders, give a quick summary of the economic conditions facing the company. Real estate finance continues to be challenging, but general economic conditions are better (but not yet a recovery by historic standards) and the lending markets remain constricted. Not noted above are these conditions persist with interest rates at historic lows and United States’ federal deficits at historic highs.

An area of particular note is the Mortgage Bankers Association projects originations of commercial and multi-family mortgages will be $230 billion in 2012, an increase of 17 percent from 2011, and continue to rise to $290 billion in 2015.

Item 1A – Risk Factors

In considering our future performance and any forward-looking statements made in this report, the material risks described below should be considered carefully. These factors should be considered in conjunction with the other information included elsewhere in this report.

MORTGAGE LENDING AND REAL ESTATE RISKS

You Will Be Unable to Evaluate Any Loans or Underlying Properties for Which We May Use Non-invested Cash in the Future

With respect to our cash available for funding future loans and any future proceeds, the offering is ongoing and it may continue until June 8, 2012, unless prior to such date, we file a new registration statement, in which event the offering will continue until the earlier of the effective date of the new registration statement or December 5, 2012. ·Investors must rely entirely on the judgment of our managers in investing the cash and proceeds. ·Investors will be unable to evaluate, in advance, any of the terms of the loans including the selection of borrowers, and the terms of the loans that will be made. ·Investors will have no ability to evaluate the identification or location of, or any other important economic and financial data pertaining to, the underlying properties that secure the loans. ·We could suffer delays in making loans or suffer loan defaults or impairment, which could adversely affect our ability to pay distributions to our members.

If We Are Unable to Raise Substantial Funds, We Will Be Limited in the Number and Type of Properties We May Finance

Pursuant to a registration statement we filed with the SEC in November 2008 and related prospectus and prospectus supplement, as amended, we are offering our units on a “best efforts” basis, whereby the broker-dealers participating in the offering are only required to use their best efforts to sell our units and have no firm commitment or obligation to purchase any of the units. As a result, we cannot assure you that any specific amount of gross proceeds will be raised, beyond amounts previously raised that are set forth elsewhere in this report, when we ultimately terminate the offering. The minimum amount in the offering of $1 million was raised by October 2009 when we first released cash proceeds from escrow and admitted additional members. The maximum amount of the offering, at $1 per unit, is up to 150,000,000 units in the primary offering and up to 37,500,000 units in the distribution reinvestment plan. If we are unable to raise substantially more proceeds than reported to date, we will originate and purchase fewer loans resulting in less diversification in terms of the number of properties financed, the geographic regions in which such properties are located and the types of properties securing the mortgages in which we invest. In such event, the likelihood of our profitability being affected by the performance of any one of our investments will increase. An investment in our units will be subject to greater risk to the extent that we lack a diversified portfolio of mortgage assets. In addition, our fixed operating expenses, as a percentage of gross income, would be higher, and our financial condition and ability to pay distributions could be adversely affected if we are unable to raise substantial funds.

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Suitable Mortgage Loans May Not Be Available From Time to Time, Which Could Reduce Your Return on Investment	Our managers receive referrals from a variety of sources, but will only make loans that satisfy our investment criteria. The ability to find suitable loans is more difficult when the economy is weaker and there is less activity in the real estate market. For example, currently the residential and commercial real estate markets in the San Francisco Bay Area are in a downturn, leading to less activity in the market and less demand for mortgage loans. In the event that the current decrease in demand for loans continues, we may be unable to find a sufficient number of suitable loans which could leave us with excess cash. In such event, we will make short term, interim investments in government obligations, certificates of deposit, money market or other liquid asset accounts, with the offering proceeds pending investment in suitable loans. Interest returns on these investments are usually lower than on mortgage loans, which would reduce the yield to holders of units, depending on how long these investments are held.
Loan Defaults and Foreclosures May Adversely Affect Us	We are engaged in the business of lending money and, as such, are subject to the risk that borrowers may be unable to repay the loans we have made to them. Most loans will be interest only or interest with small periodic repayments of principal. This means: ·The loans are structured to provide for relatively small monthly payments with a large “balloon” payment of principal due at the end of the term. Many borrowers are unable to repay such loans at maturity out of their own funds and are compelled to refinance or sell their property. ·Defaults and foreclosures may increase if the economy weakens further or if interest rates increase, which may make it more difficult for borrowers to refinance their loans at maturity or sell their property. ·If a borrower is unable to repay the loan and defaults, we may be forced to purchase the property at a foreclosure sale. If we cannot quickly sell or refinance such property, and the property does not produce any significant income, our profitability will be adversely affected. Recently enacted borrower protection laws in California impose additional notice and disclosure requirements on lenders which may slow or limit a lender’s ability to exercise remedies against residential real property collateral, including its right to sell the property in a foreclosure sale. We are aware of other proposed federal legislation under consideration which, if enacted, may also limit a lender’s ability to exercise remedies against residential real property collateral following a borrower’s default in the performance of its loan obligations. In addition, any litigation instituted by a defaulting borrower or the operation of the federal bankruptcy laws may have the effect of delaying enforcement of the lien of a defaulted loan and may in certain circumstances reduce the amount realizable from sale of a foreclosed property. A “lien” is a charge against the property of which the holder may cause the property to be sold and use the proceeds in satisfaction of the lien. In the event our right to foreclose is contested, the legal proceedings necessary to resolve the issue can be time-consuming. A judicial foreclosure may be subject to most of the delays and expenses of other litigation, sometimes requiring up to several years to complete.
Our Entry Into Workout Agreements with Delinquent Borrowers Could Lead to a Loss of Revenue	We may periodically enter into workout agreements with borrowers who are past maturity or delinquent in their regular payments. Typically, a workout agreement allows the borrower to extend the maturity date of the balloon payment and/or allows the borrower to make current monthly payments while deferring for periods of time, past due payments, and allows time to pay the loan in full.  In the event we enter into workout agreements, we may experience a loss of revenue, which could adversely affect our profitability and the returns to our members.

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We Must Rely on Appraisals Which May Not Be Accurate or May Be Affected by Subsequent Events	We are primarily an “asset” rather than a “credit” lender and rely mainly on the real property securing the loans to protect our investment. We will rely on appraisals, prepared by unrelated third parties, to determine the fair market value of real property used to secure our loans. We cannot guarantee that such appraisals will, in any or all cases, be accurate. If an appraisal is not accurate or subsequent events adversely affect the value of the property, our loan would not be as secure as we anticipated. In the event of foreclosure, we may not be able to recover our entire investment. Additionally, since an appraisal fixes the value of real property at a given point in time, subsequent events could adversely affect the value of real property used to secure a loan.
Our Lack of Emphasis on the Creditworthiness of a Commercial Borrower May Increase the Risk of Loan Defaults	While we will review and consider the income level and general creditworthiness of a borrower as part of our overall evaluation process, such considerations are subordinate to a determination that a borrower has sufficient equity in the security property to satisfy required loan-to-value ratios. Our lack of emphasis on the creditworthiness of a borrower may increase the risk of defaults on loans we make. In the event of a loan default, we may be forced to purchase the property securing the loan at a foreclosure sale. If we cannot quickly sell or refinance the foreclosed property, and if the property does not produce significant income, our profitability will be adversely affected.
We Compete With Many Other Mortgage Lenders for Loans Which Could Lead to Lower Yields and Fewer Lending Opportunities	Increased competition for mortgage loans could lead to reduced yields and fewer investment opportunities. The mortgage lending business is highly competitive, and we will compete with numerous established entities, some of which have more financial resources and experience in the mortgage lending business than our managers. We will encounter significant competition from banks, insurance companies, savings and loan associations, mortgage bankers, pension funds, real estate investment trusts and other lenders with objectives similar in whole or in part to ours.
Some of Our Loans are Junior in Priority and More Difficult and Costly to Protect	We anticipate that our loans will eventually be diversified as to priority approximately as follows: ·first mortgages – 40-60% ·second mortgages (which will be junior to a first mortgage) – 40-60% ·third mortgages (which will be junior to the two other mortgages) – 0-10%. The lien securing each loan will not be junior to more than two other encumbrances (a first and, in some cases a second deed of trust) on the real property which is to be used as security for the loan. In the event of foreclosure under a second or third deed of trust the debt secured by a senior deed(s) of trust must be satisfied before any proceeds from the sale of the property can be applied toward the debt owed to us. To protect our junior security interest, we may be required to make substantial cash outlays for such items as loan payments to senior lien holders to prevent their foreclosure, property taxes, insurance, repairs, maintenance and any other expenses associated with the property. These expenditures could have an adverse effect on our profitability.

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We Make Construction Loans Which May Subject Us to Greater Risks	We may make construction loans up to a maximum of 10% of our loan portfolio. Construction loans are those loans made to borrowers constructing entirely new structures or dwellings, whether residential, commercial or multi-family properties. Investing in construction loans subjects us to greater risk than loans related to properties with operating histories. If we foreclose on property under construction, construction will generally have to be completed before the property can begin to generate an income stream or could be sold. We may not have adequate cash reserves on hand with respect to junior encumbrances and/or construction loans at all times to protect our security. If we have inadequate cash reserves, we could suffer a loss of our investment. Additionally, we may be required to obtain permanent financing of the property in addition to the construction loan which could involve the payment of significant fees and additional cash obligations for us.
We Make Rehabilitation Loans Which May Subject Us to Greater Risks	In addition to construction loans, we may make “rehabilitation loans” to finance remodeling, adding to and/or rehabilitating an existing structure or dwelling, whether residential, commercial or multi-family properties. We may make rehabilitation loans up to a maximum of 15% of our loan portfolio. Investing in rehabilitation loans subjects us to greater risk than standard acquisition loans for properties. If we foreclose on a property undergoing remodeling or rehabilitation, such remodeling or rehabilitation will generally have to be completed before the property can realize the anticipated increase in value from such remodeling or rehabilitation. We may not have adequate cash reserves on hand with respect to junior encumbrances and/or rehabilitation loans at all times to protect our security. If we have inadequate cash reserves, we could suffer a loss of our investment. Additionally, we may be required to obtain permanent financing of the property in addition to the rehabilitation loan which could involve the payment of significant fees and additional cash obligations for us.
Owning Real Estate Following Foreclosure Will Subject Us to Many Additional Risks	If a borrower is unable to pay our loan or refinance it when it is due, we may be required to institute foreclosure proceedings against the borrower. Although we may immediately be able to sell the property, sometimes we will be required to own the property for a period of time. We will be subject to certain economic and liability risks attendant to all property ownership which could affect our profitability. The risks of ownership will include the following: ·The property could generate less income for us than we could have earned from interest on the loan. ·If the property is a rental property we will be required to find and keep tenants. ·We will be required to oversee and control operating expenses. ·We will be subject to general and local real estate and economic market conditions which could adversely affect the value of the property. ·We will be subject to any change in laws or regulations regarding taxes, use, zoning and environmental protection and hazards. ·We will be potentially liable for any injury that occurs on or to the property. ·We will be subject to local municipal codes and penalties relating to the maintenance and upkeep of lender owned properties.

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The Newly Effective Consumer Financial Protection Bureau	Established under the Dodd-Frank Act, the CFPB is charged with authority over all federal consumer lending regulations and with implementing a large number of federal consumer legislation, including ECOA, RESPA, the Fair Lending Act, the Truth in Lending Act, the Home Ownership and Equity Protection Act and the Mortgage Disclosure Improvement Act. Residing within the Federal Reserve, the CFPB has been officially operating since July 21, 2011. In addition to its regulatory authority the CFPB will have examination authority over all federal and state non-depository lending institutions, including mortgage brokers and lenders. In January 2012 the CFPB released examination procedures for mortgage servicing and for mortgage origination. The company is subject to possible examination by the CFPB. Such examinations, as well as regulations the Bureau might issue in the future, could ultimately increase our administrative burdens and adversely affect the return to our members.
If We Decide to Develop Property Acquired by Us, We Will Face Many Additional Risks	If we have acquired property through foreclosure or otherwise, there may be circumstances in which it would be in our best interest not to immediately sell the property, but to develop it ourselves. Depending upon the location of the property and market conditions, the development done by us could be either residential (single or multi-family) or commercial. Development of any type of real estate involves risks including the following: ·We will be required to rely on the skill and financial stability of third party developers and contractors. ·Any development or construction will involve obtaining local government permits. We will be subject to the risk that our project does not meet the requirements necessary to obtain those permits. ·Any type of development and construction is subject to delays and cost overruns. ·There can be no guarantee that upon completion of the development that we will be able to sell the property or realize a profit from the sale. ·Economic factors and real estate market conditions could adversely affect the value of the property.
Bankruptcy and Legal Limitations on Personal Judgments May Adversely Affect Our Profitability	Any borrower has the ability to delay a foreclosure sale by us for a period ranging from several months to several years or more by filing a petition in bankruptcy. The filing of a petition in bankruptcy automatically stops or “stays” any actions to enforce the terms of the loan. The length of this delay and the costs associated with it will generally have an adverse impact on our profitability. We also may not be able to obtain a personal judgment against a borrower.
Unintended Violations of Usury Statutes May Adversely Affect Us	Usury laws impose restrictions on the maximum interest that may be charged on our loans. Subject to applicable requirements of California law, loans arranged by a licensed California real estate broker or a licensed California Finance Lender will be exempt from applicable California usury provisions. Since RMC, a licensed California real estate broker and a holder of a California Finance Lenders license, or CFL license, will arrange our loans, our loans should be exempt from applicable state usury provisions. Nevertheless, unintended violations of the usury statutes may occur.  In such an event, we may have insufficient cash to pay any damages, thereby adversely affecting our operations. We could also lose our entire investment. We also intend to apply for a CFL license in the name of Redwood Mortgage Investors IX, LLC to provide additional flexibility in establishing the usury exemption.

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If We Make High Cost Mortgages, We Will Be Required to Comply With Additional Regulations	Although we anticipate making relatively few loans that would qualify as “high cost mortgages,” as defined by regulations of the CFPB, the failure to comply with these regulations could adversely affect us. A high cost mortgage is any loan made to a consumer secured by the consumer’s principal residence if either (i) the annual percentage rate exceeds by more than 8%, the yield on Treasury securities having comparable periods of maturity for first mortgages, or 10% for junior mortgages or (ii) the total fees payable by a consumer at or before closing exceeds 8% of the total loan amount. These regulations primarily focus on:
	·additional disclosure with respect to the terms of the loan to the borrower; ·the timing of such disclosures; and ·the prohibition of certain terms in the loan including balloon payments and negative amortization. The failure to comply with the regulations, even if the failure was unintended, will render the loan rescindable for up to three years. The lender could also be held liable for attorneys’ fees, finance charges and fees paid by the borrower and certain other money damages. In addition, under California law residential mortgage and consumer loans secured by liens on primary residences in amounts less than the Fannie Mae/Freddie Mac conforming loan limit are considered to be “high cost loans” if they have (i) an annual percentage rate at least 8% above the interest rate on U.S. Treasury securities of a comparable maturity, or (ii) points and fees in excess of 6% of the loan amount, exclusive of the points and fees. While it is unlikely that we would make many high cost loans, the failure to comply with California law regarding such loans could have significant adverse effects on us. The law prohibits certain lending practices with respect to high cost loans, including the making of a loan without regard to the borrower’s income or obligations. When making such loans, lenders must provide borrowers with a consumer disclosure, and provide for an additional rescission period prior to closing the loan. The reckless or willful failure to comply with any provision of this law, including the mandatory disclosure provisions, could result in, among other penalties, the imposition of administrative penalties of $25,000, loss or suspension of the offending broker’s license, as well as exposure to civil liability to the consumer/borrower (including the imposition of actual and punitive damages).
We Operate in a Highly Regulated Industry and the Failure to Comply with Such Regulations Will Materially Adversely Affect Our Business	The mortgage business has traditionally been highly regulated. The costs of complying with these regulations could adversely affect our profitability, and violations of these regulations could materially adversely affect our business and financial results. Recently, the turmoil in our industry has led to various proposed new legislation, rules and regulations by federal, state and local authorities relating to the origination and servicing of mortgage loans. If enacted, these initiatives could result in delayed or reduced collections from mortgagors, limitations on the foreclosure process and generally increased servicing costs. These legislative and regulatory initiatives could ultimately increase our administrative burdens and adversely affect the returns to our members.

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Since We Are Not Regulated As a Bank, Our Members and Borrowers May Have Fewer Protections	Although we are engaged in mortgage lending, we and our affiliates are not banks and accordingly, are not generally subject to the federal and state banking regulations, policies and oversight applicable to banks. For example, banks are subject to federal regulation and examination by the Federal Deposit Insurance Corporation, or FDIC, which insures bank deposits up to applicable limits. The operations of banks are also subject to the regulation and oversight of the Federal Reserve Board and state banking regulators. Banks are required to maintain a minimum level of regulatory capital in accordance with stringent guidelines established by federal law. Federal and state banking agencies also regulate the lending practices, capital structure, investment practices and dividend policy of banks, among other things. Because we and our affiliates are generally not subject to the capital requirements and other regulations and oversight applicable to banks, our members and borrowers may not have the same level of protections and safeguards afforded to owners and customers of banks.
Loan-To-Value Ratios are Determined Principally by Appraisals and Loan Broker’s Opinion of Value, Which May Be in Excess of the Ultimate Purchase Price of the Underlying Property	The so-called “loan-to-value ratio” will not exceed the following: ·80% of the appraised value for residential properties and multi-unit property; ·75% of the appraised value for commercial property; and ·50% of the appraised value for unimproved land. The loan-to-value ratios are determined based on the appraised value of a property which may be in excess of the ultimate purchase price of the underlying property. We cannot assure you that such appraisals will reflect the actual amount buyers will pay for the property. In the case of a loan made in connection with a pending property purchase, an appraisal may, for various reasons, reflect a higher or lower value than the purchase amount; we will nevertheless base our loan-to-value ratios on the appraised value, rather than on such purchase amount. Further, if the value of the property declines to a value below the amount of the loan, the loan could become under-collateralized. This would result in a risk of loss for us if the borrower defaults on the loan.
Larger Loans Result in Less Diversity and May Increase Risk	We can as a general rule decrease the risk of loss from delinquent mortgage loans by investing in a greater total number of loans. Investing in fewer, larger loans generally decreases diversification of the portfolio and increases risk of loss and possible reduction of yield to our members in the case of a delinquency of such a loan.  However, since larger loans generally will carry a somewhat higher interest rate, our managers may determine, from time to time, that a relatively larger loan is advisable for us. Our maximum investment in a loan, when made will not exceed 10% of our then total assets.
Use of Borrowed Money May Reduce Our Profitability or Cause Losses Through Liquidation	We will be permitted to borrow funds for the purpose of making loans, for increased liquidity, reducing cash reserve needs or for any other proper purpose on any terms commercially available. We may assign all or a portion of our loan portfolio and/or all or a portion of real estate that we own as security for such loans. Our managers may not leverage more than, and our total indebtedness may not at any time exceed, 50% of members’ capital.

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	Changes in the interest rate will have a particularly adverse effect on us if we have borrowed money to fund loans. Borrowed money will likely bear interest at a variable rate, whereas we are likely to be making fixed rate loans. Thus, if prevailing interest rates rise, we may have to pay more in interest on the borrowed money than we make on loans to our borrowers. This will reduce our profitability or cause losses through liquidation of loans in order to repay the debt on the borrowed money. It is possible that we could default on our obligation if we cannot cover the debt on the borrowed money.
Changes in Interest Rates May Affect Your Return on Your Investment	We expect that our loans will typically have fixed rates and the majority of our loans will be for terms of one to five years. Consequently, due to the terms of our loans, if interest rates rapidly increase, such interest rates may exceed the average interest rate earned by our loan portfolio. If prevailing interest rates rise above the average interest rate being earned by our loan portfolio, you may be unable to quickly sell your units, as they are an illiquid investment, in order to take advantage of higher returns available from other investments. In addition, an increase in interest rates accompanied by a tight supply of mortgage funds may make refinancing by borrowers with balloon payments difficult or impossible. This is true regardless of the market value of the underlying property at the time such balloon payments are due. In such event, the property may be foreclosed upon. Moreover, we expect that the majority of our loans will not include prepayment penalties for a borrower paying off a loan prior to maturity. The absence of a prepayment penalty in our loans may lead borrowers to refinance higher interest rate loans in a market of falling interest rates. This would then require us to reinvest the prepayment proceeds in loans or alternative short term investments with lower interest rates and a corresponding lower yield to members.
Marshaling of Assets Could Delay or Reduce Recovery of Loans	As security for a single loan, we may require a borrower to execute deeds of trust on other properties owned by the borrower in addition to the property the borrower is purchasing or refinancing. In the event of a default by the borrower, we may be required to “marshal” the assets of the borrower. Marshaling is an equitable doctrine used to protect a junior lienholder with a security interest in a single property from being “squeezed out” by a senior lienholder, such as us, with security interest not only in the property, but in one or more additional properties. Accordingly, if another creditor of the borrower forced us to marshal the borrower’s assets, foreclosure and eventual recovery of the loan could be delayed or reduced, and our costs associated therewith could be increased.
We May Provide Loans to Borrowers Who Are in Default Under Other of Their Obligations	While we are primarily an “asset” rather than a “credit” lender and will rely mainly on the real property securing the loans to protect our investment, we may also consider the income level and general creditworthiness of a borrower to determine his or her ability to repay the loan according to its terms. Accordingly, loans may be made to borrowers who are in default under other of their obligations (e.g., to consolidate their debts) or who do not have sources of income that would be sufficient to qualify for loans from other lenders such as banks or savings and loan associations. There is a greater risk that such borrowers will default under loans we make to them.

