10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐ TRANSITION REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission file number: 000-55601

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)

177 Bovet Road, Suite 520, San Mateo, CA	94402
(Address of principal executive offices)	(Zip Code)

(650) 365-5341

(Registrant’s telephone number, including area code)

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.    ☒  YES    ☐  NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).☒  YES    ☐  NO

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  YES    ☒  NO

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
None

Part I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

REDWOOD MORTGAGE INVESTORS IX, LLC

Balance Sheets

June 30, 2019 (unaudited) and December 31, 2018 (audited)

	June 30,			December 31,
ASSETS	2019			2018
Cash and cash equivalents	$	3,782,785		$	10,674,953
Loans
Principal		70,922,877			62,115,713
Advances		20,924			21,041
Accrued interest		641,861			473,966
Prepaid interest		(52,500	)		—
Loan balances secured by deeds of trust		71,533,162			62,610,720
Total assets	$	75,315,947		$	73,285,673
LIABILITIES, INVESTORS IN APPLICANT STATUS, AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities	$	279		$	9,321
Payables to affiliate		11,974			—
Total liabilities		12,253			9,321
Commitments and contingencies (Note 5)
Investors in applicant status		—			651,500
Members’ capital, net		79,628,024			76,804,195
Receivable from manager (formation loan)		(4,324,330	)		(4,179,343	)
Members’ capital, net, less formation loan		75,303,694			72,624,852
Total liabilities, investors in applicant status and members’ capital	$	75,315,947		$	73,285,673

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

2

REDWOOD MORTGAGE INVESTORS IX, LLC

Statements of Income

For the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)

	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019		2018
Revenues, net
Interest income	$	1,517,873	$	1,315,915	$	2,878,865	$	2,493,647
Late fees		9,642		5,531		26,627		10,242
Gain on sale, loans		—		14,246		—		14,246
Total revenues		1,527,515		1,335,692		2,905,492		2,518,135
Provision for loan losses		—		—		—		—
Operations expense
Mortgage servicing fees		42,914		38,694		81,560		73,878
Asset management fees, net (Note 3)		39,729		—		39,729		—
Costs from Redwood Mortgage Corp., net (Note 3)		—		—		—		—
Professional services, net (Note 3)		78,858		84,213		226,175		88,898
Other		21,382		8,412		24,738		8,497
Total operations expense		182,883		131,319		372,202		171,273
Net income	$	1,344,632	$	1,204,373	$	2,533,290	$	2,346,862
Members (99%)		1,331,186		1,192,329		2,507,957		2,323,393
Manager (1%)		13,446		12,044		25,333		23,469
	$	1,344,632	$	1,204,373	$	2,533,290	$	2,346,862

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

3

REDWOOD MORTGAGE INVESTORS IX, LLC

Statement of Changes in Members’ Capital

For the Three Months Ended June 30, 2019 (unaudited)

				Members' Capital, net
	Investors In Applicant Status			Members’ Capital			Manager’s Capital		Unallocated Organization and Offering Expenses			Members’ Capital, net
Balance at March 31, 2019	$	1,499,263		$	79,965,409		$	138,359	$	(2,475,629	)	$	77,628,139
Contributions on application		554,245			—			—		—			—
Contributions admitted to members' capital		(2,046,508	)		2,046,508			2,059		—			2,048,567
Premiums paid on application by RMC		5,355			—			—		—			—
Premiums admitted to members' capital		(12,355	)		12,355			—		—			12,355
Net income		—			1,331,186			13,446		—			1,344,632
Earnings distributed to members		—			(1,116,861	)		—		—			(1,116,861	)
Earnings distributed used in DRIP		—			601,285			—		—			601,285
Members’ redemptions		—			(823,654	)		—		—			(823,654	)
Organization and offering expenses		—			—			—		(92,093	)		(92,093	)
Organization and offering expenses allocated		—			(81,682	)		—		81,682			—
Organization and offering expenses repaid by RMC		—			—			—		25,654			25,654
Balance at June 30, 2019	$	—		$	81,934,546		$	153,864	$	(2,460,386	)	$	79,628,024

For the Six Months Ended June 30, 2019 (unaudited)

				Members' Capital, net
	Investors In Applicant Status			Members’ Capital			Manager’s Capital		Unallocated Organization and Offering Expenses			Members’ Capital, net
Balance at December 31, 2018	$	651,500		$	79,198,453		$	125,200	$	(2,519,458	)	$	76,804,195
Contributions on application		2,666,508			—			—		—			—
Contributions admitted to members' capital		(3,318,008	)		3,318,008			3,331		—			3,321,339
Premiums paid on application by RMC		12,355			—			—		—			—
Premiums admitted to members' capital		(12,355	)		12,355			—		—			12,355
Net income		—			2,507,957			25,333		—			2,533,290
Earnings distributed to members		—			(2,227,868	)		—		—			(2,227,868	)
Earnings distributed used in DRIP		—			1,204,181			—		—			1,204,181
Members’ redemptions		—			(1,916,050	)		—		—			(1,916,050	)
Organization and offering expenses		—			—			—		(185,332	)		(185,332	)
Organization and offering expenses allocated		—			(162,490	)		—		162,490			—
Organization and offering expenses repaid by RMC		—			—			—		62,499			62,499
Early withdrawal penalties		—			—			—		19,415			19,415
Balance at June 30, 2019	$	—		$	81,934,546		$	153,864	$	(2,460,386	)	$	79,628,024

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

4

REDWOOD MORTGAGE INVESTORS IX, LLC

Statement of Changes in Members’ Capital

For the Three Months Ended June 30, 2018 (unaudited)

				Members' Capital, net
	Investors In Applicant Status			Members’ Capital			Manager’s Capital			Unallocated Organization and Offering Expenses			Members’ Capital, net
Balance at March 31, 2018	$	4,415,358		$	69,816,123		$	117,527		$	(2,395,922	)	$	67,537,728
Contributions on application		3,094,160			—			—			—			—
Contributions admitted to members' capital		(6,177,788	)		6,177,788			6,210			—			6,183,998
Premiums paid on application by RMC		1,120			—			—			—			—
Premiums admitted to members' capital		(32,690	)		32,690			—			—			32,690
Net income		—			1,192,329			12,044			—			1,204,373
Earnings distributed to members		—			(1,088,573	)		(38,690	)		—			(1,127,263	)
Earnings distributed used in DRIP		—			589,482			—			—			589,482
Members’ redemptions		—			(299,240	)		—			—			(299,240	)
Organization and offering expenses		—			—			—			(278,696	)		(278,696	)
Organization and offering expenses allocated		—			(74,480	)		—			74,480			—
Manager reimbursement		—			—			—			9,137			9,137
Early withdrawal penalties		—			—			—			879			879
Balance at June 30, 2018	$	1,300,160		$	76,346,119		$	97,091		$	(2,590,122	)	$	73,853,088

For the Six Months Ended June 30, 2018 (unaudited)

				Members' Capital, net
	Investors In Applicant Status			Members’ Capital			Manager’s Capital			Unallocated Organization and Offering Expenses			Members’ Capital, net
Balance at December 31, 2017	$	3,270,312		$	66,450,424		$	102,902		$	(2,335,325	)	$	64,218,001
Contributions on application		7,407,598			—			—			—			—
Contributions admitted to members' capital		(9,370,995	)		9,370,995			9,410			—			9,380,405
Premiums paid on application by RMC		33,040			—			—			—			—
Premiums admitted to members' capital		(39,795	)		39,795			—			—			39,795
Net income		—			2,323,393			23,469			—			2,346,862
Earnings distributed to members		—			(2,178,920	)		(38,690	)		—			(2,217,610	)
Earnings distributed used in DRIP		—			1,187,760			—			—			1,187,760
Members’ redemptions		—			(702,640	)		—			—			(702,640	)
Organization and offering expenses		—			—			—			(422,390	)		(422,390	)
Organization and offering expenses allocated		—			(144,688	)		—			144,688			—
Manager reimbursement		—			—			—			21,330			21,330
Early withdrawal penalties		—			—			—			1,575			1,575
Balance at June 30, 2018	$	1,300,160		$	76,346,119		$	97,091		$	(2,590,122	)	$	73,853,088

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

5

REDWOOD MORTGAGE INVESTORS IX, LLC

Statements of Cash Flows

For the Three Months Ended June 30, 2019 and 2018 (unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Operations
Interest received	$	1,486,895		$	1,224,758		$	2,761,760		$	2,385,819
Other loan income		9,742			4,483			26,877			9,344
Loan administrative fee reimbursed		—			—			—			3,130
Operations expense		(194,942	)		(163,236	)		(369,481	)		(165,839	)
Total cash provided by operations		1,301,695			1,066,005			2,419,156			2,232,454
Investing – loan principal/advances
Principal collected on loans		10,088,604			6,855,023			21,978,196			19,594,640
Loans originated		(14,595,000	)		(16,594,000	)		(30,922,000	)		(26,540,500	)
Loans sold to non-affiliate, net		—			14,163,158			143,000			14,163,158
Loans transferred from affiliates		—			—			—			(5,889,819	)
Advances made on loans		2,471			565			(4,532	)		(2,083	)
Total cash (used in) provided by investing		(4,503,925	)		4,424,746			(8,805,336	)		1,325,396
Financing – members’ capital
Contributions by members, net
Contributions by members		561,586			3,101,230			2,682,154			7,449,992
Organization and offering expenses paid, net		(66,439	)		(269,560	)		(122,833	)		(401,060	)
Formation loan funding		(45,728	)		(211,727	)		(186,656	)		(569,521	)
Total cash provided by members, net		449,419			2,619,943			2,372,665			6,479,411
Distributions to members
Earnings distributed		(515,576	)		(537,781	)		(1,023,687	)		(1,029,850	)
Redemptions		(808,070	)		(299,240	)		(1,854,966	)		(702,640	)
Cash distributions to members		(1,323,646	)		(837,021	)		(2,878,653	)		(1,732,490	)
Total cash (used in) provided by financing		(874,227	)		1,782,922			(505,988	)		4,746,921
Net (decrease) increase in cash		(4,076,457	)		7,273,673			(6,892,168	)		8,304,771
Cash, beginning of period		7,859,242			9,540,950			10,674,953			8,509,852
Cash, June 30,	$	3,782,785		$	16,814,623		$	3,782,785		$	16,814,623

Non-cash financing activity of $2,221 and $15,584 for the three months ended, and $3,968 and $61,084 for the six months ended June 30, 2018 and 2019, respectively, in early withdrawal penalties which reduced redemptions, included in the table above.

Reconciliation of net income to total cash provided by operations

	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Net income	$	1,344,632		$	1,204,373		$	2,533,290		$	2,346,862
Adjustments to reconcile net income to net cash provided by operating activities
(Gain) on sale, loans		—			(14,246	)		—			(14,246	)
Amortization of loan administrative fees		—			3,254			—			3,254
Change in operating assets and liabilities
Prepaid interest		52,500			—			52,500			—
Accrued interest		(83,478	)		(94,411	)		(169,605	)		(111,083	)
Receivable from affiliate		—			(135	)		—			(135	)
Loan administrative fees reimbursed		—			—			—			3,130
Accounts payable and accrued liabilities		(11,959	)		(33,803	)		2,971			1,951
Other		—			973			—			2,721
Total adjustments		(42,937	)		(138,368	)		(114,134	)		(114,408	)
Total cash provided by operations	$	1,301,695		$	1,066,005		$	2,419,156		$	2,232,454

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

6

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

NOTE 1 – ORGANIZATION AND GENERAL

In the opinion of the management of Redwood Mortgage Corp. (RMC or the manager), the accompanying unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information included therein. These financial statements should be read in conjunction with the audited financial statements included in the company’s Form 10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operations results to be expected for the full year.

Redwood Mortgage Investors IX, LLC (RMI IX or the company) is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily through first and second deeds of trust.

The company is externally managed by RMC. The manager is solely responsible for managing the business and affairs of RMI IX, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the company. RMC provides the personnel and services necessary for RMI IX to conduct its business as the company has no employees of its own. The manager was required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members. The mortgage loans the company funds and/or invests in are arranged and generally are serviced by RMC.

The rights, duties and powers of the members and manager of the company are governed by the Ninth Amended and Restated Limited Liability Company Operating Agreement of RMI IX (the “Operating Agreement”), the Delaware Limited Liability Company Act and the California Revised Uniform Limited Liability Company Act.

The following is a summary of certain provisions of the Operating Agreement and is qualified in its entirety by the terms of the Operating Agreement itself. Members should refer to the company’s Operating Agreement for complete disclosure of its provisions.

The company’s primary investment objectives are to:

• yield a favorable rate of return from the company’s business of making and/or investing in loans;

• preserve and protect the company’s capital by making and/or investing in loans secured by California real estate, preferably income-producing properties geographically situated in the San Francisco Bay Area and the coastal metropolitan regions of Southern California; and,

• generate and distribute cash flow from these mortgage lending and investing activities.

The ongoing sources of funds for loans are the proceeds (net of redemption of members’ capital and operating expenses) from:

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• payments from RMC on the outstanding balance of the formation loan;

• sale of members’ units net of reimbursement to RMC of organization and offering expenses (“O&O expenses”) and net of amounts advanced for the formation loan to RMC, including units sold by reinvestment of distributions;

• loan sales to unaffiliated 3^rd parties and loan transfers by executed assignment to affiliated mortgage funds; and,

• a line of credit, if obtained.

The company intends to hold until maturity the loans in which it invests and does not presently intend to invest in mortgage loans primarily for the purpose of reselling such loans in the ordinary course of business; however, the company may sell mortgage loans (or fractional interests therein) when the manager determines that it appears to be advantageous for the company to do so, based upon then current interest rates, the length of time that the loan has been held by the company, the company’s credit risk and concentration risk and the overall investment objectives of the company. Loans sold to third parties may be sold for par, at a premium or, in the case of non-performing or under performing loans, at a discount. Company loans may be sold to third parties or to the manager or its affiliates; however, any loan sold to the manager or an affiliate thereof will not be sold for a purchase price less than the par value of the loan or the fair market value of the loan, whichever is greater. The manager will not receive commissions or broker fees with respect loan sales conducted for the company; however, selling loans will increase members’ capital available for investing in new loans for which the manager will earn brokerage fees and other forms of compensation.

7

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Net income and losses are allocated monthly among the members according to their respective capital accounts after one percent (1%) of the profits and losses are allocated to the manager. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the company to provide tax benefits of the type commonly associated with limited liability company tax shelter investments. Federal and state income taxes are the obligation of the members, if and when taxes apply, other than the annual California franchise tax and the California LLC cash receipts taxes paid by 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. Where there is only one manager, a majority in interest of the members is required to elect a new manager to continue the company business after a manager ceases to be a manager due to its withdrawal.

Distribution policy

Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager. Cash available for distribution means cash flow from operations (excluding repayments for loan principal and other capital transaction proceeds) less amounts set aside for creation or restoration of reserves. The manager may withhold from cash available for distribution otherwise distributable to the members with respect to any period the respective amounts of organization and offering (O&O expenses) allocated to the members’ accounts for the applicable period pursuant to the company’s reimbursement to RMC and allocation to members’ accounts of O&O expenses. The amount otherwise distributable, less the respective amounts of O&O expenses allocated to members, is the net distribution. Per the terms of the company’s Operating Agreement, cash available for distribution allocated to the members is allocated among the members in proportion to their percentage interests (except with respect to differences in the amounts of O&O expenses allocated to the respective members during the applicable period) and in proportion to the number of days during the applicable month that they owned such percentage interests.

See Note 3 (Manager and Other Related Parties) to the financial statements for a detailed discussion on the allocation of O&O expenses to members’ accounts.

Cash available for distributions allocable to members, other than those participating in the distribution reinvestment plan (DRIP) and the manager, is distributed at the end of each calendar month. Cash available for distribution allocable to members who participate in the DRIP is used to purchase additional units at the end of each calendar month. The manager’s allocable share of cash available for distribution is also distributed not more frequently than with cash distributions to members.

To determine the amount of cash to be distributed in any specific month, the company relies in part on its forecast of full year profits, which takes into account the difference between the forecasted and actual results in the year and the requirement to maintain a cash reserve.

The company’s net income, cash available for distribution, and net-distribution rate fluctuates depending on:

• loan origination volume and the balance of capital available to lend;

• the current and future interest rates negotiated with borrowers;

• the timing and amount of gains received from loan sales, if any;

• payment of fees and cost reimbursements to RMC;

• the amount and timing of other operating expenses, including expenses for professional services;

• financial support, if any, from RMC; and

• payments from RMC on the outstanding balance of the formation loan.

• a line of credit, if obtained.

Financial Support from RMC

Since commencement of operations in 2009, RMC, at its sole discretion, has provided significant financial support to the company which increased the net income, cash available for distribution, and the net-distribution rate, by:

• charging less than the maximum allowable fees;

• not requesting reimbursement of qualifying costs attributable to the company (“Costs from RMC”) on the Statements of Income); and/or,

• absorbing some, and in certain periods, all of the company’s direct expenses, such as professional fees.

8

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Such fee and cost-reimbursement waivers and the absorption of the company’s expenses by RMC were not made for the purpose of providing the company with sufficient funds to satisfy any required level of distributions, as the Operating Agreement has no such required level of distributions, nor to meet withdrawal requests. Any decision to waive fees or cost-reimbursements and/or to absorb direct expenses, and the amount (if any) to be waived or absorbed, is made by RMC in its sole discretion. This assistance has increased the company’s financial performance and resulted in an annual 6.5% net distribution rate since inception (6.95% before O&O expenses allocation of 0.45% when applicable) for periods prior to February 28, 2018.

Following a communication to members of its intention to phase in collection of its fees and cost reimbursements in April 2018, RMI IX began paying all of its direct expenses for professional-service fees (legal and audit/tax compliance) and other operating expenses (postage, printing etc.). In June 2019, RMC began collection of the asset management fee of three quarters of one percent annually (0.75%), and plans to commence collection of reimbursements of costs from RMC in 2020.

Distribution reinvestment plan (DRIP)

Members of record as of April 30, 2019, that previously elected to participate in the DRIP or that provide written notice to the manager may elect to participate in the DRIP, in those states in which approval has been obtained.

Liquidity and unit redemption program

There are substantial restrictions on transferability of units, and there is no established public trading and/or secondary market for the units and none is expected to develop. In order to provide liquidity to members, the company’s Operating Agreement includes a unit redemption program, whereby beginning one year from the date of purchase of the units, a member may redeem all or part of their units, subject to certain limitations.

The price paid for redeemed units is 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 is calculated based on the period from date of purchase as follows:

• after one year, 92% of the purchase price or of the capital account balance, whichever is less;

• after two years, 94% of the purchase price or of the capital account balance, whichever is less;

• after three years, 96% of the purchase price or of the capital account balance, whichever is less;

• after four years, 98% of the purchase price or of the capital account balance, whichever is less;

• after five years, 100% of the purchase price or of the capital account balance, whichever is less.

The company redeems units quarterly, subject to certain limitations as provided for in the Operating Agreement. The maximum number of units which may be redeemed per quarter per individual member shall not exceed the greater of (i) 100,000 units, or (ii) 25% of the member’s total outstanding units. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that, if any, applies when the redemption payments begin continues to apply throughout the redemption period and applies to all units covered by such redemption request regardless of when the final redemption payment is made.

The company has not established a cash reserve from which to fund redemptions. The company’s capacity to redeem units upon request is limited by the availability of cash and the company’s cash flow. As provided in the Operating Agreement, the company will not, in any calendar year, redeem more than five percent (5%) of the weighted average number of units outstanding during the twelve-month period immediately prior to the date of the redemption. In the event unit withdrawal requests exceed 5% in any calendar year, units will be redeemed in the priority provided in the Operating Agreement.

Contributed capital

Prior to April 30, 2019, the manager was required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

9

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Manager’s interest

If a manager is removed, withdrawn or 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. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered.

Unit sales

The company’s Registration Statement on Form S-11 filed with the SEC in June 2016 (SEC File No. 333-208315) to offer up to 120,000,000 units ($120,000,000) to the public and 20,000,000 units ($20,000,000) to its members pursuant to the DRIP, was not renewed in 2019 and the offer expired April 30, 2019. On June 11, 2019, the company filed a Post-Effective Amendment No. 5 with the SEC (SEC File No. 333-208315) to deregister all of the units which were registered under its Form S-11 Registration Statement that remained unsold as of April 30, 2019.

On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP. The Registration Statement on Form S-3 became effective on May 9, 2019.

As of June 30, 2019, the gross proceeds from sales of units from inception (October, 2009) was approximately $90,476,000, of which approximately $9,857,000 were from sales to members under our DRIP.

The company uses the gross proceeds from the sale of the units to:

• make additional loans;

• fund working capital reserves;

• pay RMC up to 4.5% of proceeds from sale of units for organization and offering expenses, excluding units sold in the DRIP; and

• fund a formation loan to RMC at up to 7% of proceeds from sale of units, excluding units sold in the DRIP.

Unit sales – commissions paid to broker-dealers/formation loan

Commissions for unit sales were previously paid to broker-dealers (B/D sales commissions) by RMC and were not paid directly by the company out of offering proceeds. Instead, the company advanced to RMC, from offering proceeds, amounts sufficient to pay the B/D sales commissions and premiums paid to investors up to seven percent (7%) of offering proceeds. The receivable arising from the advances is unsecured, and non-interest bearing and is referred to as the “formation loan.” RMC is required to make annual payments on the formation loan in the amount of one tenth of the principal balance outstanding at December 31 of the prior year.

Term of the company

The term of the company will continue until 2028, unless sooner terminated as provided in the Operating Agreement.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, 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.