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We May Face Potential Liability for Toxic or Hazardous Substances	If we take an equity interest in, management control of, or foreclose on any of the loans, we may be considered the owner of the real property securing such loans. In the event of any environmental contamination, there can be no assurance that we would not incur full recourse liability for the entire cost of any such removal and cleanup, even if we did not know about or participate in the contamination. Full recourse liability means that any of our property, including the contaminated property, could be sold in order to pay the costs of cleanup in excess of the value of the property at which such contamination occurred. In addition, we could incur liability to tenants and other users of the affected property, or users of neighboring property, including liability for consequential damages. Consequential damages are damages which are a consequence of the contamination but are not costs required to clean up the contamination, such as lost profits of a business.
If Properties We Own Contain Hazardous Substances, We Could Be Required to Pay for Their Removal or Clean Up	If we became the “owner” of any real property containing hazardous substances, we would also be exposed to risk of lost revenues during any cleanup, the risk of lower lease rates or decreased occupancy if the existence of such substances or sources on the property were a health risk. If we fail to remove the substances or sources and clean up the property, federal, state, or local environmental agencies could perform such removal and cleanup. Such agencies would impose and subsequently foreclose liens on the property for the cost thereof. We may find it difficult or impossible to sell the property prior to or following any such cleanup. If such substances are discovered after we sell the property, we could be liable to the purchaser thereof if our managers knew or had reason to know that such substances or sources existed.  In such case, we could also be subject to the costs described above. If we are required to incur such costs or satisfy such liabilities, this could have a material adverse effect on our profitability. Additionally, if a borrower is required to incur such costs or satisfy such liabilities, this could result in the borrower’s inability to repay its loan from us.
Conflicts May Arise if We Participate in Loans With Other Programs Organized by Our Managers	In certain limited circumstances and subject to compliance with applicable regulations or guidelines, we may participate in loans with other programs organized by our managers, where we purchase a fractional undivided interest in a loan. Our portion of the total loan may be smaller or greater than the portion of the loan made by the other programs. You should be aware that participating in loans with other programs organized by our managers could result in a conflict of interest between us and our managers as well between us and such other programs, in the event that the borrower defaults on the loan and our managers protect the interests of other programs, which they have organized, in the loan and in the underlying security.
The Reduction in Availability of Mortgage Lending and the Volatility and Reduction in Liquidity in the Financial Markets May Adversely Affect Our Results	In recent years, the mortgage lending industry has experienced significant instability. Due to factors such as defaults on subprime loans and the resulting decline in the market value of such loans, lenders, investors and regulators have questioned the adequacy of lending standards and other credit requirements for mortgage loans in recent years. Deterioration in credit quality among subprime and other nonconforming loans has caused substantially all lenders to eliminate subprime mortgages and most other non-conforming loans. Fewer loan options, stricter loan qualifications and other limitations or restrictions on the availability of those types of financings make it more difficult for some borrowers to finance the purchase of new and existing homes. These factors have reduced the affordability of homes and the pool of qualified homebuyers and made it more difficult to sell to first time and first time move-up buyers which have long made up a substantial part of the affordable housing market. These reductions in demand would increase the likelihood of defaults on our loans and, consequently, reduce our ability to pay distributions to our shareholders, and the duration and severity of the effects remain uncertain.

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Another Mortgage Program With Similar Investment Objectives Sponsored By Our Managers Experienced Declines in Cash Flows   Many mortgage lenders, including Redwood Mortgage Investors VIII (“RMI VIII”), a prior public mortgage program sponsored by our managers, experienced and continues to experience disruptions in cash flows from reduced loan payoffs and increased loan delinquencies. The investment objectives and strategy of these programs are substantially similar to ours. Like us, these programs make loans primarily secured by first and second deeds of trust on California real estate, including residential, commercial and multifamily properties, as well as land. From time to time, loan originations in one sector or property type become more active due to prevailing market conditions. As a result, in recent years RMI VIII’s portfolio has become more heavily weighted in residential condominiums and condominium complexes than in other property types. Availability of financing for condominium properties has been, and will likely continue to be, constricted and the stringent underwriting criteria used by lenders will cause fewer applicants to qualify for loans. Several of these condominium projects were foreclosed upon and are being held as Real Estate Owned and are rented.   In other instances RMI VIII entered into workout agreements. A workout agreement allows the borrower to extend the maturity date of the balloon payment and/or allows the borrower to make current monthly payments while deferring for periods of time, past due payments, or allows time to pay the loan in full. By deferring maturity dates of balloon payments or deferring past due payments, however, workout agreements may adversely affect the lender’s cash flow.   RMI VIII has and may continue to acquire more real estate through foreclosures. RMI VIII may choose to hold many of the properties it forecloses upon for periods of time rather than immediately selling the properties, particularly where the property has the potential to generate rental income or the value of the property can be enhanced through improvements. In the interim, this will result in RMI VIII being a holder of both debt and equity on California real estate and will require RMI VIII to expend time, effort and resources toward the management of such properties.   In response to the above conditions and in an effort to preserve cash for company operations in the current economic environment, in March 2009, RMI VIII, suspended payments to withdrawing partners until further notice and has since significantly reduced the amount of distributions made to investors. RMI VIII is unable to predict when liquidations will resume as it will depend on the payment and other terms and conditions of the amended and restated loan agreement with RMI VIII’s lending banks, the ability to collect monies due from borrowers and to dispose of real estate owned, or to receive net rental income from real estate owned, and on the improvement of general economic and capital market conditions and recovery of the real estate market. In the event the amended and restated loan agreement remains in effect, the current economic downturn continues, the disruption in the credit markets is prolonged, or liquidity in the partnership is otherwise further restricted, liquidations will continue to be suspended. For the foreseeable future, RMI VIII intends to utilize available cash flows to fund its business operations, protect its security interests in properties, maintain its real estate owned, and make the required payments and maintain the required minimum cash balances per the terms and conditions of the amended and restated loan agreement. It is anticipated liquidation payments will resume only when RMI VIII’s cash flows improve to levels that enable RMI VIII to resume lending and business operations unconstrained by the amended and restated loan agreement and the economy and the real estate and capital markets stabilize and return to normal levels of activity.  

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	As of October 18, 2010, RMI VIII and the banks entered into an amended and restated loan agreement. The significant terms and conditions in the amended loan agreement include:  1) an extended maturity date of June 30, 2012; with continuing scheduled pay downs of the loan amount to maturity; 2) an interest rate of Prime plus 1.5% subject to a floor of 5.0%; 3) an annual facility fee (payable quarterly) of 0.5%; 4) required remittance to the banks of 70% of net proceeds from the sale or refinance of REO and/or net proceeds from loan payoffs in excess of $5 million; 5) required remittance of cash balances in excess of $12 million; 6) restrictions on use of cash including no new loans with the exception of refinance of existing loans, no expenditures in the ordinary course of business to preserve, maintain, repair, or operate property in excess of $1 million without prior written consent (subject to exclusions for funds set aside for REO projects and servicing of senior liens designated in the loan agreement), limitations on distributions to electing limited partners of an amount not to exceed a distribution rate of 2.1%; 7) a collateral covenant, and 8) a financial covenant. We may experience declines in cash flow and increases in loan delinquencies similar to that experienced by other mortgage lenders, such as RMI VIII.
Our Operating Results May be Affected by Economic and Regulatory Changes That Have an Adverse Impact on the Real Estate Market.	Our operating results will be subject to risks generally associated with the ownership of assets related to the real estate industry, including: ·changes in interest rates and availability of permanent mortgage funds; ·changes in general economic or local conditions; ·changes in tax, environmental, zoning and other real estate laws; and ·periods of high interest rates and tight money supply. Due to these reasons, among others, we cannot assure you that we will be profitable or that we will increase profitability from income we receive from our investments.
The Concentration of Loans with a Single Borrower May Increase Our Risks	We may invest in multiple secured loans that share a common borrower. The aggregate of our loans, however, to any one borrower may not exceed 10% of the gross proceeds of the offering. The bankruptcy, insolvency or other inability of any borrower that is the subject of multiple loans to pay interest or repay principal on its loans would have adverse effects on our income and reduce the amount of funds available for distribution to members. The more concentrated our portfolio is with one or a few borrowers, the greater credit risk we face. The loss of any one of these borrowers would have a material adverse effect on our financial condition and results of operations.

INVESTMENT RISKS

Our Lack of Operating History Makes It Difficult to Evaluate Our Future Prospects   We have a limited operating history and have not proved we can operate successfully. Our limited operating history makes it difficult to evaluate the future prospects of our business. The past performance of other mortgage programs sponsored by our managers is not necessarily indicative of our future performance and there can be no assurance that we will achieve comparable results.   We have only generated limited revenues to date. We are subject to all of the risks inherent in the establishment of a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business.   There is no way to tell at this stage of our history whether we will be able to successfully implement our investment strategy or achieve our investment objective. There can be no assurance that we will ever achieve any substantial revenues or profitability or that investors will receive any return on investments or the return of their capital contributions.  

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Lack of Liquidity of Units Increases Their Risks	There are substantial restrictions on the transferability of the units. You will not be free to sell or transfer your units at will, and they may not be acceptable by a lender as security for borrowing. No public trading market for the units is expected to exist after the offering. It is highly unlikely that a public trading market will ever develop. The California Commissioner of Corporations also imposes a restriction on sale or transfer, except to specified persons, because of the investor suitability standards that apply to a purchaser of units who is a resident of California. Units may not be sold or transferred without consent of the Commissioner, except to family members, other holders of units, and us. Our operating agreement also imposes substantial restrictions upon a member’s ability to transfer units. The operating agreement provides members with a limited right to redeem units, subject to certain limitations and requirements. The amount that a redeeming member will receive from the company is based on the lesser of the purchase price paid by the redeeming member or the redeeming member’s capital account balance as of the date of each redemption payment. A capital account is a sum calculated for tax and accounting purposes, and may be greater than or less than the fair market value of such member’s interest in the company. The fair market value of the units will be irrelevant in determining amounts to be paid upon redemption. As described above, the amount received by a redeeming member may, under certain circumstances, be based on the member’s capital account balance as of the date of each redemption payment, rather than the date of the redemption request. Accordingly, the amount paid to a member upon redemption may not reflect the redeeming member’s capital balance as of the date on which the redemption request was made. In addition, your units may not be readily accepted as collateral for a loan. Consequently, you should consider the purchase of units only as a long-term investment.
You are Limited in Your Ability to Have Your Units Redeemed Under Our Unit Redemption Program	Our unit redemption program contains significant restrictions and limitations that limit your ability to redeem your units. The number of units you may redeem per quarter will be subject to a maximum of the greater of 100,000 units or 25% of your units outstanding. In addition, we will not, in any calendar year, redeem from all of our members a total of more than 5% (or in any calendar quarter, redeem more than 1.25%) of the weighted average number of all units outstanding during the twelve month period immediately prior to the date of the redemption. Moreover, our managers reserve the right, in their sole discretion, at any time, to reject any request for redemption, or to suspend or terminate the acceptance of new redemption requests without prior notice, or to terminate, suspend or amend the unit redemption program upon 30 days written notice. Therefore, in making a decision to purchase units, you should not assume that you will be able to sell any of your units back to us pursuant to our redemption program. We will fund redemptions solely from available company cash flow and will not establish a reserve from which to fund redemptions. Accordingly, we cannot guarantee that we will have sufficient funds to accommodate all redemption requests made in any given year.
There is No Assurance You Will Receive Cash Distributions	Our managers and their affiliates will be paid and reimbursed by us for certain services performed for us and expenses paid on our behalf. We will bear all other expenses incurred in our operations. All of these fees and expenses are deducted from cash funds generated by our operations prior to computing the amount that is available for distribution to you. Our managers, in their discretion, may also retain a portion of cash funds generated from operations for working capital purposes. Accordingly, there is no assurance as to when or whether cash will be available for distributions to you.

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You Must Rely on Our Managers for Management Decisions; You Will Have No Control Over Our Operation	All decisions with respect to our management will be made exclusively by our managers. In addition, our managers originate or arrange all of our mortgage loans.  Our success will, to a large extent, depend on the quality of our management, particularly as it relates to lending decisions. You have no right or power to take part in our management. Accordingly, you should not purchase any of the units offered hereby unless you are willing to entrust all aspects of management to our managers. You should carefully evaluate our managers’ capabilities to perform such functions.
Because We Do Not Have Independent Directors, Members May Have Less Protection Against Affiliated Transactions and Conflicts of Interests	We are managed by our managers who have various conflicts of interest in connection with their management of us. We do not have a board of directors, nor any independent directors. The absence of independent directors may leave our members with less protection against affiliated transactions and conflicts of interest arising out of our relationship with our managers and their affiliates and similar matters. These include arrangements pursuant to which our managers and their affiliates are compensated by us. If actions are taken by our managers, or expenses are incurred that are not in our best interests, it could have a material adverse effect on our business and operations.
Because We Do Not Have an Audit or Compensation Committee, Members Will Have to Rely on Our Managers, Who are Not Independent, to Perform These Functions	Since the units are not listed for trading on a national securities exchange, we are not subject to certain of the corporate governance rules established by the national securities exchanges pursuant to the Sarbanes-Oxley Act of 2002. Among other things, these rules relate to independent director standards, audit and compensation committees standards and the use of an audit committee financial expert. Accordingly, our members will not receive the protections these rules and standards were enacted to provide, such as protections against interested director transactions, conflicts of interest and similar matters. We do not have an audit or compensation committee. As a result, members will have to rely on our managers, none of whom are independent, to perform these functions. Thus, there is a potential conflict in that our managers, who are engaged in management, will participate in decisions concerning management compensation and audit issues that may affect management performance.
Your Ability to Recover Your Investment on Dissolution and Termination Will Be Limited	In the event of our dissolution or termination, the proceeds realized from the liquidation of assets, if any, will be distributed to the members only after the satisfaction of claims of creditors. Accordingly, your ability to recover all or any portion of your investment under such circumstances will depend on the amount of funds so realized and claims to be satisfied there from. Additionally, if you have elected to reinvest your distributions into additional units through your participation in our distribution reinvestment plan, you could lose such reinvested distributions in addition to the amount of your initial investment.
We Established the $1 Per Unit Offering Price on an Arbitrary Basis	We arbitrarily determined the $1 per unit selling price for the offering as well as the $1 per unit price for reinvestment of distributions. Such price bears no relationship to our book or asset values. Such price also is not necessarily the amount you may receive pursuant to your limited right to redeem units, subject to certain requirements. The amount that a redeeming member will receive is the lesser of the purchase price for the redeemed units or the redeeming member’s capital account balance as of the date of each redemption payment. The fair market value of your interest in the company will be irrelevant in determining amounts to be paid upon redemption.

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Our Managers and Their Affiliates May Purchase Units and Such Units Will Count Towards the Minimum Offering	Our managers and their affiliates may, in their discretion, purchase units for their own account. The maximum amount of units that may be purchased by our managers or their affiliates is 1,000,000 units ($1,000,000). Upon any such purchases of units, our managers or their affiliates will have the same rights as other members in respect of the units owned by them, including the right to vote on matters subject to the vote of members, subject to certain exceptions. In addition, any units purchased by our managers and their affiliates will be counted toward the minimum of 1,000,000 units ($1,000,000) that must be sold in the primary offering. As a result, at the time that we sell the minimum offering and commence operations, our managers and their affiliates could represent a significant percentage of the outstanding units and exert control over matters requiring the approval of our members.
We May Be Unable to Insure Against Certain Kinds of Losses	We will require comprehensive insurance, including fire and extended coverage, which is customarily obtained for or by a lender, on properties in which we acquire a security interest. Generally, such insurance will be obtained by and at the cost of the borrower. However, there are certain types of losses (generally of a catastrophic nature, such as civil disturbances and acts of God such as earthquakes, floods and slides) which are either uninsurable or not economically insurable. Should such a disaster occur to, or cause the destruction of, any property serving as collateral for a loan, we could lose both our invested capital and anticipated profits from such investment. In addition, on certain real estate owned by us as a result of foreclosure, we may require homeowner’s liability insurance. However, insurance may not be available for theft, vandalism, land or mud slides, hazardous substances or earthquakes on all real estate owned and losses may result from destruction or vandalism of the property thereby adversely affecting our profitability.
Our Anticipated Concentration of Mortgages in the San Francisco Bay Area Exposes Us to Greater Risks of Loss if the Local Economy Weakens	We expect that a significant majority of our loans will be secured by properties located in nine counties that comprise the San Francisco Bay Area (San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa, Marin, Napa, Solano and Sonoma). As is the case nationally, the residential and commercial real estate markets in California, including the San Francisco Bay Area, are in a downturn. Our anticipated concentration of loans in the San Francisco Bay Area exposes us to greater risk of loss if the economy in the San Francisco Bay Area weakens than would be the case if our loans were spread throughout California or the nation. The San Francisco Bay Area economy and/or real estate market conditions could be weakened by: ·An extended economic slowdown or recession in the area ·Overbuilding of commercial and residential properties     ·Relocation of businesses outside of the area due to economic factors such as high cost of living and of doing business within the region ·Increased interest rates, thereby weakening the general real estate market ·Reductions in the availability of credit If the economy were to weaken, it is likely that there would be more property available for sale, values would fall and lending opportunities would decrease. In addition, a weak economy and increased unemployment could adversely affect borrowers resulting in an increase in the number of loans in default.