10

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Fair value estimates

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.

Fair values of assets and liabilities are determined based on the fair-value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used:

• 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 in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• 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 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. 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).

Management has the requisite familiarity with the real estate 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.

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. At June 30, 2019, certain of the company’s cash balances in banks exceed federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit-worthiness/investment grade credit rating.

Loans and interest income

Performing loans are carried at amortized costs which is generally equal to the unpaid principal balance (principal). 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower.

11

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

For performing loans, interest is accrued daily on the principal plus advances, if any. Impaired loans less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or 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. Late fees are recognized in the period received.

The company may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. 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 events and or changes in circumstances cause management to have serious doubts about the collectability of the payments of interest and principal in accordance with the loan agreement, 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, then to the accrued interest, then to advances, and lastly to principal.

In the normal course of the company’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the renewed loan was previously designated as impaired.

From time to time, the company negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant delay or reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. 

The company originates loans with the intent to hold the loans until maturity.  From time to time the company may sell certain loans.  Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. In 2019 and 2018 certain performing loans were sold at an immaterial gain (net of expenses). Therefore, the recorded amount of the preforming loans (i.e., the loan balance) is deemed to approximate fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that collection of the amount owed is assured, including foregone interest, if any).

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the fair value of the collateral, net of any senior liens exceeds 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.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans 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.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

12

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Real estate owned (REO)

Real estate owned, or REO, is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expenses. Any recovery in the fair value subsequent to such a write down is recorded and is not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Recently issued accounting pronouncements

-Accounting and Financial reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. The manager expects to adopt the ASU for interim and annual reporting in 2020.

RMI IX invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral.  The real estate secured programs and low loan-to-value ratios have caused RMC to conclude that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial position.

NOTE 3 – MANAGER AND OTHER RELATED PARTIES

The Operating Agreement provides for compensation of the manager, as detailed below. RMC is entitled to 1% of the profits and losses of the company.

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	145,950		$	42,914	$	119,187		$	186,446		$	78,858	$	21,382	$	594,737
RMC support
Waived		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Net charged	$	—		$	42,914	$	39,729		$	—		$	78,858	$	21,382	$	182,883

13

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the six months ended
Chargeable/reimbursable	$	309,220		$	81,560	$	238,374		$	366,102		$	226,175	$	24,738	$	1,246,169
RMC support
Waived		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Net charged	$	—		$	81,560	$	39,729		$	—		$	226,175	$	24,738	$	372,202

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee                         (as Revised)			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	165,940		$	38,694	$	104,955		$	177,858		$	84,213	$	8,412	$	580,072
RMC support
Waived		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Net charged	$	—		$	38,694	$	—		$	—		$	84,213	$	8,412	$	131,319

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services			Other			Total
For the six months ended
Chargeable/reimbursable	$	324,303		$	73,878	$	209,910		$	362,007		$	232,050		$	22,743		$	1,224,891
RMC support
Waived		(324,303	)		—		(209,910	)		(362,007	)		—			—			(896,220	)
Expenses absorbed by RMC		—			—		—			—			(143,152	)		(14,246	)		(157,398	)
Total RMC support		(324,303	)		—		(209,910	)		(362,007	)		(143,152	)		(14,246	)		(1,053,618	)
Net charged	$	—		$	73,878	$	—		$	—		$	88,898		$	8,497		$	171,273

14

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Loan administrative fees

RMC is entitled to receive a loan administrative fee in an amount up to one percent (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 would be payable by the company upon the closing or acquisition of each loan. Since August 2015, RMC, at its sole discretion, waived and continues to waive, the loan administrative fees.   

Mortgage servicing fees

RMC earns mortgage servicing fees from the company of up to one-quarter of one percent (0.25%) annually of the unpaid principal balance of the loan portfolio 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 specific mortgage payments are collected. The mortgage servicing fees are accrued monthly on all loans. Remittance to RMC is made monthly unless the loan has been assigned a specific loss reserve, at which point remittance is deferred until the specific loss reserve is no longer required, or the property has been acquired by the company.

Asset management fees

RMC is entitled to receive a monthly asset management fee for managing the company’s portfolio and operations in an amount up to three-quarters of one percent (0.75%) annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to two percent (2%) of working capital reserves.

RMC, in its sole discretion, elected to begin collecting asset management fees in June 2019. In April 2018, the calculation of the asset management fees was adjusted to conform to the specifically applicable provisions of the Operating Agreement, accordingly the 2018 dollar amounts in the table above have been updated. The previously disclosed asset management fees were $82,066 for the three months ended June 30, 2018. This update had no effect on net income or total operating expenses, as all asset management fees were waived in 2018.

Costs from RMC

RMC, per the Operating Agreement, may request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, postage and preparation of reports to members and out-of-pocket general and administration expenses. Certain of these qualifying costs (e.g., postage) can be tracked by RMC as specifically attributable to the company. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g., by the company’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all affiliated mortgage funds managed by RMC. RMC, at its sole discretion, has elected to waive reimbursement for operating expenses during the three and six months ended June 30, 2019 and 2018.  

Professional Services

Professional services consist primarily of legal, regulatory (including SEC/FINRA compliance) and audit and tax compliance expenses. Prior to April 2018, RMC, at its sole discretion, had elected to absorb some or all of RMI IX’s expenses for professional services (and other operating expenses directly incurred by the company).

Commissions and fees paid by the borrowers to RMC

- Brokerage commissions, loan originations – 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 1.5% 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.

- Other fees – RMC receives 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.

15

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

In the ordinary course of business, performing loans may be transferred by executed assignment, in-part or in-full, between the affiliated mortgage funds at par. During the six months ended June 30, 2018, Redwood Mortgage Investors VIII, LP, an affiliated mortgage fund, transferred to the company two performing loans in-full at par value, which approximates fair value, of approximately $5,890,000. The company paid cash for the loans and the affiliated mortgage fund has no continuing obligation or involvement on the loans. No loans were transferred during the six months ended June 30, 2019.

Formation loan

Formation loan transactions are presented in the following table.

	For the six months ended			Since Inception
Balance, beginning of period	$	4,179,343		$	—
Formation loan advances to RMC		186,656			5,626,566
Payments received from RMC		—			(1,199,716	)
Early withdrawal penalties applied		(41,669	)		(102,520	)
Balance, June 30, 2019	$	4,324,330		$	4,324,330
Subscription proceeds since inception				$	80,256,995
Formation loan advance rate					7	%

The future minimum payments on the formation loan, net of early withdrawal penalties, as of June 30, 2019 are presented in the following table.

2019	$	376,265
2020		417,934
2021		417,934
2022		417,934
2023		417,934
Thereafter		2,276,329
Total	$	4,324,330

RMC is required to make annual payments on the formation loan, net of early withdrawal penalties, of one tenth of the principal balance outstanding at December 31 of the prior year. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered. The primary source of repayment of the formation loan are loan brokerage commissions earned by RMC.

Member capital withdrawals

The table below presents the company’s unit redemptions for the three and six months ended June 30, 2019 and 2018.

	Three months ended				Six months ended
	2019		2018		2019		2018
Capital redemptions-without penalty	$	375,080	$	259,817	$	742,476	$	575,867
Capital redemptions-subject to penalty		448,574		39,423		1,173,574		126,773
Total	$	823,654	$	299,240	$	1,916,050	$	702,640
Early withdrawal penalties	$	15,584	$	2,221	$	61,084	$	3,968

16

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

At June 30, 2019, scheduled future redemptions of members' capital was $883,523, all of which is scheduled for payment in 2019.

Reimbursement and allocation of organization and offering expenses

Per the Operating Agreement, the manager is reimbursed for, or the company may pay directly, O&O expenses incurred in connection with the organization of the company or offering of the units including, without limitation, attorneys’ fees, accounting fees, printing costs and other selling expenses (other than sales commissions) in a total amount not exceeding 4.5% of the original purchase price of all units (other than DRIP units) sold in all offerings (hereafter, the “maximum O&O expenses”), and the manager pays any O&O expenses in excess of the maximum O&O expenses.

For each calendar quarter or portion thereof after December 31, 2015, that a member holds units (other than DRIP units) and for a maximum of forty (40) such quarters, a portion of the O&O expenses borne by the company is allocated to and debited from that member’s capital account in an annual amount equal to 0.45% of the member’s original purchase price for those units, in equal quarterly installments of 0.1125% each commencing with the later of the first calendar quarter of 2016 or the first full calendar quarter after a member’s purchase of units, and continuing through the quarter in which such units are redeemed. If at any time the aggregate O&O expenses actually paid or reimbursed by the company since inception are less than the maximum O&O expenses, the company shall first reimburse the manager for any O&O expenses previously borne by it so long as it does not result in the company bearing more than the maximum O&O expenses, and any savings thereafter remaining shall be equitably allocated among (and serve to reduce any such subsequent cost allocations to) those members who have not yet received forty (40) quarterly allocations of O&O expenses, as determined in the good faith judgment of the manager.

Unallocated O&O transactions are summarized in the following table.

	2019			Since Inception
Balance, beginning of period	$	2,519,458		$	—
O&O expenses reimbursed to RMC		185,332			3,671,853
Early withdrawal penalties applied (1)		(19,415	)		(60,290	)
O&O expenses allocated(2)		(162,490	)		(848,846	)
O&O expenses repaid to Members' Capital by RMC(3)		(62,499	)		(302,331	)
Balance, June 30	$	2,460,386		$	2,460,386

(1) Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

(2) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters.

(3) RMC is obligated under the Operating Agreement to repay the company for unallocated O&O expenses attributed to units redeemed prior to the 40 quarterly allocations. RMC estimated its future obligations to repay unallocated O&O expenses on scheduled redemptions as of June 30, 2019, to be approximately $20,124, to be offset by early withdrawal penalties. At June 30, 2019, RMI IX owed the manager $11,974 to refund a June 2019 overpayment relating to the transactions described above.

NOTE 4 – LOANS

Loans generally are funded at a fixed interest rate with a loan term of up to five years.  Loans acquired are generally done so within the first six months of origination, and purchased at the current par value, which approximates fair value.

As of June 30, 2019, 80 of the company’s 82 loans (representing 99% of the aggregate principal of the company’s loan portfolio) have a loan term of five years or less from loan inception. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty provision.

As of June 30, 2019, 56 loans outstanding (representing 56% of the aggregate principal balance of the company’s loan portfolio) provide for monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity. The remaining loans provide for monthly payments of interest only, with the principal balance due at maturity.

17

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Secured loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table for the three and six months ended June 30, 2019.

	For the three months ended			For the six months ended
Principal, beginning of period	$	66,416,481		$	62,115,713
Loans originated		14,595,000			30,922,000
Loans sold to non-affiliate		—			(136,640	)
Principal payments received		(10,088,604	)		(21,978,196	)
Principal June 30, 2019	$	70,922,877		$	70,922,877

In March 2019, one loan with principal of $136,640, that had been designated as impaired and in non-accrual status, was sold to an unaffiliated third party which specializes in the resolution of such loans. The loan was sold for $143,000, of which $1,711 was recognized as interest income, and $4,649 was repayment of outstanding advances, with $10,791 in foregone interest.