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You Will Be Bound by Decision of Majority Vote	Subject to certain limitations, members holding a majority of units may vote to, among other things: ·dissolve and terminate the company; ·amend the operating agreement, subject to certain limitations; ·approve or disapprove the sale of all or substantially all of our assets; or ·remove or replace one or all of our managers or elect additional or new managers. If you do not vote with the majority in interest of the other members, you nonetheless will be bound by the majority vote. Our managers will have the right to increase the offering or conduct additional offerings of units without obtaining your consent or the consent of any other member.
The Formation Loan May Be Forgiven Under Certain Circumstances	We will loan to RMC, a manager, funds in an amount equal to the sales commissions and amounts payable in connection with unsolicited sales. The formation loan will be an unsecured loan that will not bear interest and will be repaid in annual installments.  During the offering period, RMC will make annual installments of one-tenth of the principal balance of the formation loan as of December 31 of the prior year. Such payment will be due and payable by December 31 of the following year. Prior to the termination of the offering, the principal balance of the formation loan will increase as additional sales of units are made each year. Upon completion of the offering, the balance of the formation loan will be repaid in ten (10) equal annual installments of principal, without interest, commencing on December 31 of the year following the year the offering terminates. A portion of the amount we receive from redeeming members as early redemption penalties may first be applied to reduce the principal balance of the formation loan.  This will have the effect of reducing the amount owed by RMC to us. If all or any one of the initial managers are removed as a manager by the vote of a majority in interest of the members and a successor or additional manager begins using any other loan brokerage firm for the placement of loans or loan servicing, RMC will be immediately released from any further payment obligation under the formation loan. If all of the managers are removed, no other managers are elected, the company is liquidated and RMC is no longer receiving payments for services rendered, we will forgive the debt on the formation loan and RMC will be immediately released from any further obligations under the formation loan. The non-interest bearing feature of the formation loan will have the effect of slightly diluting your rate of return, but to a much lesser extent than if we were required to bear all of our own syndication expenses out of the offering proceeds.
You Will Have Limited Ability to Liquidate Your Investment Prior to the End of Our Term and May Experience Delays in Receiving Distributions Upon Liquidation	Under our operating agreement, we will continue to operate until October 8, 2028, unless our term is extended by the vote of a majority in interest of the members.  While we do not currently intend to cease operations prior to the end of our term and do not anticipate providing liquidity to our members prior to such time (other than on a limited basis through our unit redemption program), we may dissolve and terminate earlier upon the occurrence of various events described our operating agreement or by operation of law. Upon our dissolution, our managers will seek to promptly liquidate our assets for the best price reasonably obtainable and to use any proceeds to satisfy our debts, and then to distribute any remaining proceeds to our members and managers in accordance with the terms of our operating agreement. However, there is no assurance that our managers will be successful in liquidating us on our anticipated termination date or any earlier dissolution date.  Delays in liquidation may arise due to market conditions and other  factors beyond  the control of  our managers.  In the  event  we are unable  to liquidate on  or prior  to  the  end of our  anticipated term,  you  and other

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	members may not receive distributions of remaining proceeds, if any, in a timely manner or at all.
Our Managers Have Limited Assets Which May Affect Their Ability to Fulfill Their Obligations to Us	Our managers have limited assets and financial resources. As a result, they may not be unable to fulfill their obligations and responsibilities to us. Our managers also serve as the sponsors and managers of other mortgage programs and have legal and financial obligations with respect to these other programs. Additionally, they may have contingent liability for the obligations of such other programs. To the extent that our managers are required to expend a significant portion of their assets and financial resources to satisfy their obligations or liabilities to such other programs or otherwise, their ability to fulfill their financial and other obligations to us may be adversely affected.
Delays in Investment Could Adversely A ffect Your Return	A delay will occur between the time you purchase your units and the time the net proceeds of the offering are invested. This delay could adversely affect the return paid to you. In order to mitigate this risk, pending the investment of the proceeds of the offering, funds will be placed in such highly liquid, short-term investments designated by our managers. The interest earned on such interim investments is expected to be less than the interest we would earn on loans.
We Cannot Precisely Determine Compensation to be Paid to Our Managers and Their Affiliates	Our managers and their affiliates are unable to predict the amounts of compensation to be paid to them. Any such prediction would necessarily involve assumptions of future events and operating results which cannot be made at this time. As a result, there is a risk that members will not have the opportunity to judge ahead of time whether the compensation realized by our managers is commensurate with the return generated by the loans.
Payment of Fees to Our Managers and Their Affiliates Will Reduce Cash Available for Investment and Distribution	Our managers and their affiliates will perform services for us in connection with the offer and sale of the units, the selection and acquisition of our investments and the administration of our investments. They will be paid substantial fees for these services, which will reduce the amount of cash available for investment in properties or distribution to members.
Working Capital Reserves May Not be Adequate	We intend to maintain working capital reserves to meet our obligations, including our carrying costs and operating expenses. Our managers believe such reserves are reasonably sufficient for our contingencies. If for any reason those reserves are insufficient, we will have to borrow the required funds or liquidate some or all of our loans. In the event our managers deem it necessary to borrow funds, there can be no assurance that such borrowing will be on acceptable terms or even available to us. Such a result might require us to liquidate our investments and abandon our activities.
We May be Required to Forego More Favorable Investments to Avoid Regulation Under Investment Company Act of 1940	Our managers intend to conduct our operations so that we will not be subject to regulation under the Investment Company Act of 1940. Among other things, they will monitor the proportions of our funds which are placed in various investments and the form of such investments so that we do not come within the definition of an investment company under such Act. As a result, we may have to forego certain investments which would produce a more favorable return.
Conflicts May Arise as a Result of Our Managers’ Legal and Financial Obligations to Other Mortgage Programs	Our managers and their affiliates are currently involved with five mortgage programs with investment objectives similar to ours. They may also organize other mortgage programs in the future with investment objectives similar to ours. Our managers and such affiliates have legal and financial obligations with respect to these other mortgage programs which are similar to their obligations with respect to us. These obligations may at times conflict or require our managers to limit the resources allocated to us and these other programs.

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Conflicts May Arise From Our Managers’ Allocation of Time Between Us and Other Activities	Our managers and their affiliates have conflicts of interest in allocating the time of their personnel between us and other activities in which they are involved. RMC also provides loan brokerage services to investors other than us. As a result, there will exist conflicts of interest on the part of our managers between us and the other mortgage programs or investors with which they are affiliated at such time.
The Amount of Loan Brokerage Commissions and Other Compensation to Our Managers May Affect the Rate of Return to You	None of the compensation payable to our managers was determined by arms length negotiations. We anticipate that the loan brokerage commissions charged to borrowers by RMC, one of our managers, will average approximately 2-5% of the principal amount of each loan, but may be higher or lower depending upon market conditions. Any increase in the loan brokerage commission charged on loans may have a direct, adverse effect upon the interest rates we charge on loans and thus the overall rate of return to you. This conflict of interest will exist in connection with every loan transaction, and you must rely upon the fiduciary duties of our managers to protect your interests.
If Our Managers Lose or are Unable to Obtain Key Personnel or One or More of Their Key Personnel Decides to Compete With Us, Our Ability to Implement Our Strategic Plans Could be Impaired	We depend on the diligence, experience and skills of certain executive officers and other key personnel of our managers and their affiliates, including Michael R. Burwell, Diana B. Mandarino and Lorene Randich, for the selection, acquisition, structuring and monitoring of our lending and investment activities. These individuals are not bound by employment agreements with the managers or with us. If any of our managers’ key personnel were to cease their employment with them or their affiliates, our operating results could suffer. One of our managers has obtained life insurance policies on Michael Burwell, one of their key personnel. There is no assurance that such insurance will be sufficient to protect against events that may adversely affect our ability to implement our strategies. We also believe that our future success depends, in large part, upon the ability of our managers or their affiliates to hire and retain highly skilled managerial, operational and marketing personnel. We cannot assure you that they will be successful in attracting and retaining such personnel. The loss of key personnel and the inability of our managers to hire any key person could harm our business, financial condition, cash flow and results of operations.
We Will Rely on Independent Broker-Dealers to Sell Units in The offering	We are offering the units through selected broker-dealers who are members of FINRA.  None of the broker-dealers participating in the offering will be affiliated with our sponsors or our managers.  Because we do not have a captive or affiliated broker-dealer that will be exclusively or primarily focused on selling our units, our ability to successfully complete the offering will depend, in large part, on our ability to develop and maintain relationships with a sufficient number of unaffiliated participating broker-dealers. These broker-dealers are engaged in the sale of various securities and investment products beyond those offered by us, including those of competing mortgage programs. In the event we are unable to enter into selling agreements with a sufficient number of qualified participating broker-dealers, or if those participating broker-dealers engaged by us fail to devote sufficient time and attention to the marketing of our units, we may be unable to raise a sufficient amount of funds in the offering as may be necessary to enable us to be successful.

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TAX RISKS

Risks Associated With Treatment of the Limited Liability Company as a Partnership for Federal Income Tax Purposes	We intend to be treated as a partnership (other than a publicly traded partnership) for federal income tax purposes and not as a corporation.  Although we have received an opinion from Baker & McKenzie LLP to the effect that we will be treated as a partnership (other than a publicly traded partnership) for federal income tax purposes, we will not seek a ruling from the Internal Revenue Service (“IRS”) on the tax treatment of us or our members. Counsel’s opinion represents only its best legal judgment based upon existing law and, among other things, factual representations provided by our managers. The opinion of counsel has no binding effect on the IRS or any court, and no assurance can be given that the conclusions reached in said opinion would be sustained by a court if challenged by the IRS. If we were taxable as a corporation, the “pass through” treatment of our income and losses would be lost. Instead, we would, among other things, pay income tax on our earnings in the same manner and at the same rate as a corporation, and our losses, if any, would not be deductible by the members. Members would be taxed upon distributions substantially in the manner that corporate shareholders are taxed on dividends. In addition, if we were classified as a publicly traded partnership but nonetheless remained taxable as a partnership, the passive activity loss rules would apply in a manner that could adversely affect members.
Your Ability to Offset Income With Our Losses May be Limited	We are engaged in mortgage lending. For many of our investors most of our income is non-passive income for purposes of certain limitations on the use of losses from passive activities. It is possible, however, that the IRS could assert that our income is properly treated as portfolio income for purposes of those limitations. Such treatment is subject to the interpretation of complex Treasury regulations, and is dependent upon a number of factors, such as whether we are engaged in a trade or business, the extent to which we incur liabilities in connection with our activities, and the proper matching of the allocable expenses incurred in the production of income. There can be no assurance that an IRS challenge to our characterization of our income will not succeed. It also is possible that we might be unable to allocate expenses to the income produced, in which case members might find their ability to offset income with allocable expenses limited by the 2% floor on miscellaneous investment expenses.
Your Tax Liability May Exceed the Cash You Receive	Your tax liabilities associated with an investment in the units for a given year may exceed the amount of cash we distribute to you during such year. As a member, you will be taxed on your allocable share of our taxable income whether or not you actually receive cash distributions from us. Your taxable income could exceed cash distributions you receive, for example, if you elect to reinvest into additional units the cash distributions you would otherwise have received. Taxable income in excess of cash distributions also could result if we were to generate so-called “phantom income” (taxable income without an associated receipt of cash). Phantom income could be recognized from a number of sources, including, without limitation, repayment of principal on loans incurred by the company as well as imputed income due to original issue discount, market discount, imputed interest and significant modifications to existing loans.

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We May Generate Unrelated Business Taxable Income (UBTI)	Tax-exempt investors (such as an employee pension benefit plan or an IRA) may be subject to tax to the extent that income from the units is treated as unrelated business taxable income, or UBTI. We may borrow funds on a limited basis, which can cause a portion of our income to be treated as UBTI. We may also receive income from services rendered in connection with making or securing loans, which is likely to constitute UBTI. In addition, although we do not currently intend to own and lease personal property, it is possible we may do so as a result of a foreclosure upon a default. Although we use reasonable efforts to prevent any borrowings and leases of personal property from causing any significant amount of income from the units to be treated as UBTI, we expect that some portion of our income may be UBTI. Prospective investors that are tax-exempt entities are urged to consult their own tax advisors regarding the suitability of an investment in units.  In particular, an investment in units may not be suitable for charitable remainder trusts.
IRS Audits Could Result in Adjustments to Your Tax Returns	The IRS could challenge certain federal income tax positions taken by us if we are audited. Any adjustment to our return resulting from an audit by the IRS would result in adjustments to your tax returns and might result in an examination of items in such returns unrelated to your investment in the units or an examination of tax returns for prior or later years. Moreover, we and our members could incur substantial legal and accounting costs in contesting any IRS challenge, regardless of the outcome. Our managers generally will have the authority and power to act for, and bind the company in connection with, any such audit or adjustment for administrative or judicial proceedings in connection therewith.
You May be Subject to State and Local Tax Laws	The state in which you reside may impose an income tax upon your share of our taxable income. Furthermore, states such as California, in which we will own property, generally impose income tax upon a member’s share of the company’s taxable income considered allocable to such states, whether or not a member resides in that state. As a result, a nonresident member may be required to file a tax return in California and any other such state. Differences may exist between federal income tax laws and state and local income tax laws. We may be required to withhold state taxes from distributions to members in certain instances. You are urged to consult with your own tax advisers with respect to state and local taxation.
Changes in Tax Laws Could Have an Adverse Effect on Your Investment	In recent years, legislative, judicial and administrative changes have been made in the provisions of the federal income tax laws applicable to investments similar to an investment in our units. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect the taxation of a member. Any such changes could have an adverse effect on an investment in our units or on the market value of our assets. You are urged to consult with your own tax advisor with respect to the impact of recent legislation on your investment in units and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our units. You should also note that our counsel’s tax opinion assumes that no legislation will be enacted after the date of this prospectus that will be applicable to an investment in our units.

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ERISA RISKS

Risks of Investment by Benefit Plan Investors and Other Tax-Exempt Investors In considering an investment in the units, if you are an employee benefit plan subject to ERISA, you should consider (i) whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA; or (ii) whether the investment is prudent, since there may not be a market created in which you can sell or otherwise dispose of the units. In addition if you are a Benefit Plan Investor, including a tax-qualified pension or 401(k) plan or an IRA, you should consider (i) whether a distribution of units from a tax-qualified plan or IRA would be accepted by an IRA custodian as a rollover, and if not, the automatic 20% income tax withholding which you may need to satisfy out of other assets that you own; (ii) whether a required distribution from a tax-qualified plan or IRA commencing on the April 1 following the  calendar year in which you attain age 70½ or, with respect to a tax-qualified plan distribution, retire, if later, could cause you to become subject to income tax that you would need to satisfy out of other assets if you were not able to transfer the unit for cash; and (iii) whether interests in us or the underlying assets owned by us constitute “plan assets” for purposes of Section 406 of ERISA or Section 4975 of the Code which could cause certain transactions with us to constitute non-exempt prohibited transactions. Finally, all tax-exempt investors, including tax-qualified pension and 401(k) plans and IRAs should consider (i) whether the investment will impair the liquidity of your plan or other entity; and (ii) whether the investment will create unrelated business taxable income for the plan or other entity. ERISA requires that the assets of a plan be valued at their fair market value as of the close of the plan year, and it may not be possible to adequately value the units from year to year, since there will not be a market for those units and the appreciation of any property may not be shown in the value of the units until we sell or otherwise dispose of our investments.

Item 1B – Unresolved Staff Comments

Because the company is not an accelerated filer, a large accelerated filer or a well-known seasoned issuer, the information required by Item 1B is not applicable.

Item 2 – Properties

As of December 31, 2011 and 2010, the company owned no properties.

Item 3 – Legal Proceedings

In the normal course of business, the company may become involved in various legal proceedings such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc., to enforce the provisions of the deeds of trust, collect the debt owed under the promissory notes, or to protect, or recoup its investment from the real property secured by the deeds of trust and to resolve disputes between borrowers, lenders, lien holders and mechanics. None of these actions typically would be of any material importance. As of the date hereof, the company is not involved in any legal proceedings other than those that would be considered part of the normal course of business.

Item 4 – Mine Safety Disclosures

Not Applicable

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Part II

Item 5 – Market for the Registrant’s Units, Related Unitholder Matters and Issuer Purchases of Equity Securities

Market Information

There is no established public trading market for the units, and we do not anticipate that one will develop. There are substantial restrictions on transferability of units and accordingly an investment in the company is non-liquid. Members have no right to withdraw from the company or to obtain the return of their capital account for at least one year from the date of purchase of units. In order to provide a certain degree of liquidity, we have adopted a unit redemption program, whereby after the one year period, a member may redeem all or part of their units, subject to certain limitations summarized under "Unit Redemption Program" below.

Use of Public Offerings Proceeds

On November 18, 2008, the company filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (SEC File No. 333-155428) to offer up to 150,000,000 units ($150,000,000) of its membership interests to the public in its primary offering and 37,500,000 units ($37,500,000) to its members pursuant to its distribution reinvestment plan.  On June 8, 2009, the SEC declared the company’s Registration Statement effective and the company commenced its initial public offering. The offering is ongoing and it may continue until June 8, 2012, unless prior to such date, we file a new registration statement, in which event the offering will continue until the earlier of the effective date of the new registration statement or December 5, 2012. On October 5, 2009, we accepted subscriptions for, and held an initial closing on, subscriptions in excess of the minimum offering amount, and on October 6, 2009, $1,013,204 was released from the escrow account to the company. As of December 31, 2011, we had sold 11,568,188 units in the offering, for gross offering proceeds of $11,568,188, (including units issued under our distribution reinvestment plan). The outstanding units are held by 252 members.

From the subscription proceeds of $11,506,844, we incurred approximately $805,000 in selling commissions and from the subscriptions admitted of $11,193,299 (excluding units issued under our distribution reinvestment plan), we incurred approximately $504,000 in organization and offering costs. We intend to use substantially all of the net proceeds from the ongoing initial public offering to make loans.

Distribution Policy

We intend to distribute, on a monthly basis, cash available for distribution to our members, other than those participating in our distribution reinvestment plan. However, there is no assurance as to the timing or amount of any such distributions.

All cash available for distribution will be allocated 1% to our managers and 99% to the members. Amounts distributed to the members will be allocated among the members in proportion to their units.

During the years 2010 and 2011, the company’s distributed annualized yield was 6.50%.

Recent Sales of Unregistered Securities

There were no sales of securities by the company within the past three years which were not registered under the Securities Act of 1933.

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Unit Redemption Program

We have adopted a unit redemption program that may enable a member to redeem all or part of their units, subject to certain limitations. The price paid for redeemed units will be based on the lesser of the purchase price paid by the redeeming member or the member's capital account balance as of the date of each redemption payment. Redemption value will be calculated as follows:

·   For redemptions beginning after one year (but before two years) 92% of purchase price or 92% of the capital account balance, whichever is less;

·   For redemptions beginning after two years (but before three years) 94% of purchase price or 94% of the capital account balance, whichever is less;

·   For redemptions beginning after three years (but before four years) 96% of purchase price or 96% of the capital account balance, whichever is less;

·   For redemptions beginning after four years (but before five years) 98% of purchase price or 98% of the capital account balance, whichever is less;

·   For redemptions beginning after five years, 100% of purchase price or 100% of the capital account balance, whichever is less.

The company will attempt to redeem units quarterly, subject to certain limitations, and subject to the right of our managers, in their sole discretion, at any time, to reject any request for redemption, or to suspend or terminate the acceptance of new redemption requests without prior notice, or to terminate, suspend or amend the unit redemption program upon 30 days written notice.

Notwithstanding the foregoing, with respect to any redemption, the number of units that may be redeemed per quarter per individual member will be subject to a maximum of the greater of 100,000 units or 25% of the member's units outstanding. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that applies when the redemption payments begin will continue to apply throughout the entire redemption period and will apply to all units covered by such redemption request regardless of when the final redemption payment is made.

The company will not establish a reserve from which to fund redemptions. The company's capacity to redeem member units upon request is restricted to the availability of company cash flow. The company will not, in any calendar year, redeem more than 5% of the weighted average number of units outstanding during the twelve month period immediately prior to the date of the redemption.

During the year ended December 31, 2011, one request of 15,000 units was redeemed under the unit redemption program.

Item 6 – Selected Financial Data (Not included as smaller reporting company)

Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The company was formed on October 8, 2008 to engage in business as an investor in mortgage loans. The company’s loans are secured primarily by first and second deeds of trust on residential, investment or commercial property in California. Loans are arranged and serviced by RMC.

32

On November 18, 2008, the company filed a Registration Statement on Form S-11 with the Securities and Exchange Commission to offer up to 150,000,000 units of its membership interests to the public in its primary offering and 37,500,000 units to its members pursuant to its distribution reinvestment plan. On June 8, 2009, the SEC declared the company’s Registration Statement effective and the company commenced its initial public offering. The offering is ongoing until June 8, 2012, unless prior to such date, we file a new registration statement, in which event the offering will continue until the earlier of the effective date of the new registration statement or December 5, 2012. Offering proceeds will be released to the company and applied to investments in mortgage loans and the payment or reimbursement of organization and offering expenses. The amount of loans the company funds or acquires will depend upon the number of units sold in the public offering and the resulting amount of the net proceeds available for investment in loans.

The company will experience a relative increase in liquidity if and when additional subscriptions for units are received and a relative decrease in liquidity as net offering proceeds are expended in connection with the funding and acquisition of loans and the payment or reimbursement of organization and offering expenses.

Critical Accounting Policies

See Note 2 (Summary of Significant Accounting Policies) to the financial statements included in Part II, Item 8 of this report for a detailed presentation of critical accounting policies, which presentation is incorporated by this reference into this Item 7.

Managers and Other Related Parties

See Notes 1 (General) and 3 (Managers and Other Related Parties) to the financial statements included in Part II, Item 8 of this Report for a detailed presentation of the various company activities for which related parties are compensated and other related transactions, including the formation loan to RMC, which presentation is incorporated by this reference into this Item 7.

33

Results of Operations

The company’s operating results are discussed below for the years ended December 31, 2011 and 2010.

	Changes for the years ended December 31,
	2011						2010 (1)
	Dollars			Percent			Dollars			Percent
Revenue, net
Interest income
Interest on loans	$	397,345		213		%	$	174,569		1,500		%
Imputed interest on formation loan		5,471		214				2,562		—
Other interest, net		(1,236	)	(100	)			(925	)	(43	)
Total interest income		401,580		211				176,206		1,277
Interest expense, amortization of discount
on imputed interest		5,471		214				2,562		—
Net interest income		396,109		211				173,644		1,258
Late fees		1,371		385				356		—
Other		200		200				(3,750	)	(97	)
Total revenues, net		397,680		212				170,250		965
Provision for loan losses		—		—				—		—
Operating expenses
Mortgage servicing fees		11,979		251				4,546		1,968
Asset management fees		—		—				(1,289	)	(100	)
Costs through RMC		37,270		939				3,971		—
Professional services		(2,304	)	(31	)			7,329		—
Other		(1,533	)	(25	)			4,064		196
Total operating expenses, net		45,412		204				18,621		518
Net income	$	352,268		213		%	$	151,629		1,079		%

(1)       The company commenced operations in October 2009.

Please refer to the above table and the Statements of Income in the financial statements in Part II, Item 8 of this report, throughout the discussions of Results of Operations.

Impact of general economic and market conditions on the company’s financial condition, results of operations and cash flows

The company’s assets continue to grow at a moderate, steady pace. Total assets, the sum of all assets owned by the company, increased to approximately $10,447,000 at December 31, 2011, from $1,708,000 at December 31, 2009 (an increase of $8,739,000 or 512 percent). Total loans increased over the same time period to approximately $8,308,000 from $1,259,000 (an increase of 560 percent). The portfolio was originated over the last two years during one of the most challenging periods of real estate lending. Three loans, with an aggregate principal of approximately $671,000, are less than 90 days delinquent at December 31, 2011. The combined loan portfolio LTV (Loan to Value ratio) was 45 percent. This means per the appraisals of the properties securing our loans, the borrowers have in the aggregate, more equity, 55 percent, than we the lenders have lent in the aggregate, against the properties, 45 percent. The result is the company has built and continues to build a solidly performing portfolio of loans with little if any delinquency at lower than typical debt to equity ratios to provide safety against loss. During our time of operations, none of our loans has been subject to a notice of default nor have we acquired any real estate as a result of borrower default.

Excellent lending opportunities continue to be available at low volumes. Activity from borrowers seeking loans has begun to increase. Little competition for these loans exist as most of the large lender participants are providing only real estate financing that meets government sponsored criteria, or have exited the business. Any loan requiring underwriting based on the value of the underlying collateral and which may be outside institutional guidelines and/or federal regulations has few lenders vying for the opportunity.

34

Revenue – Interest on loans

The increase in interest on loans is due to the growth of the secured loan portfolio. The average secured loan balance, the stated average yield and the effective average yield rate for 2011 and 2010, are shown in the table below.

	2011			2010
Average Secured Loan Balance	$	6,689,306		$	1,930,779
Stated Average Yield Rate		9.21	%		9.59	%
Effective Yield Rate		8.82	%		9.64	%

Imputed interest on formation loan/interest expense – amortization of discount

RMC repaid $48,767 and $13,268 of the formation loan in 2011 and 2010 respectively, based upon each of the prior year end loan balances. Imputed interest income and the related amortization of discount were recorded based upon the repayments.

Provision for loan losses/allowance for loan losses

At December 31, 2011 and 2010, the company had not recorded an allowance for loan losses as no loans were designated as impaired, and all loans had protective equity such that at December 31, 2011, collection was assured for amounts owing.

Operating Expenses – Mortgage servicing fees

The increase in mortgage servicing fees for 2011 reflects the increase in the secured loan portfolio noted above in Revenue – Interest on loans

Operating Expenses – Asset management fees

During 2011 and 2010, RMC waived asset management fees of $60,677 and 26,286 respectively.  There is no assurance that RMC will waive its right to receive such fees in future periods.

Operating Expenses – Costs through RMC

The increase in costs through RMC reflects reimbursement of qualifying charges from RMC which in the previous year had been absorbed by RMC.

Net Income

During 2011 and 2010 the company’s distributed annualized yield was 6.50%. The company’s cash distributions for limited members (excluding redemptions) during 2011 and 2010 were $600,790 and $203,975, respectively.

Net income recorded during 2011 and 2010 for limited members was $512,772 and $164,028, respectively. The difference between net income and cash distributions was due to the managers anticipating investing excess cash in additional quality loans throughout the year, which due to the financial markets and the general economic conditions did not present themselves. The managers believe in 2012 the difference will be recouped and therefore are not anticipating a permanent capital reduction.

Loans/Allowance for Loan Losses

See Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for detailed presentations on the secured loan portfolio and on the allowance for loan losses, which presentations are incorporated by this reference into this Item 7.

35

Liquidity and Capital Resources

The company relies upon sales of units, loan payoffs, borrowers' mortgage payments, and, to a lesser degree, if obtained a line of credit, or proceeds from real estate owned financing or sales, should the company acquire the collateral securing our loans, for the source of funds for loans. Recently, mortgage interest rates have been at historically low levels. If interest rates were to increase substantially, the yield of the company’s loans may provide lower yields than other comparable debt-related investments. In such event, unit purchases by prospective members could decline, which would reduce our overall liquidity. Additionally, if, as expected, we make primarily fixed rate loans, if interest rates were to rise, the likely result would be a slower prepayment rate for the company. This could cause a lower degree of liquidity as well as a slowdown in the ability of the company to invest in loans at the then current interest rates. Conversely, in the event interest rates were to decline, we could see both or either of a surge of unit purchases by prospective members, and significant borrower prepayments, which, if we can only obtain the then existing lower rates of interest may cause a dilution of our yield on loans, thereby lowering our overall yield to members. We, to a lesser degree, expect to rely upon a line of credit to fund loans. To date we have not obtained a line of credit. Generally, our loans are anticipated to be fixed rate, whereas a credit line will likely be a variable rate loan. In the event of a significant increase in overall interest rates, a credit line rate of interest could increase to a rate above the average portfolio rate of interest. Should such an event occur, the managers would desire to pay off the line of credit. Retirement of a line of credit would reduce our overall liquidity. Once we make loans, we expect that cash will constantly be generated from borrower payments of interest, principal and loan payoffs and that cash flow will exceed company expenses, earnings and unit redemptions. Excess cash flow, if any, will be invested in new loan opportunities, when available, and will be used to reduce a credit line or in other company business.

Currently the credit and financial markets are facing a significant and prolonged disruption. As a result, loans are not readily available to borrowers or purchasers of real estate. Continued credit constraints could impact us and our borrowers’ ability to eventually sell properties or refinance their loans in the event they have difficulty making loan payments or their loan matures. Borrowers are also generally finding it more difficult to refinance or sell their properties due to the general decline in California real estate values in recent years. The company’s loans generally have shorter maturity terms than typical mortgages. As a result, constraints on the ability of our borrowers to refinance their loans on or prior to maturity will likely have a negative impact on their ability to repay their loans. Residential-loan borrowers with high loan balances, particularly jumbo-loan borrowers, would find it difficult to refinance their loans with us. In the event a borrower is unable to repay a loan at maturity due to its inability to refinance the loan or otherwise, the company may consider extending the maturing loan through workouts or modifications, or foreclosing on the property as the managers deem appropriate based on their evaluation of each individual loan. A slow down or reduction in loan repayments would likely reduce the company’s cash flows and restrict the company’s ability to invest in new loans or provide earnings and capital distributions.

We have adopted a distribution reinvestment plan pursuant to which members may elect to have a portion or all of the full amount of their distributions from us reinvested in additional units. Earnings allocable to members who participate in the distribution reinvestment plan will be retained by the company for making further loans or for other proper company purposes.

We allow members to redeem their units subject to certain limitations and penalties. Once a member’s initial five-year holding period has passed, the managers expect to see an increase in redemptions due to the ability of members to redeem units without penalty.

During 2011 and 2010, the company, after allocation of syndication costs, made the following allocation of profits and losses both to the members who elected to participate in the distribution reinvestment plan and those that chose to receive their monthly distributions.

	2011			2010
Reinvesting	$	199,275		$	52,880
Distributing		401,515			151,095
Total	$	600,790		$	203,975
Percent of members’ capital, electing distribution		67	%		74	%

36

Members have no right to withdraw from the company or to obtain the return of their capital account for at least one year from the date of purchase of units. In order to provide our members with a certain degree of liquidity, we have adopted a unit redemption program. Generally, one year after purchasing your units, a member may redeem all or part of its units, subject to certain significant restrictions and limitations. At that time, we may, subject to the significant restrictions and limitations described below, redeem the units presented for redemption to the extent that we have sufficient cash flow available to us to fund such redemption. The price paid for redeemed units will be based on the lesser of the purchase price paid by the redeeming member or the member's capital account balance as of the date of each redemption payment. For redemptions beginning after one year (but before two years), the redemptions will be calculated as 92% of purchase price or 92% of the capital account balance, whichever is less. Beginning after each of the subsequent years, the redemption percentages will increase to 94%, 96%, 98%, and 100% respectively, of the purchase or capital account balance, whichever is less. Notwithstanding the foregoing, with respect to any redemption, the number of units that may be redeemed per quarter per individual member will be subject to a maximum of the greater of 100,000 units or 25% of the member's units outstanding. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that applies when the redemption payments begin will continue to apply throughout the entire redemption period and will apply to all units covered by such redemption request regardless of when the final redemption payment is made. Under our unit redemption program, in the event of an investor’s death, his or her heirs are provided with an option to redeem all or a portion of the investor’s units without penalty.

The table below sets forth actual liquidations for the past two years.

	Year ended December 31,
	2011			2010
Capital liquidations-without penalty		$	—		$	40,000
Capital liquidations-subject to penalty			15,000			26,730
Total		$	15,000		$	66,730

While the managers have set an estimated value for the units, such determination may not be representative of the ultimate price realized by a member for such units upon sale. No public trading market exists for the units and none is likely to develop.  Thus, there is no certainty the units can be sold at a price equal to the stated value of the capital account.

Contractual Obligations

At December 31, 2011 the company had no contractual obligations, except to reimburse RMC for syndication costs. As of December 31, 2011, approximately $1,139,000 was to be reimbursed to RMC contingent upon future sales of member units.  See Note 6 (Commitments and Contingencies, Except Loans) to the financial statements included in Part II, Item 8 of this report for a detailed presentation on commitments and contingencies, which presentation is incorporated by this reference into this Item 7.

Item 7A – Quantitative and Qualitative Disclosures About Market Risk (Not included as smaller reporting company)

37

Item 8 – Financial Statements and Supplementary Data

A – Financial Statements

The following financial statements of Redwood Mortgage Investors IX, LLC are included in Item 8:

· Report of Independent Registered Public Accounting Firm

· Balance Sheets – December 31, 2011 and 2010

· Statements of Income for the years ended December 31, 2011 and 2010

· Statements of Changes in Members’ Capital for the years ended December 31, 2011 and 2010

· Statements of Cash Flows for the years ended December 31, 2011 and 2010

· Notes to Financial Statements

B – Financial Statement Schedules

The following financial statement schedules of Redwood Mortgage Investors IX, LLC are included in Item 8:

· Schedule II  – Valuation and Qualifying Accounts

· Schedule IV – Mortgage Loans on Real Estate

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members

Redwood Mortgage Investors IX, LLC

Redwood City, California

We have audited the accompanying balance sheets of Redwood Mortgage Investors IX, LLC (a Delaware limited liability company) as of December 31, 2011 and 2010 and the related statements of income, changes in members’ capital and cash flows in the years then ended. These financial statements are the responsibility of Redwood Mortgage Investors IX’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Redwood Mortgage Investors IX, LLC is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Redwood Mortgage Investors IX’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Redwood Mortgage Investors IX, LLC as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedules II and IV are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ ARMANINO McKENNA LLP

_____________________________

ARMANINO McKENNA LLP

San Francisco, California

March 28, 2012

39

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Balance Sheets

December 31, 2011 and 2010

ASSETS

	2011		2010
Cash and cash equivalents	$	2,099,328	$	3,256,284
Loans, secured by deeds of trust
Principal		8,253,328		3,155,628
Advances		70		—
Accrued interest		54,219		18,004
Total loans		8,307,617		3,173,632
Receivable from affiliate		—		442
Loan administration fees, net		40,044		22,282
Total assets	$	10,446,989	$	6,452,640

LIABILITIES, INVESTORS IN APPLICANT STATUS, AND MEMBERS’ CAPITAL

Liabilities
Accounts payable	$	212	$	2,082
Payable to affiliate		—		1,882
Total liabilities		212		3,964
Investors in applicant status		320,545		1,285,031
Members’ capital
Members’ capital, subject to redemption, net of unallocated
syndication costs of $498,661 and $263,865 for 2011 and 2010,
respectively; and net of formation loan of $741,215 and $487,674
for 2011 and 2010, respectively		10,114,766		5,160,377
Managing members’ capital, net of unallocated syndication costs
of $5,037 and $2,665 for 2011 and 2010, respectively		11,466		3,268
Total members’ capital		10,126,232		5,163,645
Total liabilities, investors in applicant status and members’ capital	$	10,446,989	$	6,452,640

The accompanying notes are an integral part of these financial statements.

40

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Statements of Income

For the Years Ended December 31, 2011 and 2010

	2011		2010
Revenues
Interest income
Loans	$	583,552	$	186,207
Imputed interest on formation loan		8,033		2,562
Other		—		1,236
Total interest income		591,585		190,005
Interest expense – amortization of discount on formation loan		8,033		2,562
Net interest income		583,552		187,443
Late fees		1,727		356
Other		300		100
Total revenues, net		585,579		187,899
Provision for loan losses		—		—
Operating expenses
Mortgage servicing fees		16,756		4,777
Asset management fees		—		—
Costs through RMC		41,241		3,971
Professional services		5,025		7,329
Other		4,605		6,138
Total operating expenses		67,627		22,215
Net income	$	517,952	$	165,684
Net income
Managers (1%)	$	5,180	$	1,656
Members (99%)		512,772		164,028
	$	517,952	$	165,684
Net income per $1,000 invested by members
for entire period	$	56	$	52

The accompanying notes are an integral part of these financial statements.

41

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Statements of Changes in Members’ Capital

For the Years Ended December 31, 2011 and 2010

				Members
	Investors
	In						Unallocated
	Applicant						Syndication			Formation
	Status			Capital			Costs			Loan			Capital, net
Balances at December 31, 2009	$	583,500		$	1,314,371		$	(58,447	)	$	(132,680	)	$	1,123,244
Contributions on application		5,282,383			—			—			—			—
Contributions admitted to members' capital		(4,610,952	)		4,610,952			—			—			4,610,952
Premiums paid on application by RMC		70,490			—			—			—			—
Premiums admitted to members' capital		(40,390	)		40,390			—			—			40,390
Net income		—			164,028			—			—			164,028
Earnings distributed to members		—			(203,975	)		—			—			(203,975	)
Earnings distributed used in DRIP		—			52,880			—			—			52,880
Member's redemptions		—			(66,730	)		—			—			(66,730	)
Formation loan advances		—			—			—			(369,767	)		(369,767	)
Formation loan payments received		—			—			—			13,268			13,268
Syndication costs incurred		—			—			(206,044	)		—			(206,044	)
Early withdrawal penalties		—			—			626			1,505			2,131
Balances at December 31, 2010		1,285,031			5,911,916			(263,865	)		(487,674	)		5,160,377
Contributions on application		4,329,028			—			—			—			—
Contributions admitted to members' capital		(5,270,414	)		5,270,414			—			—			5,270,414
Premiums paid on application by RMC		52,955			—			—			—			—
Premiums admitted to members' capital		(76,055	)		76,055			—			—			76,055
Net income		—			512,772			—			—			512,772
Earnings distributed to members		—			(600,790	)		—			—			(600,790	)
Earnings distributed used in DRIP		—			199,275			—			—			199,275
Member's redemptions		—			(15,000	)		—			—			(15,000	)
Formation loan advances		—			—			—			(303,032	)		(303,032	)
Formation loan payments received		—			—			—			48,767			48,767
Syndication costs incurred		—			—			(235,268	)		—			(235,268	)
Early withdrawal penalties		—			—			472			724			1,196
Balances at December 31, 2011	$	320,545		$	11,354,642		$	(498,661	)	$	(741,215	)	$	10,114,766

The accompanying notes are an integral part of these financial statements.

42

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Statements of Changes in Managing Members’ Capital

For the Years Ended December 31, 2011 and 2010

	Managers
				Unallocated						Total
				Syndication						Members’
	Capital			Costs			Capital, net			Capital
Balances at December 31, 2009	$	1,322		$	(590	)	$	732		$	1,123,976
Contributions on application		—			—			—			—
Contributions admitted to members' capital		4,611			—			4,611			4,615,563
Premiums paid on application by RMC		—			—			—			—
Premiums admitted to members' capital		—			—			—			40,390
Net income		1,656			—			1,656			165,684
Earnings distributed to members		(1,656	)		—			(1,656	)		(205,631	)
Earnings distributed used in DRIP		—			—			—			52,880
Members’ redemptions		—			—			—			(66,730	)
Formation loan increases		—			—			—			(369,767	)
Formation loan payments received		—			—			—			13,268
Syndication costs incurred		—			(2,081	)		(2,081	)		(208,125	)
Early withdrawal penalties		—			6			6			2,137
Balances at December 31, 2010		5,933			(2,665	)		3,268			5,163,645
Contributions on application		—			—			—			—
Contributions admitted to members' capital		5,390			—			5,390			5,275,804
Premiums paid on application by RMC		—			—			—			—
Premiums admitted to members' capital		—			—			—			76,055
Net income		5,180			—			5,180			517,952
Earnings distributed to members		—			—			—			(600,790	)
Earnings distributed used in DRIP		—			—			—			199,275
Members’ redemptions		—			—			—			(15,000	)
Formation loan increases		—			—			—			(303,032	)
Formation loan payments received		—			—			—			48,767
Syndication costs incurred		—			(2,377	)		(2,377	)		(237,645	)
Early withdrawal penalties		—			5			5			1,201
Balances at December 31, 2011	$	16,503		$	(5,037	)	$	11,466		$	10,126,232

The accompanying notes are an integral part of these financial statements.

43

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Statements of Cash Flows

For the Years Ended December 31, 2011 and 2010

	2011			2010
Cash flows from operating activities
Net income	$	517,952		$	165,684
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Amortization of loan origination fees		44,629			8,380
Interest income, imputed on formation loan		(8,033	)		(2,562	)
Amortization of discount on formation loan		8,033			2,562
Change in operating assets and liabilities
Accrued interest		(36,215	)		(12,536	)
Advances		(70	)		—
Receivable from affiliate		442			67,066
Loan administration fees		(62,391	)		(20,755	)
Accounts payable		(1,870	)		2,082
Payable to affiliate		(1,882	)		1,182
Net cash provided by (used in) operating activities		460,595			211,103
Cash flows from investing activities
Loans originated		(8,360,839	)		(2,709,830	)
Principal collected on loans		3,263,139			807,944
Net cash provided by (used in) investing activities		(5,097,700	)		(1,901,886	)
Cash flows from financing activities
Contributions by member applicants		4,387,373			5,357,484
Members’ withdrawals		(416,515	)		(219,481	)
Syndication costs paid, net		(237,168	)		(207,493	)
Formation loan, funding		(303,032	)		(369,767	)
Formation loan, collections		49,491			14,773
Net cash provided by (used in) financing activities		3,480,149			4,575,516
Net increase (decrease) in cash and cash equivalents		(1,156,956	)		2,884,733
Cash and cash equivalents at beginning of year		3,256,284			371,551
Cash and cash equivalents at end of year	$	2,099,328		$	3,256,284

The accompanying notes are an integral part of these financial statements.

44

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 1 – ORGANIZATION AND GENERAL

Redwood Mortgage Investors IX, LLC (the “company”), a Delaware limited liability company, was organized in October 2008, to engage in business as a mortgage lender for the primary purpose of making loans secured by deeds of trust on California real estate. Loans are arranged and serviced by Redwood Mortgage Corp., a California corporation (“RMC”).

In November, 2008, the company filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (SEC) to offer up to 150,000,000 units of its membership interests to the public in its primary offering and 37,500,000 units to its members pursuant to its distribution reinvestment plan. In June, 2009, the SEC declared the company’s Registration Statement effective and the company commenced its initial public offering. In October, 2009 the company received subscriptions in excess of the minimum offering amount of $1,000,000, and $1,013,204 was released from the escrow account to the company.

The rights, duties and powers of the managers and members of the company are governed by the company’s operating agreement and the Delaware Limited Liability Company Act. The description of the company's operating agreement contained in these financial statements provides only general information. Members should refer to the company's operating agreement for a more complete description of the provisions.