On July 29, 2019 the company sold to an unaffiliated third party (the Buyer) 8 loans with aggregate principal of $4,278,490 at a price that netted an immaterial gain (the July 2019 sale). The buyer has 30 days from the sale to request a refund of the gain, for any loans that pay in full.

During the three and six months ended June 30, 2019, the company renewed one loan with principal of $400,000. See Note 3 (Manager and Other Related Parties) for a description of loans transferred by executed assignments between affiliates. The company originates loans with the intent to hold the loans until maturity. 

Borrower payments are deposited into a bank trust account established by RMC, pursuant to California regulation, and are subsequently disbursed to the company after an appropriate holding period, to ensure the funds are collected. At June 30, 2019, the trust account held a balance of $44,308, consisting of borrower payments, all of which was disbursed to RMI IX’s bank account on or before July 17, 2019.

18

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Loan characteristics

Secured loans had the characteristics presented in the following table.

	June 30,			December 31,
	2019			2018
Number of secured loans		82			83
Secured loans – principal	$	70,922,877		$	62,115,713
Secured loans – lowest interest rate (fixed)		7.3	%		7.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	864,913		$	748,382
Average principal as percent of total principal		1.2	%		1.2	%
Average principal as percent of members’ capital, net		1.1	%		1.0	%
Average principal as percent of total assets		1.1	%		1.0	%
Largest secured loan – principal	$	5,500,000		$	4,000,000
Largest principal as percent of total principal		7.8	%		6.4	%
Largest principal as percent of members’ capital, net		6.9	%		5.2	%
Largest principal as percent of total assets		7.3	%		5.5	%
Smallest secured loan – principal	$	58,321		$	74,390
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of members’ capital, net		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of California counties where security is located		18			15
Largest percentage of principal in one California county		20.5	%		25.0	%
Number of secured loans with filed notice of default		2			2
Secured loans in foreclosure – principal	$	2,308,789		$	565,685
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—
Number of secured loans with prepaid interest		1			—
Prepaid interest	$	52,500		$	—

As of June 30, 2019, the company’s largest loan with principal of $5,500,000 is secured by an office building located in Santa Clara County, bears an interest rate of 8.25% and matures on June 1, 2021.

As of June 30, 2019, the company had 2 loans with filed notices of default. As of June 30, 2019, the company had no construction loans outstanding, no rehabilitation loans outstanding, and  no commitments to fund construction or rehabilitation loans.

19

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Lien position

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

	June 30, 2019								December 31, 2018
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		40	$	35,830,376			51	%		41	$	29,699,888			48	%
Second trust deeds		42		35,092,501			49			42		32,415,825			52
Total principal, secured loans		82		70,922,877			100	%		83		62,115,713			100	%
Liens due other lenders at loan closing				72,997,929								65,941,118
Total debt			$	143,920,806							$	128,056,831
Appraised property value at loan closing			$	277,234,000							$	240,307,000
Percent of total debt to appraised values    (LTV) at loan closing(1)				54.5	%							54.5	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders.

The July 2019 loan sale (see Note 6 – Subsequent Events) included 8 loans with principal of $4,278,490 secured by first trust deeds.

Property type

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

	June 30, 2019							December 31, 2018
	Loans		Principal		Percent			Loans		Principal		Percent
Single family(2)		55	$	38,792,615		55	%		60	$	42,967,253		69	%
Multi-family		9		8,905,869		12			8		8,210,970		13
Commercial		17		21,374,393		30			15		10,937,490		18
Land		1		1,850,000		3			—		—		—
Total principal, secured loans		82	$	70,922,877		100	%		83		62,115,713		100	%

(2) Single family property type as of June 30, 2019 consists of 10 loans with principal of $5,994,661 that are owner occupied and 45 loans with principal of $32,797,954 that are non-owner occupied.  At December 31, 2018, single family property consisted of 14 loans with principal of $11,398,869 that are owner occupied and 46 loans with principal of $31,568,384 that are non-owner occupied.

20

REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Distribution of loans within California

The distribution of secured loans by counties is presented in the following table.

	June 30, 2019					December 31, 2018
	Principal		Percent			Principal		Percent
San Francisco Bay Area(3)
Santa Clara	$	14,547,090		20.5	%	$	11,756,695		18.9	%
San Mateo		13,561,032		19.1			9,619,609		15.5
San Francisco		5,067,454		7.1			5,238,008		8.4
Alameda		3,181,644		4.5			7,306,779		11.8
Sonoma		1,295,903		1.8			1,300,000		2.1
Marin		1,071,825		1.5			575,000		0.9
Solano		600,000		0.9			—		—
Contra Costa		210,281		0.3			725,771		1.2
		39,535,229		55.7			36,521,862		58.8
Other Northern California
Sutter		3,815,000		5.4			—		—
Sacramento		2,054,410		2.9			822,500		1.3
Monterey		1,431,281		2.0			322,716		0.5
Placer		634,370		0.9			637,354		1.0
		7,935,061		11.2			1,782,570		2.8
Northern California Total		47,470,290		66.9			38,304,432		61.6
Los Angeles & Coastal
Los Angeles		14,437,415		20.4			15,514,789		25.0
San Diego		5,330,911		7.5			5,563,635		9.0
Orange		1,154,755		1.6			1,177,446		1.9
Santa Barbara		499,506		0.7			—		—
		21,422,587		30.2			22,255,870		35.9
Other Southern California
San Bernardino		1,200,000		1.7			1,200,000		1.9
Riverside		830,000		1.2			355,411		0.6
		2,030,000		2.9			1,555,411		2.5
Southern California Total		23,452,587		33.1			23,811,281		38.4
Total principal, secured loans	$	70,922,877		100.0	%	$	62,115,713		100.0	%

(3) Includes Silicon Valley

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REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table as of June 30, 2019.

	Loans		Principal		Percent
2019(4)		13	$	11,769,934		17	%
2020		31		23,913,665		34
2021		22		25,156,102		35
2022		6		1,966,163		3
2023		3		829,902		1
Thereafter		2		908,660		1
Total future maturities		77		64,544,426		91
Matured as of June 30, 2019		5		6,378,451		9
Total principal, secured loans		82	$	70,922,877		100	%

(4) Loans scheduled to mature in 2019 from July 1 to December 31.

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.

The July 2019 loan sale (See Note 6 – Subsequent Events) included 8 loans scheduled to mature as follows: $912,628 (3 loans) in 2020, $1,980,000 (2 loans) in 2021, $477,202 (1 loan) in 2023, and $908,660 (2 loans) in 2024.

Matured loans

Secured loans past maturity are summarized in the following table as of June 30, 2019.

	June 30, 2019
Number of loans		5
Principal		6,378,451
Advances		—
Accrued interest		93,324
Total recorded investment	$	6,471,775
Principal past maturity as percent of total principal		9	%

Of the 5 loans past maturity at June 30, 2019, 2 loans with an aggregate principal balance of approximately $987,610 were designated as impaired. One loan with a principal balance of approximately $220,540 was designated as impaired and in non-accrual status. This loan paid in full in July 2019.

Two loans, with aggregate principal of $4,915,279, which were 60 days delinquent and past maturity, paid in full in July 2019. One loan with principal of $475,562, negotiated an extension agreement with the manager in July 2019, and was current with their payments.

Delinquency

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

	June 30, 2019				December 31, 2018
	Loans		Principal		Loans		Principal
Past Due
30-89 days		4	$	5,638,466		5	$	3,828,975
90-179 days		3		1,457,839		—		—
180 or more days		2		2,029,329		2		565,685
Total past due		9		9,125,634		7		4,394,660
Current		73		61,797,243		76		57,721,053
Total principal, secured loans		82	$	70,922,877		83	$	62,115,713

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REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Three loans, with an aggregate principal balance of approximately $5,391,000, were 60 days delinquent and past maturity at June 30, 2019. One loan with a principal balance of approximately $767,000 was 90 days delinquent and past maturity at June 30, 2019. One loan, with a principal balance of approximately $221,000, was 180 days delinquent and at June 30, 2019 was past maturity, paid in full in July 2019.

Loans in non-accrual status

Secured loans in non-accrual status are summarized in the following table as of June 30, 2019 and December 31, 2018.

	June 30, 2019		December 31, 2018
Number of loans	$	2	$	2
Principal		2,029,329		565,685
Advances		10,100		10,688
Accrued interest		85,695		19,831
Total recorded investment	$	2,125,124	$	596,204
Foregone interest	$	39,907	$	33,410

At June 30, 2019, 3 loans with an aggregate principal balance of approximately $1,458,000 were 90 or more days delinquent and not in non-accrual status, as their LTV’s were deemed adequately collateralized. No loans were 90 or more days delinquent and not in non-accrual status at December 31, 2018. In July 2019, one loan with  principal of approximately $220,540 which had been designated as impaired and in non-accrual status, was paid in full.

Impaired loans/allowance for loan losses

	June 30, 2019			December 31, 2018
Principal	$	3,487,167		$	3,841,148
Recorded investment(6)		3,668,610			3,950,157
Impaired loans without allowance		3,668,610			3,950,157
Impaired loans with allowance		—			—
Allowance for loan losses, impaired loans		—			—
Number of loans		5			6
LTV		54.1	%		54.7	%

(6) Recorded investment is the sum of the principal, advances, and interest accrued for financial reporting purposes.

Impaired loans had average balances and interest income recognized and received in cash as presented in the following tables as of and for the six months ended June 30, 2019 and the year ended December 31, 2018.

	June 30, 2019		December 31, 2018
Average recorded investment	$	3,809,384	$	2,050,897
Interest income recognized		138,612		23,848
Interest income received in cash		37,919		21,670

No loan payment modifications were made during the three and six months ended June 30, 2019, and no modifications were in effect at June 30, 2019 and December 31, 2018.  

No allowance for loan losses has been recorded as all loans were deemed to have protective equity (i.e., low loan-to-value ratio) such that collection is reasonably assured for all amounts owing.

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REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Fair Value

In 2019 and 2018 certain performing loans were sold at an immaterial gain (net of expenses). Therefore, the recorded amount of the preforming loans (i.e., the loan balance) is deemed to approximate fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that collection of the amount owed is assured, including foregone interest, if any).

Loans designated impaired (i.e., that are collateral dependent) are measured at fair value on a non-recurring basis when the net realizable value of the real property collateral is determined to be less than the loan balance. No impaired loans were measured at fair value on a non-recurring basis at and for the periods ended June 30, 2019 or December 31, 2018.