The managing members (“Managers”) of the company are RMC and its wholly-owned subsidiary, Gymno LLC, originally incorporated as Gymno Corporation (“Gymno”). Prior to September 30, 2011, The Redwood Group, Ltd., a California corporation (“Redwood Group”) owned all of the outstanding shares of RMC, and acquired, as of September 30, 2011, all of the outstanding shares of Gymno Corporation in exchange for shares of Redwood Group’s common stock. Redwood Group then merged with and into RMC, which resulted in Gymno Corporation becoming a wholly-owned subsidiary of RMC. Gymno Corporation then converted into Gymno LLC, a California limited liability company, with Michael R. Burwell, the majority owner and President of RMC, as its managing member.

The managers are solely responsible of company business, subject to the voting rights of the members on specified matters.  Any one of the managers acting alone has the power and authority to act for and bind the company.

Members representing a majority of the outstanding units may, without the concurrence of the managers, vote to: (i) dissolve the company, (ii) amend the operating agreement, subject to certain limitations, (iii) approve or disapprove the sale of all or substantially all of the assets of the company or (iv) remove or replace one or all of the managers.

The approval of all the members is required to elect a new manager to continue the company business where there is no remaining manager after a manager ceases to be a manager other than by removal.

Profits and losses are allocated among the members according to their respective capital accounts monthly after 1% of the profits and losses is allocated to the managers. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting.

Distribution reinvestment plan

Members may elect to have all or a portion of their monthly distributions reinvested in additional units, subject to the availability of units under the distribution reinvestment plan. Members may withdraw from the distribution reinvestment plan with written notice.

45

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 1 – ORGANIZATION AND GENERAL (continued)

Liquidity and unit redemption program

There are substantial restrictions on transferability of company units and accordingly an investment in the company is non-liquid. There is no public or secondary market for the units and none is expected to develop. Members have no right to withdraw from the company or to obtain the return of their capital account for at least one year from the date of purchase of units.

In order to provide a certain degree of liquidity, after the one year period, a member may redeem all or part of their units, subject to certain limitations.  The price paid for redeemed units will be based on the lesser of the purchase price paid by the redeeming member or the member's capital account balance as of the date of each redemption payment.  Redemption value will be calculated as follows:

·   For redemptions beginning after one year (but before two years) 92% of purchase price or 92% of the capital account balance, whichever is less;

·   For redemptions beginning after two years (but before three years) 94% of purchase price or 94% of the capital account balance, whichever is less;

·   For redemptions beginning after three years (but before four years) 96% of purchase price or 96% of the capital account balance, whichever is less;

·   For redemptions beginning after four years (but before five years) 98% of purchase price or 98% of the capital account balance, whichever is less;

·   For redemptions beginning after five years, 100% of purchase price or 100% of the capital account balance, whichever is less.

The company will attempt to redeem units quarterly, subject to certain limitations.

Notwithstanding the foregoing, with respect to any redemption, the number of units that may be redeemed per quarter per individual member will be subject to a maximum of the greater of 100,000 units or 25% of the member's units outstanding. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that applies when the redemption payments begin will continue to apply throughout the entire redemption period and will apply to all units covered by such redemption request regardless of when the final redemption payment is made.

The company will not establish a reserve from which to fund redemptions. The company's capacity to redeem member units upon request is restricted to the availability of company cash flow. The company will not, in any calendar year, redeem more than 5% of the weighted average number of units outstanding during the twelve month period immediately prior to the date of the redemption.

Contributed capital

The managers are required to contribute to capital 1/10 of 1% of the aggregate capital accounts of the members.

Managers' interest

If a manager is removed, withdrawn or is terminated, the company will pay to the manager all amounts then accrued and owing to the manager. Additionally, the company will terminate the manager's interest in the company's profits, losses, distributions and capital by payment of an amount in cash equal to the then present fair value of such interest.

46

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 1 – ORGANIZATION AND GENERAL (continued)

Sales commissions - formation loans

Sales commissions are not paid directly by the company out of the offering proceeds. Instead, the company loans to RMC, one of the managers, amounts to pay all sales commissions and amounts payable in connection with unsolicited orders. This loan is unsecured and non-interest bearing and is referred to as the “formation loan.” During the offering period, RMC will repay annually, one tenth of the principal balance of the formation loan as of December 31 of the prior year.  Upon completion of the offering, the formation loan will be amortized over 10 years and repaid in 10 equal annual installments. The formation loan has been deducted from members’ capital in the balance sheets. As amounts are received from RMC as payments on the loan, the deduction from capital will be reduced. Interest is imputed at the market rate of interest in effect in the years the offering closed. If the managing members are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven.

Income taxes and Members’ capital – tax basis

Income taxes – federal and state – are the obligation of the members, if and when taxes apply, other than for the minimum annual California franchise tax paid by the company.

Members’ capital reconciliation

A reconciliation of members’ capital in the financial statements to the tax basis of company capital is presented in the following table at December 31.

	2011		2010
Members’ capital per financial statements	$	10,126,232	$	5,163,645
Unallocated syndication costs		503,698		266,530
Allowance for loan losses		—		—
Formation loans receivable		741,215		487,674
Members’ capital tax basis	$	11,371,145	$	5,917,849

Term of the Company

The company is scheduled to terminate in 2028, unless sooner terminated as provided in the operating agreement.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods.  Such estimates relate principally to the determination of the allowance for loan losses, including the valuation of impaired loans, (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates.

47

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Management estimates (continued)

Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate.

The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions.  Historically, it has been rare for determinations of fair value to be made without substantial reference to current market transactions. However, in recent years, due to the low levels of real estate transactions, and the number of transactions that are distressed (i.e., that are executed by an unwilling seller – often compelled by lenders or other claimants – and/or executed without broad exposure or with market exposure but with few, if any, resulting offers), more interpretation, judgment and interpolation/extrapolation within and across property types is required.

Appraisals of commercial real property generally present three approaches to estimating value: 1) market comparables or sales approach; 2) cost to replace and 3) capitalized cash flows or investment approach. These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed, or for land when-entitled); and determining the unit of value (e.g. as a series of  individual unit sales or as a bulk disposition). Further complicating this process, which is already subject to judgment, uncertainty and imprecision are the on-going low transaction volumes in the residential, commercial and land markets, and the variability that has resulted.  This exacerbates the imprecision in the process, and requires additional considerations and inquiries as to whether the transaction was entered into by a willing seller into a functioning market or was the transaction completed in a distressed market, with the predominant number of sellers being those surrendering properties to lenders in partial settlement of debt (as is prevalent in the residential markets) and/or participating in “arranged sales” to achieve partial settlement of debts and claims and to generate tax advantage. Either way, the present market is at historically low transaction volumes with neither potential buyers nor sellers willing to transact. In certain asset classes the time elapsed between transactions – other than foreclosures – was 12 or more months.

Management has the requisite familiarity with the markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value, and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types.

Net income recorded for limited members was $512,772 and cash distributed to limited members was $600,790. The difference between net income and actual cash distributions was due to the managers anticipating investing excess cash in additional quality loans throughout the year, which due to the financial markets and the general economic conditions did not present themselves. The managers believe in 2012 the difference will be recouped and therefore are not anticipating a permanent capital reduction.

Cash and cash equivalents

The company considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Periodically, company cash balances in banks exceed federally insured limits.

48

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans and interest income

Loans and advances generally are stated at the principal amount. Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the company’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums, and attorney fees. Advances generally are stated at the principal and accrue interest until repaid by the borrower.

The company may fund a specific loan origination net of an interest reserve to insure timely interest payments at the inception (one to two years) of the loan. As monthly interest payments become due, the company funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction to the principal.

If based upon current information and events, it is probable the company will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Any subsequent payments on impaired loans are applied to late fees and then to reduce first the accrued interest, then advances, and then unpaid principal.

From time to time, the company may negotiate and enter into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the company’s operations, loans that mature are renewed and/or the maturity is extended. If at the time of renewal the loan is not designated as impaired and the renewal is at terms reflecting then current market rates and conditions, the loan is not designated impaired.

Interest is accrued daily based on the principal of the loans. An impaired loan continues to accrue as long as the loan is in the process of collection and is considered to be well-secured. Loans are placed on non-accrual status at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement.

Loan administration fees are capitalized and amortized over the life of the loan on a straight-line method which approximates the effective interest method.

Allowance for loan losses

Loans and the related accrued interest and advances are analyzed on a periodic basis for ultimate recoverability.  Delinquencies are identified and followed as part of the loan system. Delinquencies are determined based upon contractual terms. For impaired loans, a provision is made for loan losses to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral values, such that the net carrying amount (principal, plus advances, plus accrued interest less the specific allowance) is reduced to the present value of future cash flows discounted at the loan’s effective interest rate, or, if a loan is collateral dependent, to the estimated fair value of the related collateral net of any senior loans, which would include costs to sell in arriving at net realizable value if planned disposition of the asset securing a loan is by way of sale. Loans that are determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss (i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed. Based on its knowledge of the borrowers and their historical (and expected) performance, and the exposure to loss, management estimates an appropriate reserve by property type for probable credit losses in the portfolio.

49

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

The fair value estimates are derived from information available in the real estate markets including similar property, and may require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

Net income per $1,000 invested

Amounts reflected in the statements of operations as net income per $1,000 invested by members for the entire period are amounts allocated to members who had their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive periodic distributions of their net income. Individual income is allocated each month based on the members’ pro rata share of members’ 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.

Recently issued accounting pronouncements

The FASB has issued ASU 2011-02 (April 2011), “A Creditor’s Determination of Whether Restructuring is a Troubled Debt Restructuring,” providing guidance to lenders for evaluating where a modification or restructuring of a loan as a Troubled Debt Restructuring (TDR). ASU 2011-02 provides expanded guidance on whether:  1) the lender has granted a “concession” and 2) whether the borrower is experiencing “financial difficulties.” The ASU is effective for the first interim or annual period beginning after June 15, 2011 (i.e. the third quarter of 2011) and is required to be applied retroactively for all modifications and restructuring activities in 2011. The partnership adopted ASU 2011-02 effective January 1, 2011.

The FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820):  Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRs”. The ASU is effective for interim and annual periods beginning after December 15, 2011 with prospective application. The partnership is evaluating the effect of the ASU.

NOTE 3 – MANAGERS AND OTHER RELATED PARTIES

The managers of the company are RMC and its wholly-owned subsidiary, Gymno LLC. The company's business is conducted primarily through RMC, which arranges, services and maintains the loan portfolio for the benefit of the company. The fees received by the managers are paid pursuant to the operating agreement and are determined at the sole discretion of the mangers within the prescribed limits. The following is a list of various activities for which related parties are compensated:

The following commissions and fees are paid by the borrowers.

Loan brokerage commissions

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, RMC may collect a loan brokerage commission that is expected to range from approximately 2% to 5% of the principal amount of each loan made during the year. Total loan brokerage commissions are limited to an amount not to exceed 4% of the total company assets per year. The loan brokerage commissions are paid by the borrowers, and thus, are not an expense of the company. In 2011 and 2010, loan brokerage commissions paid by the borrowers were $134,678 and $54,840, respectively.

50

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 3 – MANAGERS AND OTHER RELATED PARTIES (continued)

Other fees

RMC or Gymno will receive fees for processing, notary, document preparation, credit investigation, reconveyance, and other mortgage related fees. The amounts received are customary for comparable services in the geographical area where the property securing the loan is located, payable solely by the borrower and not by the company. In 2011 and 2010, these fees totaled $10,432 and $4,452, respectively.

The following fees are paid by the company.

Loan administrative fees

RMC will receive a loan administrative fee in an amount up to 1% of the principal amount of each new loan originated or acquired on the company's behalf by RMC for services rendered in connection with the selection and underwriting of potential loans. Such fees are payable by the company upon the closing of each loan. In 2011 and 2010, the loan administration fees paid by the company to RMC were $62,391 and $20,755, respectively.

Mortgage servicing fees

Mortgage servicing fees of up to 0.25%, on an annual basis, of the unpaid principal of each loan will be paid monthly to RMC, or such lesser amount as is reasonable and customary in the geographic area where the property securing the mortgage is located. RMC is entitled to receive these fees regardless of whether mortgage payments are collected. RMC at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such fee waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of fees, if any, to be waived. The decision to waive fees and the amount, if any, to be waived, is made by RMC in its sole discretion.

Mortgage servicing fees paid to RMC are presented in the following table for the years ended December 31.

	2011		2010
Maximum chargeable by RMC	$	16,756	$	4,777
Waived by RMC		—		—
Charged	$	16,756	$	4,777

Asset management fees

The managers receive a monthly asset management fee for managing the company's portfolio and operations in an amount up to 0.75% annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to 2% of working capital reserves. This amount will be recomputed annually after the second full year of operations by subtracting from the then fair value of the company’s loans plus working capital reserves, an amount equal to the outstanding debt.

The managers, at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such fee waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of fees, if any, to be waived. The decision to waive fees and the amount, if any, to be waived, is made by RMC in its sole discretion. An increase or decrease in this fee within the limits set by the operating agreement directly impacts the yield to the members.

51

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 3 – MANAGERS AND OTHER RELATED PARTIES (continued)

Asset management fees (continued)

Asset management fees paid to the managers are presented in the following table for the years ended December 31.

	2011			2010
Maximum chargeable by the managers	$	60,677		$	26,286
Waived by the managers		(60,677	)		(26,286	)
Charged	$	—		$	—

Clerical costs through RMC

Our managers and their affiliates are reimbursed by the company for all operating expenses incurred on behalf of the company, including without limitation, accounting and audit fees, legal fees and expenses, postage, costs to prepare reports to the managers, and out-of-pocket and general administrative expenses. During 2011 and 2010, the company incurred $41,241 and $3,971, respectively of operating expenses paid for by the managers which were reimbursed to RMC. RMC at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such cost waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of costs, if any, to be waived. The decision to waive costs and the amount, if any, to be waived, is made by RMC in its sole discretion. An increase or decrease in these costs within the limits set by the operating agreement directly impacts the yield to the members.

Formation loan

Formation loan transactions are presented in the following table for the years ended December 31.

	2011			2010
Member contributions to date	$	11,506,844		$	7,177,817
Balance, January 1	$	487,674		$	132,680
Formation Loan made		303,032			369,767
Unamortized discount on imputed interest		(51,489	)		(51,875	)
Formation Loan made, net		739,217			450,572
Repayments received from RMC		(48,767	)		(13,268
Early withdrawal penalties applied		(724	)		(1,505	)
Formation loan, net		689,726			435,799
Unamortized discount on imputed interest		51,489			51,875
Balance, December 31	$	741,215		$	487,674
Percent loaned		7.00	%		7.00	%

The formation loan has been deducted from members’ capital in the balance sheets. As amounts are collected from RMC, the deduction from capital will be reduced. Interest has been imputed at the market rate of interest in effect at the end of each quarter for the new additions to the loan. If the managing members are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven.

52

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 3 – MANAGERS AND OTHER RELATED PARTIES (continued)

Formation loan (continued)

The future minimum payments on the formation loan are presented in the following table ($ in thousands).

2012	$	74,122
2013		74,122
2014		74,122
2015		74,122
2016		74,122
Thereafter		370,605
Total	$	741,215

RMC is required to repay the formation loan.  During the offering period, RMC will repay annually, one tenth of the principal balance of the formation loan as of December 31 of the prior year. Upon completion of the offering, the formation loan will be amortized over 10 years and repaid in 10 equal annual installments.

Syndication costs

The company bears its own syndication costs, other than certain sales commissions, including legal and accounting expenses, printing costs, selling expenses and filing fees. Syndication costs are charged against members' capital and will be allocated to individual members consistent with the company’s operating agreement.

For the current offering, organizational and syndication costs were limited to 4.5% of the gross proceeds, with any excess being paid by the managers. Applicable gross proceeds were $11,193,299. Related expenditures, net of early withdrawal penalties applied, totaled $503,698 or 4.5% of contributions.

Syndication costs incurred by the company are summarized in the following table for the years ended December 31.

	2011			2010
Balance, January 1	$	266,530		$	59,037
Costs incurred		237,645			208,125
Early withdrawal penalties applied		(477	)		(632	)
Allocated to date		—			—
Balance, December 31	$	503,698		$	266,530

RMC is entitled to receive reimbursement of organizational and offering expenses expended on our behalf. Through December 31, 2011, organizational and offering expenses totaled approximately $1,615,000. Upon achieving the minimum unit sales of 1,000,000 units, the company became obligated to reimburse RMC for these costs up to an amount equal to 4.5% of gross offering proceeds until RMC has been fully reimbursed for organizational and offering expenses it incurred. As of December 31, 2011, approximately $1,139,000 was to be reimbursed to RMC contingent upon future sales of member units.

53

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 4 – LOANS

The company generally funds loans with a fixed interest rate and a five-year term. As of December 31, 2011, 80% of the company’s loans (representing 79% of the aggregate principal of the company’s loan portfolio) have a five year term or less from loan inception. The remaining loans have terms longer than five years. As of December 31, 2011, five loans outstanding (representing 35% of the aggregate principal balance of the company’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity. The remaining loans require monthly payments of principal and interest, typically calculated on a 30 year amortization, with the remaining principal balance due at maturity.

Secured loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table for the years ended December 31.

	2011			2010
Principal, January 1	$	3,155,628		$	1,253,742
Loans funded		8,3.60,839			2,709,830
Payments received		(3,263,139	)		(807,944	)
Principal, December 31	$	8,253,328		$	3,155,628

Loan characteristics

Secured loans had the characteristics presented in the following table.

	2011			2010
Number of secured loans		25			12
Secured loans – principal	$	8,253,328		$	3,155,628
Secured loans – interest rates range (fixed)		7.75-11.00	%		8.50-11.00	%
Average secured loan – principal	$	330,133		$	262,969
Average principal as percent of total principal		4.00	%		8.33	%
Average principal as percent of members’ capital		3.26	%		5.09	%
Average principal as percent of total assets		3.16	%		4.08	%
Largest secured loan – principal	$	1,000,000		$	877,500
Largest principal as percent of total principal		12.12	%		27.81	%
Largest principal as percent of members’ capital		9.87	%		16.99	%
Largest principal as percent of total assets		9.57	%		13.60	%
Smallest secured loan – principal	$	97,255		$	97,997
Smallest principal as percent of total principal		1.18	%		3.11	%
Smallest principal as percent of members’ capital		0.96	%		1.90	%
Smallest principal as percent of total assets		0.93	%		1.52	%
Number of counties where security is located (all California)		10			8
Largest percentage of principal in one county		30.18	%		27.81	%
Number of secured loans in foreclosure		—			—
Secured loans in foreclosure – principal		—			—
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—

As of December 31, 2011, the company’s largest loan in the principal of $1,000,000 represents 12.12% of outstanding secured loans and 9.57% of company assets. The loan is secured by a residential property located in San Francisco, California, bears an interest rate of 8.75% and matures on July 1, 2012.

54

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 4 – LOANS (continued)

Loan characteristics (continued)

Larger loans sometimes increase above 10% of the secured loan portfolio or company assets as these amounts decrease due to member withdrawals and loan payoffs and due to restructuring of existing loans. As the portfolio grows within the near term, it is anticipated the single loan exceeding 10% of the secured loan portfolio will be less than 10% of the secured loan portfolio. Nevertheless, the largest loan is less than 10% of the company assets.

Distribution by California counties

The distribution of secured loans outstanding by California counties is presented in the following table at December 31.

	2011				2010
	Unpaid Principal Balance		Percent		Unpaid Principal Balance		Percent
Northern California Counties
San Francisco	$	2,490,816	30.18	%	$	594,190	18.82	%
Santa Clara		1,050,000	12.72			877,500	27.81
Marin		746,368	9.04			248,320	7.87
San Mateo		556,592	6.75			422,867	13.40
Alameda		536,595	6.50			119,138	3.78
Contra Costa		308,355	3.74			—	—
Monterey		184,851	2.24			—	—
		5,873,577	71.17			2,262,015	71.68	%
Southern California Counties
Los Angeles		1,482,910	17.96			573,902	18.18	%
San Diego		697,529	8.45			210,000	6.66
Orange		199,312	2.42			—	—
Riverside		—	—			109,711	3.48
		2,379,751	28.83			893,613	28.32	%
Total secured loans	$	8,253,328	100.00	%	$	3,155,628	100.00	%

Loan Commitments

The company makes construction and rehabilitation loans, which are not fully disbursed at loan inception. The company has approved the borrowers up to a maximum loan balance; however, disbursements are made periodically during completion phases of the construction or rehabilitation or at such other times as required under the loan documents. At December 31, 2011, there were no undisbursed loan funds. The company does not maintain a separate cash reserve to hold the undisbursed obligations, which are intended to be funded.

The company periodically negotiates contractual workout agreements with borrowers whose loans are past maturity or who are delinquent in making payments. The company does not have any active workout agreement, nor is it obligated to fund additional money as of December 31, 2011.

55

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 4 – LOANS (continued)

Lien position

Secured loans had the lien positions presented in the following table.

	2011						2010
	Loans	Principal			Percent		Loans	Principal			Percent
First trust deeds	17	$	6,383,100		77	%	6	$	1,813,697		57	%
Second trust deeds	8		1,870,228		23		6		1,341,931		43
Total secured loans	25		8,253,328		100	%	12		3,155,628		100	%
Liens due other lenders at loan closing			4,569,311						3,464,067
Total debt		$	12,822,639					$	6,619,695
Appraised property value at loan closing		$	26,836,465					$	11,565,115
Percent of total debt to appraised
values (LTV) at loan closing (1)			47.78	%					57.24	%

(1) Based on appraised values and liens due other lenders at loan closing. The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any.

Property type

Secured loans summarized by property type are presented in the following table.

	2011					2010
	Loans	Principal		Percent		Loans	Principal		Percent
Single family	23	$	7,585,395	92	%	11	$	2,885,924	91	%
Multi-family	1		267,933	3		1		269,704	9
Commercial	1		400,000	5		—		—	—
Land	—		—	—		—		—	—
Total secured loans	25	$	8,253,328	100	%	12	$	3,155,628	100	%

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table.

	Loans	Principal		Percent
2012	4	$	2,550,000	31	%
2013	4		1,486,479	18
2014	2		269,255	3
2015	6		1,893,375	23
2016	7		1,463,801	18
Thereafter	2		590,418	7
Total secured loans	25	$	8,253,328	100	%

56

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 4 – LOANS (continued)

Scheduled maturities (continued)

Loans may be repaid or refinanced before, at or after the contractual maturity date. On matured loans the company may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

Renewals included in 2011 and 2010 were $204,880 and $0, respectively.

Delinquency

Secured loans summarized by payment delinquency are presented in the following table.

	2011		2010
Past Due
30-89 days	$	670,600	$	206,201
90-179 days		—		—
180 or more days		—		—
Total past due		670,600		206,201
Current		7,582,728		2,949,427
Total secured loans	$	8,253,328	$	3,155,628

Impaired loans/allowance for loan losses

At December 31, 2011 and 2010, the company had not designated any loans as impaired and had not recorded an allowance for loan losses as all loans were deemed to have protective equity (i.e., low loan-to-value ratio) such that collection is reasonably assured for amounts owing.

NOTE 5 – FAIR VALUE

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction.  Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The company determines the fair values of its assets and liabilities based on the fair value hierarchy established in GAAP. The standard describes three levels of inputs that may be used to measure fair value (Level 1, Level 2 and Level 3). Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the company’s own data.

57

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements

December 31, 2011 and 2010

NOTE 5 – FAIR VALUE (continued)

The company does not record loans at fair value on a recurring basis.

The following methods and assumptions were used to estimate the fair value of assets and liabilities:

(a)   Cash and cash equivalents. The carrying amount equals fair value. All amounts, including interest bearing accounts, are subject to immediate withdrawal.

(b)   Secured loans. The fair value of the loans was $8,454,000 and $3,195,000 at December 31, 2011 and 2010, respectively. The fair value was estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. For impaired loans in which a specific allowance is established based on the fair value of the collateral, the collateral fair value is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers opinion of values, and publicly available information on in-market transactions (Level 2 inputs). Historically, it has been rare for determinations of fair value to be made without substantial reference to current market transactions. However, in recent years, due to the low number of real estate transactions, and the number of transactions that are distressed (i.e., that are executed by an unwilling seller – often compelled by lenders or other claimants – and/or executed without broad exposure or with market exposure but with few, if any, resulting offers), more interpretation, judgment and interpolation/extrapolation within and across property types is required (Level 3 inputs).

NOTE 6 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS AND SYNDICATION COSTS

Legal proceedings

In the normal course of business, the company may become involved in various legal proceedings such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc., to enforce the provisions of the deeds of trust, collect the debt owed under the promissory notes, or to protect, or recoup its investment from the real property secured by the deeds of trust and to resolve disputes between borrowers, lenders, lien holders and mechanics. None of these actions typically would be of any material importance. As of December 31, 2011, the company is not involved in any legal proceedings other than those that would be considered part of the normal course of business.

NOTE 7 – SUBSEQUENT EVENTS

None

58

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule II – Valuation and Qualifying Accounts

December 31, 2011 and 2010

	B		C
	Balance at		Additions							E
A	Beginning		Charged to Costs		Charged to		D			Balance at
Description	of Period		and Expenses		Other Accounts		Deductions			End of Period
Year ended December 31, 2010
Deducted from asset accounts
Allowance for loan losses	$	—	$	—	$	—	$	—	(a)	$	—
Cumulative write-down of
real estate owned		—		—		—		—	(b)		—
	$	—	$	—	$	—	$	—		$	—
Year ended December 31, 2011
Deducted from asset accounts
Allowance for loan losses	$	—	$	—	$	—	$	—	(a)	$	—
Cumulative write-down of
real estate owned		—		—		—		—	(b)		—
	$	—	$	—	$	—	$	—		$	—

Note (a) – Represents write-offs of loans or transfers

Note (b) – Represents write-offs of real estate owned

59

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate

December 31, 2011

													Col. H
													Principal
									Col. F				Amount of
									Face		Col. G		Loans
				Col. C	Col. D				Amount of		Carrying		Subject to			Col. J
	Col. B			Final	Periodic		Col. E		Mortgage		Amount of		Delinquent		Col. I	California
Col. A	Interest			Maturity	Payment		Prior		Original		Mortgage		Principal		Type of	Geographic
Descrip.	Rate			Date	Terms		Liens		Amount		Investments		or Interest		Lien	Location
The following loans individually exceed 3% of aggregate carrying amount of mortgage investments
Res.		9.25	%	11/01/13	$	4,113	$	—	$	500,000	$	488,825	$	—	1st	San Diego
Res.		9.25	%	12/01/15		6,428		—		781,340		764,757		—	1st	Los Angeles
Res.		8.90	%	06/01/15		2,193		—		275,000		271,694		—	1st	San Mateo
Res.		11.00	%	06/01/17		2,524		406,375		265,000		263,043		—	2nd	San Francisco
Apts.		10.50	%	10/01/15		2,549		1,080,379		270,000		267,933		—	2nd	Los Angeles
Res.		8.50	%	03/01/16		2,384		—		310,000		308,355		—	1st	Contra Costa
Res.		8.75	%	04/01/12		3,646		—		500,000		500,000		—	1st	Marin
Res.		9.00	%	07/01/16		2,510		—		312,000		311,208		—	1st	Alameda
Res.		9.90	%	02/01/13		2,475		—		300,000		300,000		—	1st	San Francisco
Res.		8.75	%	07/01/12		7,292		—		1,000,000		1,000,000		—	1st	San Francisco
Comm.		10.00	%	11/01/12		3,333		694,309		400,000		400,000		—	2nd	Santa Clara
Res.		8.75	%	11/01/12		4,740		—		650,000		650,000		—	1st	Santa Clara
Res.		10.00	%	05/01/18		2,940		1,185,323		335,000		327,374		—	2nd	San Francisco
Res.		9.25	%	09/01/13		5,923		—		720,000		600,399		—	1st	San Francisco
The remaining loans have been aggregated by their property type
Res.		9.06	%			15,007		1,202,925		1,842,250		1,799,740		—
Total					$	68,057	$	4,569,311	$	8,460,590	$	8,253,328	$	—

Note:  Most loans have balloon payments due at maturity. As required by rule 12-29, column H represents amounts 90 days or more delinquent in principal or interest payments.

60

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate

December 31, 2011 and 2010

Reconciliation of carrying amount (cost) of loans at close of periods

	2011		2010
Balance, January 1	$	3,155,628	$	1,253,742
Additions during period
New loans		8,360,839		2,709,830
Other		—		—
Total additions		8,360,839		2,709,830
Deductions during period
Collections of principal		3,263,139		807,944
Foreclosures		—		—
Cost of loans sold		—		—
Amortization of premium		—		—
Other		—		—
Total deductions		3,263,139		807,944
Balance, December 31	$	8,253,328	$	3,155,628

The numbers in the table above exclude the renewals of $204,880 in 2011 and $0 in 2010.

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Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with the company’s independent registered public accounting firm during the years ended December 31, 2011 and 2010.

Item 9A – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The company carried out an evaluation, under the supervision and with the participation of the managers of the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the managers concluded the company’s disclosure controls and procedures were effective.

Manager’s Report on Internal Control over Financial Reporting

The managers are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rule 13a-15(f). The internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The managers and their respective managements conducted an evaluation of the effectiveness of the company’s internal control over financial reporting based on the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, the managers concluded the manager’s internal control over financial reporting was effective as of December 31, 2011.

This annual report does not include an attestation report of the manager’s independent registered public accounting firm regarding internal control over financial reporting because current law and SEC rules require such attestation reports only for large accelerated filers and accelerated filers (and the company, as a smaller reporting company, is not subject to that requirement).

Changes to Internal Control Over Financial Reporting

There have not been any changes in the manager’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, the manager’s  internal control over financial reporting.

Item 9B – Other Information

None

Part III

Item 10 – Directors, Executive Officers and Corporate Governance

The company has no officers or directors. The managing members (“Managers”) of the company are RMC and its wholly-owned subsidiary, Gymno LLC, originally incorporated as Gymno Corporation. The Managers are solely responsible for managing the company business, subject to the rights of the members to vote on specified matters. Any one of the Managers acting alone has the power and authority to act for and bind the company. A majority of the outstanding member interests may, without the consent of the Managers, vote to: (i) terminate the company, (ii) amend the operating agreement, (iii) approve or disapprove the sale of all or substantially all of the assets of the company and (iv) remove or replace one or all of the Managers. The approval of the majority of members is required to elect a new Manager to continue the company business where there is no remaining Manager after a Manager ceases to be a Manager other than by removal.

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The Managers

Redwood Mortgage Corp.  Redwood Mortgage Corp. is a licensed real estate broker incorporated in 1978 under the laws of the State of California, and is engaged primarily in the business of arranging and servicing mortgage loans. Redwood Mortgage Corp. will act as the loan broker and servicing agent in connection with loans, as it has done on behalf of several other limited partnerships formed by the managers.

Gymno LLC.  Gymno LLC is a California limited liability company formed in 1986 as Gymno Corporation, for the purpose of acting as a Manager of this company and general partner of other limited partnerships formed by the individual managers. As of September 30, 2011 Gymno LLC became a wholly owned subsidiary of Redwood Mortgage Corp.

Affiliates of Our Managers

Michael R. Burwell.  Michael R. Burwell, age 55, past member of Board of Trustees and Treasurer, Mortgage Brokers Institute (1984-1986); President, Director, Chief Financial Officer, Redwood Mortgage Corp. (1979-present); Director, Secretary and Treasurer A & B Financial Services, Inc. (1980-2009); and President, Director, Chief Financial Officer and Secretary of Gymno Corporation (1986-2011); Managing Member of Gymno LLC (since 2011).

    Diana B. Mandarino.  Diana B. Mandarino, age 65, Director and Executive Vice President of RMC (2001-present), Director of Sales and Marketing, Redwood Mortgage Investors (1995-present), Sr. Vice President, Rancon Securities Corp. (1982-1995), Marketing and Sales Assistant, Belmont Reid & Co. Investment Group, (1977-1982); Member and past President of Financial Planning Association, Silicon Valley Chapter. Ms. Mandarino attended Foothill Community College from 1965-1967.

    Lorene A Randich.  Lorene A. Randich, aged 54, Director and Vice President of Redwood Mortgage Corp. and holding corporate broker’s license for Redwood Mortgage Corp. (2011-present), Vice President of Loan Production and Underwriting (2001-present), licensed real estate broker since 1996, employed with Redwood Mortgage Corp. since 1991, Credit Authorization Supervisor and Management Training Program, Sears Roebuck Credit Central, (1978-1983), BA from UC Berkeley (1980), member of the National Association of Realtors, California Mortgage Bankers Association, the California Association of Mortgage Professionals (Board member – San Francisco/Peninsula Chapter) and the California Mortgage Association (Member, Education Committee).

Financial Oversight by Managers

The company does not have a board of directors or an audit committee. Accordingly, the managers serve the equivalent function of an audit committee for, among other things, the following purposes: appointment, compensation, review and oversight of the work of our independent public accountants, and establishing the enforcing of the Code of Ethics. However, since the company does not have an audit committee and the managers are not independent of the company, the company does not have an “audit committee financial expert.”

Code of Ethics

The managers have adopted a Code of Ethics applicable to the managers and to any agents, employees or independent contractors engaged by the managers to perform the functions of a principal financial officer, principal accounting officer or controller of the company, if any. You may obtain a copy of this Code of Ethics, without charge, upon request by calling our Investor Services Department at (650) 365-5341.

63

Item 11 – Executive Compensation

COMPENSATION OF THE MANAGERS AND AFFILIATES BY COMPANY

As indicated above in Item 10, the company has no officers or directors.  The company is managed by the managers.  There are certain fees and other items paid to management and related parties.

A more complete description of management compensation is found in the company’s prospectus, dated June 8, 2009, under the section “Compensation of our Managers and Their Affiliates” at pages 42-49, which is incorporated herein by reference.  Such compensation is summarized below.

I.  THE FOLLOWING COMPENSATION HAS BEEN PAID TO THE MANAGERS AND/OR THEIR AFFILIATES FOR SERVICES RENDERED DURING THE YEAR ENDED DECEMBER 31, 2011. ALL SUCH COMPENSATION IS IN COMPLIANCE WITH THE GUIDELINES AND LIMITATIONS SET FORTH IN THE OPERATING AGREEMENT.

Entity Receiving Compensation	Description of Compensation and Services Rendered	Amount
Redwood Mortgage Corp.	Mortgage Servicing Fee for servicing loans	$16,756
(Manager)
Managers &/or Affiliates	Asset Management Fee for managing assets	$0
Managers	1% interest in profits (loss)	$5,180
	Less allocation of syndication costs	$0
		$5,180
Managers &/or Affiliates	Portion of early withdrawal penalties applied to
	reduce Formation Loan	$724

II. FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED WITH THE COMPANY BY COMPANIES RELATED TO THE MANAGERS DURING THE YEAR ENDED DECEMBER 31, 2011 (EXPENSES OF BORROWERS NOT OF THE COMPANY)

Redwood Mortgage Corp.	Mortgage Brokerage Commissions for services in
	connection with the review, selection, evaluation,
	negotiation, and extension of the loans paid by the
	borrowers and not by the company	$134,678
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 company	$9,982
Gymno LLC	Reconveyance Fee	$450

III. IN ADDITION, THE MANAGERS AND/OR RELATED COMPANIES PAY CERTAIN EXPENSES ON BEHALF OF THE COMPANY FOR WHICH IT IS REIMBURSED AS NOTED IN THE STATEMENTS OF OPERATION DURING THE YEAR ENDED DECEMBER 31, 2011 . . . . . . . . . . . . . . .  $41,241

64

Item 12 – Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters

The managers own an aggregate total of 1% of the company including a 1% portion of income and losses.

Item 13 – Certain Relationships and Related Transactions, and Director Independence

Refer to footnote 3 of the Notes to Financial Statements in Part II item 8, which describes related party fees and data.

Also refer to the company’s prospectus, dated June 8, 2009, under the section “Compensation of Our Managers and Their Affiliates” (pages 42-49), which is incorporated herein by reference.

For a description of the company’s policies and procedures for the review, approval or ratification of related party transactions, refer also to the company’s prospectus dated June 8, 2009, for the discussion under the caption “Compensation of Our Managers and Their Affiliates” (pages 42-49) , the discussion under the caption “Conflicts of Interest” (pages 49-52) and the discussion under the caption “Investment Objectives and Criteria” (pages 61-67), each of which is incorporated herein by reference.

Since the company does not have a board of directors and since the managers are not considered independent of the company, the company does not have the equivalent of independent directors.

Item 14 – Principal Accountant Fees and Services

Fees for services performed for the company by the principal accountant for 2011 and 2010 are as follows:

Audit Fees The aggregate fees billed during the years ended December 31, 2011 and 2010 for professional services rendered for the audit of the company’s annual financial statements included in the company’s Annual Report on Form 10-K, review of financial statements included in the company’s Quarterly Reports on Form 10-Q and for services provided in connection with regulatory filings were $77,698 and $68,582, respectively.

Audit Related Fees There were no fees billed during the years ended December 31, 2011 and 2010 for audit-related services.

Tax fees The aggregate fees billed for tax services for the years ended December 31, 2011 and 2010 were $18,855 and $7,547, respectively.  These fees relate to professional services rendered primarily for tax compliance.

All Other Fees There were no other fees billed during the years ended December 31, 2011 and 2010.

All audit and non-audit services are approved by the managers prior to the accountant being engaged by the company.

65

Part IV

Item 15 – Exhibits and Financial Statement Schedules

A.           Documents filed as part of this report are incorporated:

1. In Part II, Item 8 under A –Financial Statements.

2. The Financial Statement Schedules are listed in Part II - Item 8 under B –Financial Statement Schedules.

3. Exhibits.

Exhibit No. Description of Exhibits

3.1		Limited Liability Company Operating Agreement
3.2		Certificate of Formation
3.3		Amended and Restated Limited Liability Company Operating Agreement
3.4		Second Amended and Restated Limited Liability Company Operating Agreement
10.1		Distribution Reinvestment Plan
10.2		Loan Servicing Agreement
10.3	(a)	Form of Note secured by Deed of Trust for Construction Loans, which provides for interest only payments
	(b)	Form of Note secured by Deed of Trust for Commercial Loans which provides for interest only payments
	(c)	Form of Note secured by Deed of Trust for Commercial Loans which provides for principal and interest payments
	(d)	Form of Note secured by Deed of Trust for Residential Loans, which provides for interest only payments.
	(e)	Form of Note secured by Deed of Trust for Residential Loans which provides for interest and principal prepayments
10.4	(a)	Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing to accompany Exhibit 10.3(a)
	(b)	Deed of Trust, Assignment of Leases and Rents, and Security Agreement and Fixture Filing to accompany Exhibits 10.3(b) and 10.3(c)
	(c)	Deed of Trust, Assignment of Leases and Rents, and Security Agreement and Fixture Filing to accompany Exhibit 10.3(d) and 10.3(e)
10.5		Agreement to Seek a Lender
10.6		Formation Loan Promissory Note
31.1		Certification of Manager pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Manager pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Selected Portions of the Registrant’s Prospectus, dated June 8, 2009
101.INS	*	XBRL Instance Document
101.SCH	*	XBRL Taxonomy Extension Schema Document
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

All of the above exhibits, other than exhibit 31.1, 31.2, 31.3, 32.1, 32.2, 32.3, 99.1 and 101 (XBRL data) were previously filed as the exhibits to Registrant’s Registration Statement on Form S-11 (Registration No. 333-106900 and incorporated by reference herein).

* XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement of Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

66

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 28th day of March, 2012.

REDWOOD MORTGAGE INVESTORS IX, LLC

By:	Redwood Mortgage Corp., Manager
	By:	/S/ Michael R. Burwell
		Michael R. Burwell, President,
		Secretary/Treasurer
By:	Gymno LLC, Manager
	By:	/S/ Michael R. Burwell
		Michael R. Burwell, Managing Member

67

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity indicated on the 28th day of March, 2012.