Secured loans, performing (i.e. not designated as impaired) (Level 2) - Each loan is reviewed quarterly for its delinquency, LTV adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. The fair value of loan balances secured by deeds of trust is deemed to approximate the recorded amount (per the financial statements) as our loans:

• are of shorter terms at origination than commercial real estate loans by institutional lenders;

• are written without a prepayment penalty causing uncertainty/a lack of predictability as to the expected duration of the loan; and

• have limited marketability and are not yet sellable into an established secondary market.

Secured loans, designated impaired (Level 2) - Secured loans designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. 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 (Level 2 inputs).

The following methods and assumptions are used to determine the fair value of the collateral securing a loan.

Single family – Management’s preferred method for determining the fair market value of its single-family residential assets is the sale comparison method. Management primarily obtains sale comps via its subscription to the RealQuest service, but also uses free online services such as Zillow.com and other available resources to supplement this data. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, number of bedrooms and bathrooms, square footage, sale date, condition and year built.

If applicable sale comps are not available or deemed unreliable, management will seek additional information in the form of brokers’ opinions of value or appraisals.

Multi-family residential – Management’s preferred method for determining the aggregate retail value of its multifamily units is the sale comparison method. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, rental income, number of units, composition of units by the number of bedrooms and bathrooms, square footage, condition, amenities and year built.

Management’s secondary method for valuing its multifamily assets as income-producing rental operations is the direct capitalization method.  In order to determine market cap rates for properties of the same class and location as the subject, management refers to published data from reliable third-party sources such as the CBRE Cap Rate Survey. Management applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Commercial buildings – Where commercial rental income information is available, management’s preferred method for determining the fair value of its commercial real estate assets is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to reputable third-party sources such as the CBRE Cap Rate Survey. Management then applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing commercial rental project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

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REDWOOD MORTGAGE INVESTORS IX, LLC

Notes to Financial Statements

June 30, 2019 (unaudited)

Management supplements the direct capitalization method with additional information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

Commercial land – Commercial land has many variations/uses, thus requiring management to employ a variety of methods depending upon the unique characteristics of the subject land. Management may rely on information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

NOTE 5 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS

Commitments

At June 30, 2019, scheduled future redemptions of members' capital was $883,523, all of which is scheduled for payment in 2019.

Legal proceedings

In the normal course of its business, the company may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect its interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the company. 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.

NOTE 6 – SUBSEQUENT EVENTS

On July 29, 2019 the company sold to an unaffiliated third party 8 loans with aggregate principal of $4,278,490 at a price that netted an immaterial gain. The buyer has 30 days from the sale to request a refund of the gain, for any loans that pay in full.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto, which are included in Item 1 of this report on Form 10-Q, as well as the audited financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (or SEC). The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operations results to be expected for the full year.

Forward-Looking Statements

Certain statements in this Report on Form 10-Q 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding the company’s expectations, hopes, intentions, beliefs and strategies regarding the future. Forward-looking statements, which are based on various assumptions (some of which are beyond our control), may be identified by reference to a future period or periods or by use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” “possible” or similar terms or variations on those terms or the negative of those terms. Forward-looking statements include statements regarding trends in the California real estate market; future interest rates and economic conditions and their effect on the company and its assets; estimates as to the allowance for loan losses; forecasts of future sales and redemptions of units, forecasts of future funding of loans; loan payoffs and the possibility of future loan sales (and the gain thereon, net of expenses) to third parties, if any; forecasts of future financial support by the manager including the eventual elimination of financial support; future fluctuations in the net distribution rate; and beliefs relating to how the company will be affected by 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, but are not limited to, the following:

• changes in economic conditions, interest rates, and/or changes in California real estate markets;

• the impact of competition and competitive pricing for mortgage loans;

• the manager’s ability to make and arrange for loans that fit our investment criteria;

• whether we will have any future loan sales to unaffiliated third parties, and if we do, the gain, net of expenses, and the volume/timing of loan sales to unaffiliated third parties, which to date have provided only immaterial gains to us;

• the timing and dollar amount of the decreasing financial support from the manager and the corresponding impact on the net distribution rate to members;

• the concentration of credit risks to which we are exposed;

• increases in payment delinquencies and defaults on our mortgage loans; and

• changes in government regulation and legislative actions affecting our business.

All forward-looking statements and reasons why results may differ included in this Form 10-Q 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.

Overview

Redwood Mortgage Investors IX, LLC (we, RMI IX or the company) is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment loans secured by California real estate, primarily through first and second deeds of trust. The company is externally managed. Redwood Mortgage Corp. (RMC, the manager or management) is the manager of the company.

Cash generated from loan payoffs and borrower payments of principal and interest is used for operating expenses, reimbursements to RMC of O&O expenses, and unit redemptions. The cash flow, if any, in excess of these uses is reinvested in new loans.

Redemptions are made once a quarter, on the last business day of the quarter. The unit redemption program is ongoing and available to members beginning one year after the purchase of the units.  The maximum number of units that may be redeemed in any year and the maximum amount of redemption available in any period to members are subject to certain limitations including, but limited to, the company will not:

26

• in any calendar year, redeem more than 5%; or

• in any calendar quarter, redeem more than 1.25%, of the weighted average number of units outstanding during the twelve (12) month period immediately prior to the date of the redemption.

In addition, the manager may, in its sole discretion, further limit the percentage of the total members’ units that may be redeemed or may adjust the timing of scheduled redemptions (including deferring withdrawals indefinitely), to the extent that such redemption would cause the company to be treated as a “publicly traded partnership” within the meaning of Section 7704 of the Code or any Treasury Regulations promulgated thereunder (determined without reference to Code Section 469(i)).

In the event that redemption requests in excess of the foregoing limitations are received by the manager, such redemption requests will be honored in the following order of priority:

• first, to redemptions upon the death of a member; and

• next, to other redemption requests until all other requests for redemption have been met.

All redemption requests shall be honored on a pro rata basis, based on the amount of redemption requests received in the preceding quarter plus unfulfilled redemption requests that the company was unable to honor in prior quarter(s).

See Note 1 (Organization and General) to the financial statements included in Part I, Item 1 of this report on Form 10-Q for additional detail on the organization and operations of RMI IX which detail is incorporated by this reference into this Item 2. For a detailed presentation of the company activities for which related parties are compensated and related transactions, including the formation loan to RMC, See Note 1 (Organization and General) and Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report, which presentation is incorporated by this reference into this Item 2.

Since commencement of operations in 2009, RMC, at its sole discretion, provided significant financial support to the company which increased the net income, cash available for distribution, and the net-distribution rate, by:

• charging less than the maximum allowable fees;

• not requesting reimbursement of qualifying costs attributable to the company (“Costs from RMC”) on the Statements of Income); and/or,

• absorbing some, and in certain periods, all of the company’s direct expenses, such as professional fees.

Such fee and cost-reimbursement waivers and the absorption of the company’s expenses by RMC were not made for the purpose of providing the company with sufficient funds to satisfy any required level of distributions, as the Operating Agreement has no such required level of distributions, nor to meet withdrawal requests. Any decision to waive fees or cost-reimbursements and/or to absorb direct expenses, and the amount (if any) to be waived or absorbed, is made by RMC in its sole discretion. This assistance has increased the company’s financial performance and resulted in an annual 6.5% net distribution rate since inception (6.95% before O&O expense allocation of 0.45%, annually when applicable) for periods prior to February 28, 2018.

In March 2018, RMC communicated to the members its planned and ongoing reductions in financial support and that net income, cash available for distribution and the net distribution rate were expected to decrease correspondingly. In April 2018, the company commenced paying all of its direct expenses for professional-service fees (legal and audit/tax compliance) and other operating expenses (postage, printing etc.). RMC began collection of the asset management fee of 75 basis points (0.75%) in the second quarter of 2019, and similarly plans to commence collection of the cost reimbursements from RMC in 2020.

Critical Accounting Policies

See Note 2 (Summary of Significant Accounting Policies) to the financial statements included in Part I, Item 1 of this report on Form 10-Q for a detailed presentation of critical accounting policies which presentation is incorporated by this reference into this Item 2.

Results of Operations

General economic conditions – California

Our mortgage loans are secured by California real estate, primarily through first and second deeds of trust. Our loan investment activity and the value of the real estate securing our loans is impacted significantly by economic activity and employment conditions in the state. Wells Fargo’s Economics Group periodically provides timely, relevant information and analysis in its commentary and reports regarding California’s employment and economic conditions. Highlights from recently issued reports from Wells Fargo Securities Economic Group are presented below.

In the publication “California Job Growth Appears to Be Back on Track” dated July 19, 2019:

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“After a slow start earlier this year, California’s economy appears to have shifted back into high gear. Nonfarm employment surged during the second quarter, with employers adding 46,200 jobs in June, following gains of 21,600 jobs in May and 48,600 jobs in April. The 116,400 jobs added during the second quarter is two and half times what was added during the first quarter of the year.”

“Construction employment jumped 1.3% in June, as builders and contractors added 11,900 new jobs. Employment is up 4.4% over the past year, with gains evident in residential, commercial and infrastructure projects.”

“Worries that a handful of disappointing initial public offerings might be a precursor of a broader slowdown in California’s tech sector now look incredibly premature. Hiring in the tech sector remains exceptionally strong, particularly anything related to cloud computing, data storage, digital content and internet search. Production of tech hardware also appears to be ramping up, with strong job growth reported at producers of computers and electronic equipment and semiconductor manufacturers.”

“Measuring tech employment from the monthly employment data is somewhat difficult. We often use the sum of professional & technical services and information services as a real-time proxy for California tech employment because these broad industry categories are the closest that we can get to isolating the tech sector in the seasonally adjusted data. Unfortunately, these broad categories include many of the industries being disrupted by new rapidly growing technologies. Employment in the information sector has risen 2.7% over the past year, resulting in a gain of 14,400 jobs.”

“All of the gain in the information sector has come from the tech-driven industries, mostly in the catch-all category labeled other information services. Employment in this sector, which includes many of the jobs in cloud computing, data storage and digital streaming, has surged 13.1% over the past year, resulting in 15,000 net new jobs (600 more than the broader information category). Moreover, hiring continues to rise solidly in other key industry subcategories, including software publishing (+4.3%) and data processing, data hosting and related services (+8.0%), which includes much of social media and internet search.”

“The rapid growth in the tech sector helps explain why so much of California’s job growth continues to be concentrated in the San Francisco Bay area and Los Angeles, particularly West L.A., which is home to a substantial portion of the digital media industry. Southern California led the state in job growth this past month, with the greater Los Angeles area adding 17,900 jobs. Most of that was in Los Angeles, which added 7,300 jobs. The Inland Empire added 6,200 jobs, and employers added 3,000 jobs in Orange County. The San Francisco Bay area saw a net gain of 12,900 jobs in June and has added 67,500 jobs so far this year, accounting for 40% of the jobs added in California so far this year”.

In the publication “FOMC Cuts Rates 25 bps, but Two Members Dissent” dated July 31, 2019:

“As widely expected, the Federal Open Market Committee (FOMC) decided at its meeting today to reduce the range for the federal funds rate 25 bps. That range now spans 2.00% to 2.25%. The committee also decided to end the reduction in its balance sheet in August, which has been underway since October 2017. Previously, the FOMC said that it would end its balance sheet run-off in October.”

“But those two actions were essentially the only nods toward a dovish policy action. For starters, the statement that accompanied today’s announcement was very similar to that which was released after the last FOMC meeting on June 19. The committee characterized the labor market as “strong” and said that “economic activity has been rising at a moderate rate.” The FOMC went on to say that “growth of household spending has picked up from earlier in the year”—an acknowledgement of the 4.3% annualized growth rate in real personal consumption expenditures in Q2—but that “business fixed investment has been soft.” The committee views a sustained expansion in economic activity as the most likely outcome, but acknowledged that there are uncertainties associated with this view.”

“Regarding inflation, the FOMC said that it is “running below 2 percent,” which is the Fed’s target, and it stated that “market-based measures of inflation compensation remain low.” This undershoot of inflation relative to target and the low level of inflation expectations give the committee room to cut rates further in coming months.”

“But lower rates in the future are not necessarily preordained. Kansas City Fed President George and Boston Fed President Rosengren dissented from today’s rate-cut decision. Both voting members of the FOMC would have preferred to have kept rates on hold, and there may have been additional non-voting members who would have preferred no action as well. (We will get more color on what members thought when the minutes of the meeting are released in a few weeks.) The FOMC is a consensus-driven body, and it will become harder to convince a “critical mass” of committee members to continue easing policy the lower rates go. That said, the FOMC stated that it will be observing a whole range of incoming information as it “contemplates the future path of the fed funds rate.”

“We continue to look for one additional 25 bps rate cut, probably at the October 30 policy meeting. Today’s policy action should be viewed as an “insurance” rate cut. In the context of uncertainties about the economic outlook and below-target inflation, easier policy seems to be warranted. In our view, another 25 bps rate cut would constitute additional “insurance” against a more pronounced slowdown.”

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Key Performance Indicators

The table below shows key performance indicators at and for the six months ended June 30.

	2019			2018
Secured loans – end of period balance	$	70,922,877		$	53,538,730
Secured loans – average daily balance	$	65,495,000		$	59,332,000
Interest on loans, gross	$	2,878,865		$	2,496,900
Portfolio interest rate(1)		8.8	%		8.4	%
Effective yield rate(2)		8.8	%		8.4	%
Amortization of loan administrative fees, net(7)	$	—		$	3,254
Interest on loans, net	$	2,878,865		$	2,493,647
Percent of average daily balance(2)		8.8	%		8.4	%
Provision for loan losses	$	—		$	—
Percent of average daily balance(2)		0.0	%		0.0	%
Total operations expense(7)	$	372,202		$	171,273
Net Income(7)	$	2,533,290		$	2,346,862
Percent of average members’ capital(3)(4)		6.2	%		6.6	%
Member Distributions, net	$	2,227,868		$	2,178,920
Percent of average members’ capital(3)(5)		5.5	%		6.1	%
Members’ capital, gross – end of period balance	$	81,934,546		$	76,346,119
Members’ capital, gross – average daily balance	$	80,666,000		$	70,621,000
Member Redemptions(6)	$	1,916,050		$	702,640

(1) Stated note interest rate, weighted daily average (annualized)

(2) Percent of secured loans – average daily balance (annualized)

(3) Percent of members’ capital, gross – average daily balance (annualized)

(4) Percent based on the net income available to members (excluding 1% allocated to manager)

(5) Members Distributions is net of O&O expenses allocated to members’ accounts during the year

(6) Scheduled member redemptions as of June 30, 2019 were $883,523 payable in 2019. Scheduled member redemptions as of June 30, 2018 were $929,284.

(7) See Note 1 (Organization and General) and Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2.

29

The table below shows key performance indicators at and for the three months ended June 30.

	2019			2018
Secured loans – end of period balance	$	70,922,877		$	53,538,730
Secured loans – average daily balance	$	68,745,000		$	62,866,000
Interest on loans, gross	$	1,517,873		$	1,319,168
Portfolio interest rate(1)		8.8	%		8.4	%
Effective yield rate(2)		8.8	%		8.4	%
Amortization of loan administrative fees, net(7)		—			3,254
Interest on loans, net	$	1,517,873		$	1,315,915
Percent of average daily balance(2)		8.8	%		8.4	%
Provision for loan losses	$	—		$	—
Percent of average daily balance(2)		0.0	%		0.0	%
Total operations expense(7)	$	182,883		$	131,319
Net Income(7)	$	1,344,632		$	1,204,373
Percent of average members’ capital(3)(4)		6.5	%		6.6	%
Member Distributions, net	$	1,116,861		$	1,088,573
Percent of average members’ capital(3)(5)		5.5	%		5.9	%
Members’ capital, gross – end of period balance	$	81,934,546		$	76,346,119
Members’ capital, gross – average daily balance	$	81,458,000		$	72,774,000
Member Redemptions(6)	$	823,654		$	299,240

(1) Stated note interest rate, weighted daily average (annualized)

(2) Percent of secured loans – average daily balance (annualized)

(3) Percent of members’ capital, gross – average daily balance (annualized)

(4) Percent based on the net income available to members (excluding 1% allocated to manager)

(5) Members Distributions is net of O&O expenses allocated to members’ accounts during the year

(6) Scheduled member redemptions as of June 30, 2019 were $883,523 payable in 2019. Scheduled member redemptions as of June 30, 2018 were $929,284.

(7) See Note 1 (Organization and General) and Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2.

Secured loans

The secured loan balance at June 30, 2019 of $70,922,877 was an increase of approximately 32.5% ($17.4 million) over the June 30, 2018 secured loan balance of $53,538,730. The increase in the secured loan balance is consistent with the increased members’ capital of approximately 7.3% ($5.6 million). New loans originated were approximately $14.6 million for the three months ended June 30, 2019. Members’ capital increased approximately $1,969,000 for the three months ended June 30, 2019. Secured loans as a percent of members’ capital (based on average balances) was 84.4% and 86.4% for three months ended June 30, 2019 and 2018, respectively.

We have sought to exercise strong discipline in underwriting loan applications and lending against collateral at amounts that create a mortgage portfolio that has substantial protective equity (i.e., safety margins to outstanding debt) as indicated by the overall conservative weighted average loan-to-value ratio (LTV) which at June 30, 2019 was approximately 54.5%. Thus, per the appraisal-based valuations at the time of loan inception, borrowers have, in the aggregate, equity of 45.5% in the property, and we as lenders have lent in the aggregate 54.5% (including other senior liens on the property) against the properties we hold as collateral for the repayment of our loans.

30

See Note 4 (Loans) to the financial statements included in Part I, Item 1 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 2.

Performance overview

Revenue from the interest on loans, net for the six months ended June 30, 2019 increased by approximately $385,000, over the same period in 2018, due to the increased average secured loan balance, approximately $29,000 in default interest collected on three loans that had been designated impaired, and an increase in the average portfolio interest rate (8.8% in 2019 and 8.4% in 2018). Operations expense for the six months ended June 30, 2019 increased by approximately $201,000, over the same period in 2018 due primarily to the termination of financial support from RMC of our direct operating expenses (e.g. professional services and other direct operating expenses) beginning April 1, 2018, an increase in mortgage servicing fees due to an increased loan portfolio, and RMC, at its sole discretion, electing to begin collecting asset management fees in June 2019. The annualized net distribution rate for the six months ended June 30, 2019, was 5.5%. In all periods presented, the manager, at its sole discretion, provided financial support that increased net income and the return to investors.

RMC support provided, as detailed below, totaled approximately $412,000 and $449,000 for the three months ended, and $874,000 and $1,054,000 for the six months ended June 30, 2019 and 2018, respectively. Mortgage servicing fees and asset management fees which could have been collected increased during the three and six months ended June 30, 2019 compared to the same period in 2018 due to increased loan and capital balances. Beginning April 1, 2018, RMI IX paid all direct operating expenses (i.e., professional services and other direct operating expenses) resulting in an increase in professional services and other expense during the six months ended June 30, 2019 compared to the same period in 2018. Prior to April 1, 2018, RMC, at its sole discretion, had elected to absorb some or all of RMI IX’s professional services and other direct expenses. The secured loan, and members’ capital balances are used as a base for the calculation for fees charged by RMC, and increases or decreases in the balances will have a similar effect on the total amount chargeable by RMC.  The decision to waive all or a portion of these fees is made by RMC, in its sole discretion. In March 2018, RMC communicated to the members its planned and ongoing reductions in financial support and that net income, cash available for distribution and the net distribution rate were expected to decrease correspondingly. RMC began the collection of the asset management fees in June 2019, and plans to commence collection of reimbursement of cost from RMC in 2020. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item I of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2.

Analysis and Discussion of income from operations 2019 v. 2018 (six months ended)

Significant changes to revenue and expenses during the six months ended June 30, 2019 and 2018 are summarized in the following table.

	Interest on loans, net		Provision For Loan Losses		Operations Expense			Net Income
For the six months ended
June 30, 2019	$	2,878,865		—		372,202			2,533,290
June 30, 2018		2,493,647		—		171,273			2,346,862
Change	$	385,218		—		200,929			186,428
Change
Loan balance increase		143,922		—		7,682			136,240
Loan portfolio effective yield rate		241,296		—		—			241,296
Gain on sale, loans		—		—		—			(14,246	)
Late fees		—		—		—			16,385
Capital balance increase		—		—		41,545			(41,545	)
RMC fees/costs waived		—		—		2,677			(2,677	)
Reduced support from RMC		—		—		157,399			(157,399	)
Cost allocated from RMC		—		—		(4,493	)		4,493
California tax payment		—		—		11,790			(11,790	)
Other		—		—		(15,671	)		15,671
Change	$	385,218		—		200,929			186,428

The table above displays only significant changes to net income for the period, and is not intended to cross-foot.

See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2. See “Performance Overview” for a discussion of RMC’s plans to reduce and eventually eliminate fee waivers and cost absorptions.

31

Interest on Loans, net

Interest on loans increased due to growth of the secured loan portfolio, approximately $29,000 in default interest collected on loans that had been designated impaired during the six months ended June 30, 2019, and an increase in the average portfolio interest rate (8.8% in 2019 and 8.4% in 2018). The secured loan portfolio has strong payment history with two loans (representing 2.9% of the aggregate principal balance of the company’s loan portfolio) currently designated as non-accrual at June 30, 2019. The secured loans – average daily balance at June 30, 2019 was $65.5 million, an increase of approximately $6.2 million, or 10.4% over the average daily balance at June 30, 2018 of approximately $59.3 million.

Provision for loan losses

At June 30, 2019 and 2018, the company had not recorded an allowance for loan losses as all loans had protective equity such that at June 30, 2019 and 2018, collection was deemed probable for amounts owed by the borrowers.