Signature Title Date

/S/ Michael R. Burwell
Michael R. Burwell	President, Secretary/Treasurer of Redwood Mortgage Corp. (Principal Financial and Accounting Officer); Director of Redwood Mortgage Corp.	March 28, 2012

/S/ Michael R. Burwell
Michael R. Burwell	Managing Member of Gymno LLC	March 28, 2012

68

EX-31.1

Exhibit 31.1

PRESIDENT’S CERTIFICATION

I, Michael R. Burwell, certify that:

1. I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors IX, LLC, a Delaware Limited Liability Company (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s forth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Michael R. Burwell

___________________________

Michael R. Burwell, President,

Redwood Mortgage Corporation,

Manager

March 28, 2012

EX-31.2

Exhibit 31.2

PRESIDENT AND CHIEF FINANCIAL OFFICER CERTIFICATION

I, Michael R. Burwell, certify that:

1. I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors IX, LLC, a Delaware Limited Liability Company (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s forth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Michael R. Burwell

_____________________________

Michael R. Burwell,

Managing Member of Gymno LLC,

Manager

March 28, 2012

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Redwood Mortgage Investors IX, LLC (the “company”) on Form 10-K for the period ended December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Redwood Mortgage Investors IX, LLC and will be retained by Redwood Mortgage Investors IX, LLC and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Michael R. Burwell

___________________________

Michael R. Burwell, President,

Redwood Mortgage Corporation,

Manager

March 28, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Redwood Mortgage Investors IX, LLC (the “company”) on Form 10-K for the period ended December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Redwood Mortgage Investors IX, LLC and will be retained by Redwood Mortgage Investors IX, LLC and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Michael R. Burwell

_____________________________

Michael R. Burwell,

Managing Member of Gymno LLC,

Manager

                                March 28, 2012

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Note 3 - Managers and Other Related Parties

12 Months Ended

Dec. 31, 2011

Related Party Transactions Disclosure [Text Block]

NOTE 3 – MANAGERS AND OTHER RELATED PARTIES

The managers of the company are RMC and its wholly-owned subsidiary, Gymno LLC. The company's business is conducted primarily through RMC, which arranges, services and maintains the loan portfolio for the benefit of the company. The fees received by the managers are paid pursuant to the operating agreement and are determined at the sole discretion of the mangers within the prescribed limits. The following is a list of various activities for which related parties are compensated:

The following commissions and fees are paid by the borrowers.

Loan brokerage commissions

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, RMC may collect a loan brokerage commission that is expected to range from approximately 2% to 5% of the principal amount of each loan made during the year. Total loan brokerage commissions are limited to an amount not to exceed 4% of the total company assets per year. The loan brokerage commissions are paid by the borrowers, and thus, are not an expense of the company. In 2011 and 2010, loan brokerage commissions paid by the borrowers were $134,678 and $54,840, respectively.

Other fees

RMC or Gymno will receive fees for processing, notary, document preparation, credit investigation, reconveyance, and other mortgage related fees. The amounts received are customary for comparable services in the geographical area where the property securing the loan is located, payable solely by the borrower and not by the company. In 2011 and 2010, these fees totaled $10,432 and $4,452, respectively.

The following fees are paid by the company.

Loan administrative fees

RMC will receive a loan administrative fee in an amount up to 1% of the principal amount of each new loan originated or acquired on the company's behalf by RMC for services rendered in connection with the selection and underwriting of potential loans. Such fees are payable by the company upon the closing of each loan. In 2011 and 2010, the loan administration fees paid by the company to RMC were $62,391 and $20,755, respectively.

Mortgage servicing fees

Mortgage servicing fees of up to 0.25%, on an annual basis, of the unpaid principal of each loan will be paid monthly to RMC, or such lesser amount as is reasonable and customary in the geographic area where the property securing the mortgage is located. RMC is entitled to receive these fees regardless of whether mortgage payments are collected. RMC at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such fee waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of fees, if any, to be waived. The decision to waive fees and the amount, if any, to be waived, is made by RMC in its sole discretion.

Mortgage servicing fees paid to RMC are presented in the following table for the years ended December 31.

	2011		2010
Maximum chargeable by RMC	$	16,756	$	4,777
Waived by RMC		—		—
Charged	$	16,756	$	4,777

Asset management fees

The managers receive a monthly asset management fee for managing the company's portfolio and operations in an amount up to 0.75% annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to 2% of working capital reserves. This amount will be recomputed annually after the second full year of operations by subtracting from the then fair value of the company’s loans plus working capital reserves, an amount equal to the outstanding debt.

The managers, at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such fee waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of fees, if any, to be waived. The decision to waive fees and the amount, if any, to be waived, is made by RMC in its sole discretion. An increase or decrease in this fee within the limits set by the operating agreement directly impacts the yield to the members.

Asset management fees paid to the managers are presented in the following table for the years ended December 31.

	2011			2010
Maximum chargeable by the managers	$	60,677		$	26,286
Waived by the managers		(60,677	)		(26,286	)
Charged	$	—		$	—

Clerical costs through RMC

Our managers and their affiliates are reimbursed by the company for all operating expenses incurred on behalf of the company, including without limitation, accounting and audit fees, legal fees and expenses, postage, costs to prepare reports to the managers, and out-of-pocket and general administrative expenses. During 2011 and 2010, the company incurred $41,241 and $3,971, respectively of operating expenses paid for by the managers which were reimbursed to RMC. RMC at times, waived amounts otherwise to be earned by it, to improve the company’s earnings. Such cost waivers were not made with the purpose of providing the company with sufficient funds to satisfy redemption requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of costs, if any, to be waived. The decision to waive costs and the amount, if any, to be waived, is made by RMC in its sole discretion. An increase or decrease in these costs within the limits set by the operating agreement directly impacts the yield to the members.

Formation loan

Formation loan transactions are presented in the following table for the years ended December 31.

	2011			2010
Member contributions to date	$	11,506,844		$	7,177,817
Balance, January 1	$	487,674		$	132,680
Formation Loan made		303,032			369,767
Unamortized discount on imputed interest		(51,489	)		(51,875	)
Formation Loan made, net		739,217			450,572
Repayments received from RMC		(48,767	)		(13,268
Early withdrawal penalties applied		(724	)		(1,505	)
Formation loan, net		689,726			435,799
Unamortized discount on imputed interest		51,489			51,875
Balance, December 31	$	741,215		$	487,674
Percent loaned		7.00	%		7.00	%

The formation loan has been deducted from members’ capital in the balance sheets. As amounts are collected from RMC, the deduction from capital will be reduced. Interest has been imputed at the market rate of interest in effect at the end of each quarter for the new additions to the loan. If the managing members are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven.

The future minimum payments on the formation loan are presented in the following table ($ in thousands).

2012	$	74,122
2013		74,122
2014		74,122
2015		74,122
2016		74,122
Thereafter		370,605
Total	$	741,215

RMC is required to repay the formation loan.  During the offering period, RMC will repay annually, one tenth of the principal balance of the formation loan as of December 31 of the prior year. Upon completion of the offering, the formation loan will be amortized over 10 years and repaid in 10 equal annual installments.

Syndication costs

The company bears its own syndication costs, other than certain sales commissions, including legal and accounting expenses, printing costs, selling expenses and filing fees. Syndication costs are charged against members' capital and will be allocated to individual members consistent with the company’s operating agreement.

For the current offering, organizational and syndication costs were limited to 4.5% of the gross proceeds, with any excess being paid by the managers. Applicable gross proceeds were $11,193,299. Related expenditures, net of early withdrawal penalties applied, totaled $503,698 or 4.5% of contributions.

Syndication costs incurred by the company are summarized in the following table for the years ended December 31.

	2011			2010
Balance, January 1	$	266,530		$	59,037
Costs incurred		237,645			208,125
Early withdrawal penalties applied		(477	)		(632	)
Allocated to date		—			—
Balance, December 31	$	503,698		$	266,530

RMC is entitled to receive reimbursement of organizational and offering expenses expended on our behalf. Through December 31, 2011, organizational and offering expenses totaled approximately $1,615,000. Upon achieving the minimum unit sales of 1,000,000 units, the company became obligated to reimburse RMC for these costs up to an amount equal to 4.5% of gross offering proceeds until RMC has been fully reimbursed for organizational and offering expenses it incurred. As of December 31, 2011, approximately $1,139,000 was to be reimbursed to RMC contingent upon future sales of member units.

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Note 2 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Significant Accounting Policies [Text Block]

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods.  Such estimates relate principally to the determination of the allowance for loan losses, including the valuation of impaired loans, (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates.

Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate.

The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions.  Historically, it has been rare for determinations of fair value to be made without substantial reference to current market transactions. However, in recent years, due to the low levels of real estate transactions, and the number of transactions that are distressed (i.e., that are executed by an unwilling seller – often compelled by lenders or other claimants – and/or executed without broad exposure or with market exposure but with few, if any, resulting offers), more interpretation, judgment and interpolation/extrapolation within and across property types is required.

Appraisals of commercial real property generally present three approaches to estimating value: 1) market comparables or sales approach; 2) cost to replace and 3) capitalized cash flows or investment approach. These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed, or for land when-entitled); and determining the unit of value (e.g. as a series of  individual unit sales or as a bulk disposition). Further complicating this process, which is already subject to judgment, uncertainty and imprecision are the on-going low transaction volumes in the residential, commercial and land markets, and the variability that has resulted.  This exacerbates the imprecision in the process, and requires additional considerations and inquiries as to whether the transaction was entered into by a willing seller into a functioning market or was the transaction completed in a distressed market, with the predominant number of sellers being those surrendering properties to lenders in partial settlement of debt (as is prevalent in the residential markets) and/or participating in “arranged sales” to achieve partial settlement of debts and claims and to generate tax advantage. Either way, the present market is at historically low transaction volumes with neither potential buyers nor sellers willing to transact. In certain asset classes the time elapsed between transactions – other than foreclosures – was 12 or more months.

Management has the requisite familiarity with the markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value, and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types.

Net income recorded for limited members was $512,772 and cash distributed to limited members was $600,790. The difference between net income and actual cash distributions was due to the managers anticipating investing excess cash in additional quality loans throughout the year, which due to the financial markets and the general economic conditions did not present themselves. The managers believe in 2012 the difference will be recouped and therefore are not anticipating a permanent capital reduction.

Cash and cash equivalents

The company considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Periodically, company cash balances in banks exceed federally insured limits.

Loans and interest income

Loans and advances generally are stated at the principal amount. Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the company’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums, and attorney fees. Advances generally are stated at the principal and accrue interest until repaid by the borrower.

The company may fund a specific loan origination net of an interest reserve to insure timely interest payments at the inception (one to two years) of the loan. As monthly interest payments become due, the company funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction to the principal.

If based upon current information and events, it is probable the company will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Any subsequent payments on impaired loans are applied to late fees and then to reduce first the accrued interest, then advances, and then unpaid principal.

From time to time, the company may negotiate and enter into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the company’s operations, loans that mature are renewed and/or the maturity is extended. If at the time of renewal the loan is not designated as impaired and the renewal is at terms reflecting then current market rates and conditions, the loan is not designated impaired.

Interest is accrued daily based on the principal of the loans. An impaired loan continues to accrue as long as the loan is in the process of collection and is considered to be well-secured. Loans are placed on non-accrual status at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement.

Loan administration fees are capitalized and amortized over the life of the loan on a straight-line method which approximates the effective interest method.

Allowance for loan losses

Loans and the related accrued interest and advances are analyzed on a periodic basis for ultimate recoverability.  Delinquencies are identified and followed as part of the loan system. Delinquencies are determined based upon contractual terms. For impaired loans, a provision is made for loan losses to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral values, such that the net carrying amount (principal, plus advances, plus accrued interest less the specific allowance) is reduced to the present value of future cash flows discounted at the loan’s effective interest rate, or, if a loan is collateral dependent, to the estimated fair value of the related collateral net of any senior loans, which would include costs to sell in arriving at net realizable value if planned disposition of the asset securing a loan is by way of sale. Loans that are determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss (i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed. Based on its knowledge of the borrowers and their historical (and expected) performance, and the exposure to loss, management estimates an appropriate reserve by property type for probable credit losses in the portfolio.

The fair value estimates are derived from information available in the real estate markets including similar property, and may require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

Net income per $1,000 invested

Amounts reflected in the statements of operations as net income per $1,000 invested by members for the entire period are amounts allocated to members who had their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive periodic distributions of their net income. Individual income is allocated each month based on the members’ pro rata share of members’ 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.

Recently issued accounting pronouncements

The FASB has issued ASU 2011-02 (April 2011), “A Creditor’s Determination of Whether Restructuring is a Troubled Debt Restructuring,” providing guidance to lenders for evaluating where a modification or restructuring of a loan as a Troubled Debt Restructuring (TDR). ASU 2011-02 provides expanded guidance on whether:  1) the lender has granted a “concession” and 2) whether the borrower is experiencing “financial difficulties.” The ASU is effective for the first interim or annual period beginning after June 15, 2011 (i.e. the third quarter of 2011) and is required to be applied retroactively for all modifications and restructuring activities in 2011. The partnership adopted ASU 2011-02 effective January 1, 2011.

The FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820):  Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRs”. The ASU is effective for interim and annual periods beginning after December 15, 2011 with prospective application. The partnership is evaluating the effect of the ASU.

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Balance Sheets (USD $)	Dec. 31, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 2,099,328	$ 3,256,284
Loans, secured by deeds of trust
Principal	8,253,328	3,155,628
Advances	70
Accrued interest	54,219	18,004
Total loans	8,307,617	3,173,632
Receivable from affiliate		442
Loan administration fees, net	40,044	22,282
Total assets	10,446,989	6,452,640
Liabilities
Accounts payable	212	2,082
Payable to affiliate		1,882
Total liabilities	212	3,964
Investors in applicant status	320,545	1,285,031
Members’ capital
Members’ capital, subject to redemption, net of unallocated syndication costs of $498,661 and $263,865 for 2011 and 2010, respectively; and net of formation loan of $741,215 and $487,674 for 2011 and 2010, respectively	10,114,766	5,160,377
Managing members’ capital, net of unallocated syndication costs of $5,037 and $2,665 for 2011 and 2010, respectively	11,466	3,268
Total members’ capital	10,126,232	5,163,645
Total liabilities, investors in applicant status and members’ capital	$ 10,446,989	$ 6,452,640

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Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities
Net income	$ 517,952	$ 165,684
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Amortization of loan origination fees	44,629	8,380
Interest income, imputed on formation loan	(8,033)	(2,562)
Amortization of discount on formation loan	8,033	2,562
Change in operating assets and liabilities
Accrued interest	(36,215)	(12,536)
Advances	(70)
Receivable from affiliate	442	67,066
Loan administration fees	(62,391)	(20,755)
Accounts payable	(1,870)	2,082
Payable to affiliate	(1,882)	1,182
Net cash provided by (used in) operating activities	460,595	211,103
Cash flows from investing activities
Loans originated	(8,360,839)	(2,709,830)
Principal collected on loans	3,263,139	807,944
Net cash provided by (used in) investing activities	(5,097,700)	(1,901,886)
Cash flows from financing activities
Contributions by member applicants	4,387,373	5,357,484
Members’ withdrawals	(416,515)	(219,481)
Syndication costs paid, net	(237,168)	(207,493)
Formation loan, funding	(303,032)	(369,767)
Formation loan, collections	49,491	14,773
Net cash provided by (used in) financing activities	3,480,149	4,575,516
Net increase (decrease) in cash and cash equivalents	(1,156,956)	2,884,733
Cash and cash equivalents at beginning of year	3,256,284	371,551
Cash and cash equivalents at end of year	$ 2,099,328	$ 3,256,284

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Note 1 - Organization and General

12 Months Ended

Dec. 31, 2011

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 – ORGANIZATION AND GENERAL

Redwood Mortgage Investors IX, LLC (the “company”), a Delaware limited liability company, was organized in October 2008, to engage in business as a mortgage lender for the primary purpose of making loans secured by deeds of trust on California real estate. Loans are arranged and serviced by Redwood Mortgage Corp., a California corporation (“RMC”).

In November, 2008, the company filed a Registration Statement on Form S-11 with the Securities and Exchange Commission (SEC) to offer up to 150,000,000 units of its membership interests to the public in its primary offering and 37,500,000 units to its members pursuant to its distribution reinvestment plan. In June, 2009, the SEC declared the company’s Registration Statement effective and the company commenced its initial public offering. In October, 2009 the company received subscriptions in excess of the minimum offering amount of $1,000,000, and $1,013,204 was released from the escrow account to the company.

The rights, duties and powers of the managers and members of the company are governed by the company’s operating agreement and the Delaware Limited Liability Company Act. The description of the company's operating agreement contained in these financial statements provides only general information. Members should refer to the company's operating agreement for a more complete description of the provisions.

The managing members (“Managers”) of the company are RMC and its wholly-owned subsidiary, Gymno LLC, originally incorporated as Gymno Corporation (“Gymno”). Prior to September 30, 2011, The Redwood Group, Ltd., a California corporation (“Redwood Group”) owned all of the outstanding shares of RMC, and acquired, as of September 30, 2011, all of the outstanding shares of Gymno Corporation in exchange for shares of Redwood Group’s common stock. Redwood Group then merged with and into RMC, which resulted in Gymno Corporation becoming a wholly-owned subsidiary of RMC. Gymno Corporation then converted into Gymno LLC, a California limited liability company, with Michael R. Burwell, the majority owner and President of RMC, as its managing member.

The managers are solely responsible of company business, subject to the voting rights of the members on specified matters.  Any one of the managers acting alone has the power and authority to act for and bind the company.

Members representing a majority of the outstanding units may, without the concurrence of the managers, vote to: (i) dissolve the company, (ii) amend the operating agreement, subject to certain limitations, (iii) approve or disapprove the sale of all or substantially all of the assets of the company or (iv) remove or replace one or all of the managers.

The approval of all the members is required to elect a new manager to continue the company business where there is no remaining manager after a manager ceases to be a manager other than by removal.

Profits and losses are allocated among the members according to their respective capital accounts monthly after 1% of the profits and losses is allocated to the managers. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting.

Distribution reinvestment plan

Members may elect to have all or a portion of their monthly distributions reinvested in additional units, subject to the availability of units under the distribution reinvestment plan. Members may withdraw from the distribution reinvestment plan with written notice.

Liquidity and unit redemption program

There are substantial restrictions on transferability of company units and accordingly an investment in the company is non-liquid. There is no public or secondary market for the units and none is expected to develop. Members have no right to withdraw from the company or to obtain the return of their capital account for at least one year from the date of purchase of units.

In order to provide a certain degree of liquidity, after the one year period, a member may redeem all or part of their units, subject to certain limitations.  The price paid for redeemed units will be based on the lesser of the purchase price paid by the redeeming member or the member's capital account balance as of the date of each redemption payment.  Redemption value will be calculated as follows:

● For redemptions beginning after one year (but before two years) 92% of purchase price or 92% of the capital account balance, whichever is less;

● For redemptions beginning after two years (but before three years) 94% of purchase price or 94% of the capital account balance, whichever is less;

● For redemptions beginning after three years (but before four years) 96% of purchase price or 96% of the capital account balance, whichever is less;

● For redemptions beginning after four years (but before five years) 98% of purchase price or 98% of the capital account balance, whichever is less;

● For redemptions beginning after five years, 100% of purchase price or 100% of the capital account balance, whichever is less.

The company will attempt to redeem units quarterly, subject to certain limitations.

Notwithstanding the foregoing, with respect to any redemption, the number of units that may be redeemed per quarter per individual member will be subject to a maximum of the greater of 100,000 units or 25% of the member's units outstanding. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that applies when the redemption payments begin will continue to apply throughout the entire redemption period and will apply to all units covered by such redemption request regardless of when the final redemption payment is made.

The company will not establish a reserve from which to fund redemptions. The company's capacity to redeem member units upon request is restricted to the availability of company cash flow. The company will not, in any calendar year, redeem more than 5% of the weighted average number of units outstanding during the twelve month period immediately prior to the date of the redemption.

Contributed capital

The managers are required to contribute to capital 1/10 of 1% of the aggregate capital accounts of the members.

Managers' interest

If a manager is removed, withdrawn or is terminated, the company will pay to the manager all amounts then accrued and owing to the manager. Additionally, the company will terminate the manager's interest in the company's profits, losses, distributions and capital by payment of an amount in cash equal to the then present fair value of such interest.

Sales commissions - formation loans

Sales commissions are not paid directly by the company out of the offering proceeds. Instead, the company loans to RMC, one of the managers, amounts to pay all sales commissions and amounts payable in connection with unsolicited orders. This loan is unsecured and non-interest bearing and is referred to as the “formation loan.” During the offering period, RMC will repay annually, one tenth of the principal balance of the formation loan as of December 31 of the prior year.  Upon completion of the offering, the formation loan will be amortized over 10 years and repaid in 10 equal annual installments. The formation loan has been deducted from members’ capital in the balance sheets. As amounts are received from RMC as payments on the loan, the deduction from capital will be reduced. Interest is imputed at the market rate of interest in effect in the years the offering closed. If the managing members are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven.

Income taxes and Members’ capital – tax basis

Income taxes – federal and state – are the obligation of the members, if and when taxes apply, other than for the minimum annual California franchise tax paid by the company.

Members’ capital reconciliation

A reconciliation of members’ capital in the financial statements to the tax basis of company capital is presented in the following table at December 31.