Total principal amounts past due more than 90 days at June 30, 2019 and 2018 were $3,487,168 and $567,210 (representing 4.9% and 1.1% of the aggregate principal balance of the company’s loan portfolio), respectively.

Operations expense

Operations expense as a percent of interest on loans, net was approximately 12.9% and 6.9% for the six months ended June 30, 2019 and 2018, respectively. The increase in operations expense was due primarily to RMC ceasing to absorb our direct operating expenses (e.g. professional service expense and other direct operating expenses), beginning April 1, 2018, an increase in mortgage servicing fees due to an increase average daily balance in the secured loan portfolio, and RMC, in its sole discretion, electing to collect asset management fees in beginning in June 2019.

Significant changes to operations expense during the six months ended June 30, 2019 and 2018, are summarized in the following table.

	Mortgage Servicing Fees		Asset Management Fees, net		Costs From RMC, net			Professional Services, net			Other			Total
For the six months ended
June 30, 2019	$	81,560		39,729		—			226,175			24,738			372,202
June 30, 2018		73,878		—		—			88,898			8,497			171,273
Change	$	7,682		39,729		—			137,277			16,241			200,929
Change
Loan balance increase	$	7,682		—		—			—			—			7,682
Capital balance increase		—		28,464		13,081			—			—			41,545
RMC fees/costs waived		—		11,265		(13,081	)		—			—			(1,816	)
Reduced support from RMC		—		—		—			143,152			14,247			157,399
California tax payment		—		—		—			—			11,790			11,790
Other		—		—		—			(5,875	)		(9,796	)		(15,671	)
Change	$	7,682		39,729		—			137,277			16,241			200,929

See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2. See “Performance Overview” for a discussion of RMC’s plans to reduce and eventually eliminate fee waivers and cost absorptions.

Mortgage Servicing fees

The increase in mortgage servicing fees of $7,682 was attributed to the increase in the average daily secured loan portfolio to $65,495,000, noted above in Key Performance Indicators, at the annual rate of 0.25%.

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Asset management fee

The total amount of asset management fees chargeable were $238,374 and $209,910 for the six months ended June 30, 2019 and 2018, respectively. The increase in asset management fees chargeable was due to the increase in total capital under management. Total members capital at June 30, 2019 and 2018 was approximately $81,935,000 and $76,346,000, respectively. RMC, at its sole discretion, elected to begin collecting asset management fees in June 2019 totaling $39,729. Of the total asset management fees chargeable, RMC, at its sole discretion, waived $198,645 and $209,910 during the six months ended June 30, 2019 and 2018, respectively. The asset management fee is chargeable in an amount up to three-quarters of one percent (0.75%) annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to two percent (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.

Costs from RMC, net

Cost incurred by RMC, for which reimbursement could have been requested were $366,102 and $362,007 for the six months ended June 30, 2019 and 2018, respectively. RMC, at its sole discretion, waived all reimbursements for the six months ended June 30, 2019 and 2018. The decrease in costs from RMC, net chargeable was due primarily to a decrease in allocable expenses incurred by RMC, specifically relating to payroll and consultant expenses. RMC, per the Operating Agreement, may request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, postage and preparation of reports to members and out-of-pocket general and administration expenses. Certain of these qualifying costs (e.g. postage) can be tracked by RMC as specifically attributable to the company. Other costs (e.g. RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g. by the company’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all affiliated mortgage funds managed by RMC. Increases or decreases in members’ capital or secured loan balances will have a similar effect on the total amount chargeable by RMC.  The decision to waive all or a portion of these fees is made by RMC, in its sole discretion.

Professional Services

Professional services consist primarily of legal, audit and tax-compliance expenses. Professional service expense incurred during the six months ended June 30, 2019 and 2018 was $226,175 and $232,050, respectively. Beginning April 1, 2018, RMI IX paid for all professional service expenses directly. Prior to April 1, 2018, RMC, at its sole discretion, had elected to absorb some or all of RMI IX’s expenses for professional services. During the six months ended June 30, 2018, RMC, in its sole discretion, reimbursed $143,152 of professional services expense.

Analysis and Discussion of income from operations 2019 v. 2018 (three months ended)

Significant changes to revenue and expenses during the three months ended June 30, 2019 and 2018 are summarized in the following table.

	Interest on loans, net		Provision For Loan Losses		Operations Expense			Net Income
For the three months ended
June 30, 2019	$	1,517,873		—		182,883			1,344,632
June 30, 2018		1,315,915		—		131,319			1,204,373
Change	$	201,958		—		51,564			140,259
Change
Loan balance increase	$	129,184		—		4,220			124,964
Loan portfolio effective yield rate		72,774		—		—			72,774
Gain on sale, loans		—		—		—			(14,246	)
Late fees		—		—		—			4,111
Capital balance increase		—		—		22,820			(22,820	)
RMC fees/costs waived		—		—		16,909			(16,909	)
California tax payment		—		—		11,790			(11,790	)
Other		—		—		(4,175	)		4,175
Change	$	201,958		—		51,564			140,259

The table above displays only significant changes to net income for the period, and is not intended to cross-foot.

33

See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2. See “Performance Overview” for a discussion of RMC’s plans to reduce and eventually eliminate fee waivers and cost absorptions.

Interest on Loans, net

Interest on loans increased approximately $202,000 due to growth of the secured loan portfolio, and an increase in the average portfolio interest rate (8.8% in 2019 and 8.4% in 2018). The portfolio has strong payment history with two loans (representing 2.9% of the aggregate principal balance of the company’s loan portfolio) currently designated as non-accrual at June 30, 2019. The Secured loans – average daily balance at June 30, 2019  was $68.7 million, an increase of approximately $5.9 million, or 9.4% over the average daily balance at June 30, 2018 of approximately $62.8 million.

Provision for loan losses

At June 30, 2019 and 2018, the company had not recorded an allowance for loan losses as all loans had protective equity such that at June 30, 2019 and 2018, collection was deemed probable for amounts owed by the borrowers.

Total principal amounts past due more than 90 days at June 30, 2019 and 2018 were $3,487,168 and $567,210 (representing 4.9% and 1.1% of the aggregate principal balance of the company’s loan portfolio), respectively.

Operations expense

Operations expense as a percent of interest on loans, net was approximately 12.0% and 10.0% for the three months ended June 30, 2019 and 2018, respectively. The increase in operations expense was due primarily to RMC ceasing to absorb our direct operating expenses (e.g. professional service expense and other direct operating expenses), beginning April 1, 2018, an increase in mortgage servicing fees due to an increase average daily balance in the secured loan portfolio, and RMC, in its sole discretion, electing to collect asset management fees beginning in June 2019.

Significant changes to operations expense during the three months ended June 30, 2019 and 2018, are summarized in the following table.

	Mortgage Servicing Fees		Asset Management Fees, net		Costs From RMC, net			Professional Services, net			Other		Total
For the three months ended
June 30, 2019	$	42,914		39,729		—			78,858			21,382		182,883
June 30, 2018		38,694		—		—			84,213			8,412		131,319
Change	$	4,220		39,729		—			(5,355	)		12,970		51,564
Change
Loan balance increase	$	4,220		—		—			—			—		4,220
Capital balance increase		—		14,232		8,588			—			—		22,820
RMC fees/costs waived		—		25,497		(8,588	)		—			—		16,909
California tax payment		—		—		—			—			11,790		11,790
Other		—		—		—			(5,355	)		1,180		(4,175	)
Change	$	4,220		39,729		—			(5,355	)		12,970		51,564

See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion on fees waived and costs absorbed by the manager, which presentation is incorporated by this reference into this Item 2. See “Performance Overview” for a discussion of RMC’s plans to reduce and eventually eliminate fee waivers and cost absorptions.

Mortgage Servicing fees

The increase in mortgage servicing fees of $4,220 was attributed to the increase in the average daily secured loan portfolio to $68,745,000, noted above in Key Performance Indicators, at the annual rate of 0.25%.

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Asset management fee

The total amount of asset management fees chargeable were $119,187 and $104,955 for the three months ended June 30, 2019 and 2018, respectively. The increase in asset management fees chargeable was due to the increase in total capital under management. Total members capital at June 30, 2019 and 2018 was approximately $81,935,000 and $76,346,000, respectively. RMC, at its sole discretion, elected to begin collecting asset management fees in June 2019 totaling $39,729. Of the total asset management fees chargeable, RMC, at its sole discretion, waived $79,458 and $104,955 during the three months ended June 30, 2019 and 2018, respectively. The asset management fee is chargeable in an amount up to three-quarters of one percent (0.75%) annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to two percent (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.

Costs from RMC, net

Cost incurred by RMC, for which reimbursement could have been requested were $186,446 and $177,858 for the three months ended June 30, 2019 and 2018, respectively. RMC, at its sole discretion, waived all reimbursements for the three months ended June 30, 2019 and 2018. RMC, per the Operating Agreement, may request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, postage and preparation of reports to members and out-of-pocket general and administration expenses. Certain of these qualifying costs (e.g. postage) can be tracked by RMC as specifically attributable to the company. Other costs (e.g. RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g. by the company’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all affiliated mortgage funds managed by RMC. Increases or decreases in members’ capital or secured loan balances will have a similar effect on the total amount chargeable by RMC.  The decision to waive all or a portion of these fees is made by RMC, in its sole discretion.

Professional Services

Professional services consist primarily of legal, audit and tax-compliance expenses. Professional service expense incurred during the three months ended June 30, 2019 and 2018 was $78,858 and $84,213, respectively. No professional services were reimbursed by RMC during the three months ended June 30, 2019 and 2018, respectively.

Members' capital, cash flows and liquidity

The table below shows Cash flows by business activity for the three and six months ended June 30.

	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Members’ capital
Contributions by members	$	561,586		$	3,101,230		$	2,682,154		$	7,449,992
Organization and offering costs, net		(66,439	)		(269,560	)		(122,833	)		(401,060	)
Formation loan, net		(45,728	)		(211,727	)		(186,656	)		(569,521	)
Redemptions, net		(808,070	)		(299,240	)		(1,854,966	)		(702,640	)
Earnings distributed to members		(515,576	)		(537,781	)		(1,023,687	)		(1,029,850	)
Cash – members’ capital, net		(874,227	)		1,782,922			(505,988	)		4,746,921
Loan principal/advances/interest
Principal collected	$	10,088,604		$	6,855,023		$	21,978,196		$	19,594,640
Loans sold to non-affiliate, net		—			14,163,158			143,000			14,163,158
Interest received, net		1,486,895			1,224,758			2,761,760			2,388,949
Other loan income		9,742			4,483			26,877			9,344
Loan funding & advances, net		(14,592,529	)		(16,593,435	)		(30,926,532	)		(26,542,583	)
Loans transferred from affiliates		—			—			—			(5,889,819	)
Cash – loans, net		(3,007,288	)		5,653,987			(6,016,699	)		3,723,689
Operations expense		(194,942	)		(163,236	)		(369,481	)		(165,839	)
Net change in cash	$	(4,076,457	)	$	7,273,673		$	(6,892,168	)	$	8,304,771

35

The table below shows the company’s unit redemptions for the three and six months ended June 30, 2019 and 2018.