	2011		2010
Members’ capital per financial statements	$	10,126,232	$	5,163,645
Unallocated syndication costs		503,698		266,530
Allowance for loan losses		—		—
Formation loans receivable		741,215		487,674
Members’ capital tax basis	$	11,371,145	$	5,917,849

Term of the Company

The company is scheduled to terminate in 2028, unless sooner terminated as provided in the operating agreement.

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Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2011	Dec. 31, 2010
Members’ capital, subject to redemption, formation loan receivable	$ 741,215	$ 487,674
Capital Account Members [Member]
Unallocated syndication costs	498,661	263,865
Capital Account Managers [Member]
Unallocated syndication costs	$ 5,037	$ 2,665

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	Redwood Mortgage Investors IX
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	0
Entity Public Float	$ 0
Amendment Flag	false
Entity Central Index Key	0001448038
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY

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Statements of Income (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Revenues
Loans	$ 583,552	$ 186,207
Imputed interest on formation loan	8,033	2,562
Other		1,236
Total interest income	591,585	190,005
Interest expense – amortization of discount on formation loan	8,033	2,562
Net interest income	583,552	187,443
Late fees	1,727	356
Other	300	100
Total revenues, net	585,579	187,899
Operating expenses
Mortgage servicing fees	16,756	4,777
Costs through RMC	41,241	3,971
Professional services	5,025	7,329
Other	4,605	6,138
Total operating expenses	67,627	22,215
Net income	517,952	165,684
Net income
Managers (1%)	5,180	1,656
Members (99%)	512,772	164,028
	$ 517,952	$ 165,684
Net income per $1,000 invested by members for entire period	56	52

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Note 6 - Commitments and Contingencies, Other Than Loan Commitments and Syndication Costs

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Text Block]

NOTE 6 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS AND SYNDICATION COSTS

Legal proceedings

In the normal course of business, the company may become involved in various legal proceedings such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc., to enforce the provisions of the deeds of trust, collect the debt owed under the promissory notes, or to protect, or recoup its investment from the real property secured by the deeds of trust and to resolve disputes between borrowers, lenders, lien holders and mechanics. None of these actions typically would be of any material importance. As of December 31, 2011, the company is not involved in any legal proceedings other than those that would be considered part of the normal course of business.

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Note 5 - Fair Value

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Text Block]

NOTE 5 – FAIR VALUE

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction.  Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The company determines the fair values of its assets and liabilities based on the fair value hierarchy established in GAAP. The standard describes three levels of inputs that may be used to measure fair value (Level 1, Level 2 and Level 3). Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the company’s own data.

The company does not record loans at fair value on a recurring basis.

The following methods and assumptions were used to estimate the fair value of assets and liabilities:

(a) Cash and cash equivalents. The carrying amount equals fair value. All amounts, including interest bearing accounts, are subject to immediate withdrawal.

(b) Secured loans. The fair value of the loans was $8,454,000 and $3,195,000 at December 31, 2011 and 2010, respectively. The fair value was estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. For impaired loans in which a specific allowance is established based on the fair value of the collateral, the collateral fair value is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers opinion of values, and publicly available information on in-market transactions (Level 2 inputs). Historically, it has been rare for determinations of fair value to be made without substantial reference to current market transactions. However, in recent years, due to the low number of real estate transactions, and the number of transactions that are distressed (i.e., that are executed by an unwilling seller – often compelled by lenders or other claimants – and/or executed without broad exposure or with market exposure but with few, if any, resulting offers), more interpretation, judgment and interpolation/extrapolation within and across property types is required (Level 3 inputs).

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Schedule IV - Mortgage Loans on Real Estate

12 Months Ended

Dec. 31, 2011

Mortgage Loans on Real Estate, by Loan Disclosure [Text Block]

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate

December 31, 2011

													Col. H
													Principal
									Col. F				Amount of
									Face		Col. G		Loans
				Col. C	Col. D				Amount of		Carrying		Subject to			Col. J
	Col. B			Final	Periodic		Col. E		Mortgage		Amount of		Delinquent		Col. I	California
Col. A	Interest			Maturity	Payment		Prior		Original		Mortgage		Principal		Type of	Geographic
Descrip.	Rate			Date	Terms		Liens		Amount		Investments		or Interest		Lien	Location
The following loans individually exceed 3% of aggregate carrying amount of mortgage investments
Res.		9.25	%	11/01/13	$	4,113	$	—	$	500,000	$	488,825	$	—	1st	San Diego
Res.		9.25	%	12/01/15		6,428		—		781,340		764,757		—	1st	Los Angeles
Res.		8.90	%	06/01/15		2,193		—		275,000		271,694		—	1st	San Mateo
Res.		11.00	%	06/01/17		2,524		406,375		265,000		263,043		—	2nd	San Francisco
Apts.		10.50	%	10/01/15		2,549		1,080,379		270,000		267,933		—	2nd	Los Angeles
Res.		8.50	%	03/01/16		2,384		—		310,000		308,355		—	1st	Contra Costa
Res.		8.75	%	04/01/12		3,646		—		500,000		500,000		—	1st	Marin
Res.		9.00	%	07/01/16		2,510		—		312,000		311,208		—	1st	Alameda
Res.		9.90	%	02/01/13		2,475		—		300,000		300,000		—	1st	San Francisco
Res.		8.75	%	07/01/12		7,292		—		1,000,000		1,000,000		—	1st	San Francisco
Comm.		10.00	%	11/01/12		3,333		694,309		400,000		400,000		—	2nd	Santa Clara
Res.		8.75	%	11/01/12		4,740		—		650,000		650,000		—	1st	Santa Clara
Res.		10.00	%	05/01/18		2,940		1,185,323		335,000		327,374		—	2nd	San Francisco
Res.		9.25	%	09/01/13		5,923		—		720,000		600,399		—	1st	San Francisco
The remaining loans have been aggregated by their property type
Res.		9.06	%			15,007		1,202,925		1,842,250		1,799,740		—
Total					$	68,057	$	4,569,311	$	8,460,590	$	8,253,328	$	—

Note:  Most loans have balloon payments due at maturity. As required by rule 12-29, column H represents amounts 90 days or more delinquent in principal or interest payments.

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate

December 31, 2011 and 2010

Reconciliation of carrying amount (cost) of loans at close of periods

	2011		2010
Balance, January 1	$	3,155,628	$	1,253,742
Additions during period
New loans		8,360,839		2,709,830
Other		—		—
Total additions		8,360,839		2,709,830
Deductions during period
Collections of principal		3,263,139		807,944
Foreclosures		—		—
Cost of loans sold		—		—
Amortization of premium		—		—
Other		—		—
Total deductions		3,263,139		807,944
Balance, December 31	$	8,253,328	$	3,155,628

The numbers in the table above exclude the renewals of $204,880 in 2011 and $0 in 2010.

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Note 7 - Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events [Text Block]

NOTE 7 – SUBSEQUENT EVENTS

None.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2011

Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Schedule II – Valuation and Qualifying Accounts

December 31, 2011 and 2010

	B		C
	Balance at		Additions							E
A	Beginning		Charged to Costs		Charged to		D			Balance at
Description	of Period		and Expenses		Other Accounts		Deductions			End of Period
Year ended December 31, 2010
Deducted from asset accounts
Allowance for loan losses	$	—	$	—	$	—	$	—	(a)	$	—
Cumulative write-down of
real estate owned		—		—		—		—	(b)		—
	$	—	$	—	$	—	$	—		$	—
Year ended December 31, 2011
Deducted from asset accounts
Allowance for loan losses	$	—	$	—	$	—	$	—	(a)	$	—
Cumulative write-down of
real estate owned		—		—		—		—	(b)		—
	$	—	$	—	$	—	$	—		$	—

Note (a) – Represents write-offs of loans or transfers

Note (b) – Represents write-offs of real estate owned

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Statements of Changes in Members' Capital (USD $)	12 Months Ended													12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Investors In Applicant Status [Member] Contributions On Application [Member]	Dec. 31, 2010 Investors In Applicant Status [Member] Contributions On Application [Member]	Dec. 31, 2011 Investors In Applicant Status [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Investors In Applicant Status [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2011 Investors In Applicant Status [Member] Premiums Paid On Application By RMC [Member]	Dec. 31, 2010 Investors In Applicant Status [Member] Premiums Paid On Application By RMC [Member]	Dec. 31, 2011 Investors In Applicant Status [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2010 Investors In Applicant Status [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2011 Investors In Applicant Status [Member]	Dec. 31, 2010 Investors In Applicant Status [Member]	Dec. 31, 2009 Investors In Applicant Status [Member]	Dec. 31, 2011 Capital Account Members [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Capital Account Members [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2011 Capital Account Members [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2010 Capital Account Members [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2011 Capital Account Members [Member] Earnings Distributed To Members [Member]	Dec. 31, 2010 Capital Account Members [Member] Earnings Distributed To Members [Member]	Dec. 31, 2011 Capital Account Members [Member] Earnings Distributed Used In DRIP [Member]	Dec. 31, 2010 Capital Account Members [Member] Earnings Distributed Used In DRIP [Member]	Dec. 31, 2011 Capital Account Members [Member] Member's Redemptions [Member]	Dec. 31, 2010 Capital Account Members [Member] Member's Redemptions [Member]	Dec. 31, 2011 Capital Account Members [Member]	Dec. 31, 2010 Capital Account Members [Member]	Dec. 31, 2011 Unallocated Syndication Costs Members [Member] Capital Accounts [Member]	Dec. 31, 2010 Unallocated Syndication Costs Members [Member] Capital Accounts [Member]	Dec. 31, 2011 Unallocated Syndication Costs Members [Member]	Dec. 31, 2010 Unallocated Syndication Costs Members [Member]	Dec. 31, 2011 Formation Loan, Gross [Member] Capital Accounts [Member]	Dec. 31, 2010 Formation Loan, Gross [Member] Capital Accounts [Member]	Dec. 31, 2011 Formation Loan, Gross [Member]	Dec. 31, 2010 Formation Loan, Gross [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Premiums Admitted To Members Capital [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Earnings Distributed To Members [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Earnings Distributed To Members [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Earnings Distributed Used In DRIP [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Earnings Distributed Used In DRIP [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Member's Redemptions [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Member's Redemptions [Member]	Dec. 31, 2011 Total Members’ Capital [Member] Capital Accounts [Member]	Dec. 31, 2010 Total Members’ Capital [Member] Capital Accounts [Member]	Dec. 31, 2011 Total Members’ Capital [Member]	Dec. 31, 2010 Total Members’ Capital [Member]	Dec. 31, 2011 Capital Account Managers [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Capital Account Managers [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Capital Account Managers [Member] Earnings Distributed To Members [Member]	Dec. 31, 2011 Capital Account Managers [Member]	Dec. 31, 2010 Capital Account Managers [Member]	Dec. 31, 2011 Unallocated Syndication Costs Managers [Member] Capital Accounts [Member]	Dec. 31, 2010 Unallocated Syndication Costs Managers [Member] Capital Accounts [Member]	Dec. 31, 2011 Unallocated Syndication Costs Managers [Member]	Dec. 31, 2010 Unallocated Syndication Costs Managers [Member]	Dec. 31, 2011 Total Managers’ Capital [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Total Managers’ Capital [Member] Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Total Managers’ Capital [Member] Earnings Distributed To Members [Member]	Dec. 31, 2011 Total Managers’ Capital [Member] Capital Accounts [Member]	Dec. 31, 2010 Total Managers’ Capital [Member] Capital Accounts [Member]	Dec. 31, 2011 Total Managers’ Capital [Member]	Dec. 31, 2010 Total Managers’ Capital [Member]	Dec. 31, 2011 Contributions Admitted To Members Capital [Member]	Dec. 31, 2010 Contributions Admitted To Members Capital [Member]	Dec. 31, 2011 Premiums Admitted To Members Capital [Member]	Dec. 31, 2010 Premiums Admitted To Members Capital [Member]	Dec. 31, 2011 Earnings Distributed To Members [Member]	Dec. 31, 2010 Earnings Distributed To Members [Member]	Dec. 31, 2011 Earnings Distributed Used In DRIP [Member]	Dec. 31, 2010 Earnings Distributed Used In DRIP [Member]	Dec. 31, 2011 Member's Redemptions [Member]	Dec. 31, 2010 Member's Redemptions [Member]	Dec. 31, 2011 Capital Accounts [Member]	Dec. 31, 2010 Capital Accounts [Member]
Balances	$ 5,163,645	$ 1,123,976									$ 320,545	$ 1,285,031	$ 583,500											$ 5,911,916	$ 1,314,371			$ (263,865)	$ (58,447)			$ (487,674)	$ (132,680)													$ 5,160,377	$ 1,123,244				$ 5,933	$ 1,322			$ (2,665)	$ (590)						$ 3,268	$ 732
Member contributions			4,329,028	5,282,383	(5,270,414)	(4,610,952)	52,955	70,490	(76,055)	(40,390)				5,270,414	4,610,952	76,055	40,390																	5,270,414	4,610,952	76,055	40,390											5,390	4,611								5,390	4,611						5,275,804	4,615,563	76,055	40,390
Net income	517,952	165,684																						512,772	164,028																					512,772	164,028				5,180	1,656										5,180	1,656
Member distributions	416,515	219,481																(600,790)	(203,975)	199,275	52,880	(15,000)	(66,730)															(600,790)	(203,975)	199,275	52,880	(15,000)	(66,730)							(1,656)									(1,656)									(600,790)	(205,631)	199,275	52,880	(15,000)	(66,730)
Formation loan advances	(303,032)	(369,767)																														(303,032)	(369,767)													(303,032)	(369,767)
Formation loan payments received	49,491	14,773																												48,767	13,268													48,767	13,268																													48,767	13,268
Syndication costs incurred	(237,168)	(207,493)																								(235,268)	(206,044)																	(235,268)	(206,044)								(2,377)	(2,081)						(2,377)	(2,081)													(237,645)	(208,125)
Early withdrawal penalties	1,201	2,137																										472	626			724	1,505													1,196	2,131								5	6						5	6
Balances	$ 10,126,232	$ 5,163,645									$ 320,545	$ 1,285,031	$ 583,500											$ 11,354,642	$ 5,911,916			$ (498,661)	$ (263,865)			$ (741,215)	$ (487,674)													$ 10,114,766	$ 5,160,377				$ 16,503	$ 5,933			$ (5,037)	$ (2,665)						$ 11,466	$ 3,268

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Note 4 - Loans

12 Months Ended

Dec. 31, 2011

Financing Receivables [Text Block]

NOTE 4 – LOANS

The company generally funds loans with a fixed interest rate and a five-year term. As of December 31, 2011, 80% of the company’s loans (representing 79% of the aggregate principal of the company’s loan portfolio) have a five year term or less from loan inception. The remaining loans have terms longer than five years. As of December 31, 2011, five loans outstanding (representing 35% of the aggregate principal balance of the company’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity. The remaining loans require monthly payments of principal and interest, typically calculated on a 30 year amortization, with the remaining principal balance due at maturity.

Secured loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table for the years ended December 31.

	2011			2010
Principal, January 1	$	3,155,628		$	1,253,742
Loans funded		8,3.60,839			2,709,830
Payments received		(3,263,139	)		(807,944	)
Principal, December 31	$	8,253,328		$	3,155,628

Loan characteristics

Secured loans had the characteristics presented in the following table.

	2011			2010
Number of secured loans		25			12
Secured loans – principal	$	8,253,328		$	3,155,628
Secured loans – interest rates range (fixed)		7.75-11.00	%		8.50-11.00	%
Average secured loan – principal	$	330,133		$	262,969
Average principal as percent of total principal		4.00	%		8.33	%
Average principal as percent of members’ capital		3.26	%		5.09	%
Average principal as percent of total assets		3.16	%		4.08	%
Largest secured loan – principal	$	1,000,000		$	877,500
Largest principal as percent of total principal		12.12	%		27.81	%
Largest principal as percent of members’ capital		9.87	%		16.99	%
Largest principal as percent of total assets		9.57	%		13.60	%
Smallest secured loan – principal	$	97,255		$	97,997
Smallest principal as percent of total principal		1.18	%		3.11	%
Smallest principal as percent of members’ capital		0.96	%		1.90	%
Smallest principal as percent of total assets		0.93	%		1.52	%
Number of counties where security is located (all California)		10			8
Largest percentage of principal in one county		30.18	%		27.81	%
Number of secured loans in foreclosure		—			—
Secured loans in foreclosure – principal		—			—
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—

As of December 31, 2011, the company’s largest loan in the principal of $1,000,000 represents 12.12% of outstanding secured loans and 9.57% of company assets. The loan is secured by a residential property located in San Francisco, California, bears an interest rate of 8.75% and matures on July 1, 2012.

Larger loans sometimes increase above 10% of the secured loan portfolio or company assets as these amounts decrease due to member withdrawals and loan payoffs and due to restructuring of existing loans. As the portfolio grows within the near term, it is anticipated the single loan exceeding 10% of the secured loan portfolio will be less than 10% of the secured loan portfolio. Nevertheless, the largest loan is less than 10% of the company assets.

Distribution by California counties

The distribution of secured loans outstanding by California counties is presented in the following table at December 31.

	2011					2010
	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
Northern California Counties
San Francisco	$	2,490,816		30.18	%	$	594,190		18.82	%
Santa Clara		1,050,000		12.72			877,500		27.81
Marin		746,368		9.04			248,320		7.87
San Mateo		556,592		6.75			422,867		13.40
Alameda		536,595		6.50			119,138		3.78
Contra Costa		308,355		3.74			—		—
Monterey		184,851		2.24			—		—
		5,873,577		71.17			2,262,015		71.68	%
Southern California Counties
Los Angeles		1,482,910		17.96			573,902		18.18	%
San Diego		697,529		8.45			210,000		6.66
Orange		199,312		2.42			—		—
Riverside		—		—			109,711		3.48
		2,379,751		28.83			893,613		28.32	%
Total secured loans	$	8,253,328		100.00	%	$	3,155,628		100.00	%

Loan Commitments

The company makes construction and rehabilitation loans, which are not fully disbursed at loan inception. The company has approved the borrowers up to a maximum loan balance; however, disbursements are made periodically during completion phases of the construction or rehabilitation or at such other times as required under the loan documents. At December 31, 2011, there were no undisbursed loan funds. The company does not maintain a separate cash reserve to hold the undisbursed obligations, which are intended to be funded.

The company periodically negotiates contractual workout agreements with borrowers whose loans are past maturity or who are delinquent in making payments. The company does not have any active workout agreement, nor is it obligated to fund additional money as of December 31, 2011.

Lien position

Secured loans had the lien positions presented in the following table.

	2011								2010
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		17	$	6,383,100			77	%		6	$	1,813,697			57	%
Second trust deeds		8		1,870,228			23			6		1,341,931			43
Total secured loans		25		8,253,328			100	%		12		3,155,628			100	%
Liens due other lenders at loan closing				4,569,311								3,464,067
Total debt			$	12,822,639							$	6,619,695
Appraised property value at loan closing			$	26,836,465							$	11,565,115
Percent of total debt to appraised values (LTV) at loan closing (1)				47.78	%							57.24	%

(1) Based on appraised values and liens due other lenders at loan closing. The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any.

Property type

Secured loans summarized by property type are presented in the following table.

	2011							2010
	Loans		Principal		Percent			Loans		Principal		Percent
Single family		23	$	7,585,395		92	%		11	$	2,885,924		91	%
Multi-family		1		267,933		3			1		269,704		9
Commercial		1		400,000		5			—		—		—
Land		—		—		—			—		—		—
Total secured loans		25	$	8,253,328		100	%		12	$	3,155,628		100	%

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table.

	Loans		Principal		Percent
2012		4	$	2,550,000		31	%
2013		4		1,486,479		18
2014		2		269,255		3
2015		6		1,893,375		23
2016		7		1,463,801		18
Thereafter		2		590,418		7
Total secured loans		25	$	8,253,328		100	%

Loans may be repaid or refinanced before, at or after the contractual maturity date. On matured loans the company may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

Renewals included in 2011 and 2010 were $204,880 and $0, respectively.

Delinquency

Secured loans summarized by payment delinquency are presented in the following table.

	2011		2010
Past Due
30-89 days	$	670,600	$	206,201
90-179 days		—		—
180 or more days		—		—
Total past due		670,600		206,201
Current		7,582,728		2,949,427
Total secured loans	$	8,253,328	$	3,155,628

Impaired loans/allowance for loan losses

At December 31, 2011 and 2010, the company had not designated any loans as impaired and had not recorded an allowance for loan losses as all loans were deemed to have protective equity (i.e., low loan-to-value ratio) such that collection is reasonably assured for amounts owing.