	Three months ended				Six months ended
	2019		2018		2019		2018
Capital redemptions-without penalty	$	375,080	$	259,817	$	742,476	$	575,867
Capital redemptions-subject to penalty		448,574		39,423		1,173,574		126,773
Total	$	823,654	$	299,240	$	1,916,050	$	702,640
Early withdrawal penalties	$	15,584	$	2,221	$	61,084	$	3,968

Ongoing public offering of units/ SEC Registrations

The company’s Registration Statement on Form S-11 filed with the SEC in June 2016 (SEC File No. 333-208315) to offer up to 120,000,000 units ($120,000,000) to the public and 20,000,000 units ($20,000,000) to its members pursuant to the DRIP, was not renewed in 2019 and the offer expired April 30, 2019. On June 11, 2019, the company filed a Post-Effective Amendment No. 5 with the SEC (SEC File No. 333-208315) to deregister all of the units which were registered under its Form S-11 Registration Statement that remained unsold as of April 30, 2019.

On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP. The Registration Statement on Form S-3 became effective on May 9, 2019.

As of June 30, 2019, the gross proceeds from sales of units from inception (October, 2009) was approximately $90,476,000, of which approximately $9,857,000 were from sales to members under our DRIP.

Commencing May 1, 2019, the sources of funds for loans are the proceeds (net of redemption of members’ capital and operating expenses) from:

• loan origination volume and the balance of capital available to lend;

• the current and future interest rates negotiated with borrowers;

• the timing and amount of gains received from loan sales, if any;

• payment of fees and cost reimbursements to RMC;

• the amount and timing of other operating expenses, including expenses for professional services;

• financial support, if any, from RMC; and

• payments from RMC on the outstanding balance of the formation loan.

• a line of credit, if obtained.

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 at maturity possibly would have a negative impact on their ability to repay their loans. In the event a borrower is unable to repay at maturity, the company may consider extending the term through a loan modification or foreclosing on the property. A reduction in loan repayments would reduce the company’s cash flows and restrict the company’s ability to invest in new loans and/or, if ongoing for an extended period, provide earnings distributions and redemptions of members’ capital.

Generally, within a broad range, the company’s rates on mortgage loans is not affected by market movements in interest rates. If, as expected, we continue to make and invest in fixed rate loans primarily, and interest rates were to rise, a possible result would be lower prepayments of the company’s loans. This increase in the duration of time loans are on the books may reduce overall liquidity, which itself may reduce the company’s investment into new loans at higher interest rates. Conversely, if interest rates were to decline, we could see a significant increase in borrower prepayments. If we then invest in new loans at lower rates of interest, a lower yield to members may possibly result.

Contractual obligations

At June 30, 2019, scheduled redemptions of members' capital equaled $883,523,  all of which is scheduled to be paid in 2019.

At June 30, 2019, the company had no construction or rehabilitation loans outstanding.

The Company has no off-balance sheet arrangements as such arrangements are not permitted by the Operating Agreement.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not included because the company is a smaller reporting company.

36

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The company is externally managed by RMC. The manager is solely responsible for managing the business and affairs of the company, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the company. RMC provides the personnel and services necessary for us to conduct our business, as we have no employees of our own.

As a limited liability company, we do not have a board of directors, nor, therefore, do we have an audit committee of the board of directors. The manager, however, provides the equivalent functions of a board of directors and of an audit committee for, among other things, the following purposes:

• Appointment; compensation, and review and oversight of the work of our independent public accountants; and

• establishing and maintaining internal controls over our financial reporting.

RMC, as the manager, carried out an evaluation, with the participation of RMC's President (acting as principal executive officer/principal financial officer) of the effectiveness of the design and operation of the manager's controls and procedures over financial reporting and disclosure (as defined in Rule 13a-15 of the Exchange Act) as of and for the period covered by this report. Based upon that evaluation, RMC's principal executive officer/principal financial officer concluded, as of the end of such period, that the manager's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

Changes to Internal Control Over Financial Reporting

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

37

PART II – OTHER INFORMATION

ITEM 1. 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 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 June 30, 2019, the company was not involved in any legal proceedings other than those that would be considered part of the normal course of business.

ITEM 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

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

Use of Proceeds from Registered Securities

The company’s Registration Statement on Form S-11 filed with the SEC in June 2016 (SEC File No. 333-208315) to offer up to 120,000,000 units ($120,000,000) to the public and 20,000,000 units ($20,000,000) to its members pursuant to the DRIP, was not renewed in 2019 and the offer expired April 30, 2019. On June 11, 2019, the company filed a Post-Effective Amendment No. 5 with the SEC (SEC File No. 333-208315) to deregister all of the units which were registered under its Form S-11 Registration Statement that remained unsold as of April 30, 2019.

On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP. The Registration Statement on Form S-3 became effective on May 9, 2019.

As of June 30, 2019, the gross proceeds from sales of units from inception (October, 2009) was approximately $90,476,000, of which approximately $9,857,000 were from sales to members under our DRIP.

The company used the gross proceeds from the sale of the units from inception (October 2009) through June 30, 2019 to:

• make additional loans;

• fund working capital reserves;

• pay RMC up to 4.5% of proceeds from sale of units for organization and offering expenses; and

• fund a formation loan to RMC at up to 7% of proceeds from sale of units

The units have been registered pursuant to Section 12(g) of the Exchange Act.  Such registration of the units, along with the satisfaction of certain other requirements under ERISA, enables the units to qualify as “publicly-offered securities” for purposes of ERISA and regulations issued thereunder. By satisfying those requirements, the underlying assets of the company should not be considered assets of a “benefit plan investor” (as defined under ERISA) by virtue of the investment by such benefit plan investor in the units.

Cash generated from loan payoffs and borrower payments of principal and interest is used for operating expenses, reimbursements to RMC of O&O expenses, and unit redemptions. The cash flow, if any, in excess of these uses is reinvested in new loans.

For a description of the formation loan advances made by RMI IX to RMC from offering proceeds to pay broker dealer sales commissions, see Note 3 (Manager and other Related Parties) to the financial statements included in Part I, Item 1 of this report, which information is incorporated by reference in this Item 2.

Redemptions are made once a quarter, on the last business day of the quarter. Redemptions for the three months ended June 30, 2019 were $823,654. The unit redemption program is ongoing and available to members beginning one year after the purchase of the units.  The maximum number of units that may be redeemed in any year and the maximum amount of redemption available in any period to members are subject to certain limitations.

38

ITEM 3. Defaults Upon Senior Securities

Not Applicable.

ITEM 4. Mine Safety Disclosures

Not Applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

Exhibit No.	Description of Exhibits
31.1	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
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

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REDWOOD MORTGAGE INVESTORS IX, LLC
	(Registrant)
Date:  August 9, 2019	By:	Redwood Mortgage Corp., Manager
		By:	/s/ Michael R. Burwell
		Name:	Michael R. Burwell
		Title:	President, Secretary and Treasurer
			(On behalf of the registrant, and in the capacity of principal financial officer)

40

EX-31.1

Exhibit 31.1

PRESIDENT’S CERTIFICATION

I, Michael R. Burwell, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 fourth 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,

(principal executive officer and principal financial officer)

Redwood Mortgage Corp.,

Manager

August 9, 2019

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 Quarterly Report of Redwood Mortgage Investors IX, LLC (the “company”) on Form 10-Q for the period ended June 30, 2019 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,

(principal executive officer and principal financial officer)

Redwood Mortgage Corp.,

Manager

August 9, 2019

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2019 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
No Trading Symbol Flag	true
Entity Registrant Name	Redwood Mortgage Investors IX
Entity Central Index Key	0001448038
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding	0
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-55601
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-3541068
Entity Address, Address Line One	177 Bovet Road
Entity Address, Address Line Two	Suite 520
Entity Address, City or Town	San Mateo
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94402
City Area Code	650
Local Phone Number	365-5341

XML

Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 3,782,785	$ 10,674,953
Loans
Principal	70,922,877	62,115,713
Advances	20,924	21,041
Accrued interest	641,861	473,966
Prepaid interest	(52,500)
Loan balances secured by deeds of trust	71,533,162	62,610,720
Total assets	75,315,947	73,285,673
LIABILITIES, INVESTORS IN APPLICANT STATUS, AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities	279	9,321
Payables to affiliate	11,974
Total liabilities	12,253	9,321
Commitments and contingencies (Note 5)
Investors in applicant status		651,500
Members’ capital, net	79,628,024	76,804,195
Receivable from manager (formation loan)	(4,324,330)	(4,179,343)
Members’ capital, net, less formation loan	75,303,694	72,624,852
Total liabilities, investors in applicant status and members’ capital	$ 75,315,947	$ 73,285,673

XML

Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues, net
Interest income	$ 1,517,873	$ 1,315,915	$ 2,878,865	$ 2,493,647
Late fees	9,642	5,531	26,627	10,242
Gain on sale, loans		14,246		14,246
Total revenues	1,527,515	1,335,692	2,905,492	2,518,135
Operations expense
Mortgage servicing fees	42,914	38,694	81,560	73,878
Asset management fees, net (Note 3)	39,729		39,729
Professional services, net (Note 3)	78,858	84,213	226,175	88,898
Other	21,382	8,412	24,738	8,497
Total operations expense	182,883	131,319	372,202	171,273
Net income	1,344,632	1,204,373	2,533,290	2,346,862
Members (99%)	1,331,186	1,192,329	2,507,957	2,323,393
Manager (1%)	$ 13,446	$ 12,044	$ 25,333	$ 23,469

XML

Statements of Income (Parenthetical) (Unaudited)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Manager investment	1.00%	1.00%	1.00%	1.00%
Redwood Mortgage Investors IX [Member]
Members investment	99.00%	99.00%	99.00%	99.00%

XML

Statement of Changes in Members' Capital (Unaudited) - USD ($)		3 Months Ended		6 Months Ended		117 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019
Beginning balance				$ 72,624,852
Net income		$ 1,344,632	$ 1,204,373	2,533,290	$ 2,346,862
Early withdrawal penalties	[1]			19,415		$ 60,290
Ending balance		75,303,694		75,303,694		75,303,694
RMC [Member]
Early withdrawal penalties		15,584	2,221	61,084	3,968
Investors In Applicant Status [Member]
Beginning balance		1,499,263	4,415,358	651,500	3,270,312
Early withdrawal penalties			0	0	0
Ending balance			1,300,160		1,300,160
Investors In Applicant Status [Member] | Contributions On Application [Member]
Partners capital accounts		554,245	3,094,160	2,666,508	7,407,598
Investors In Applicant Status [Member] | Contributions Admitted To Members Capital [Member]
Partners capital accounts		(2,046,508)	(6,177,788)	(3,318,008)	(9,370,995)
Investors In Applicant Status [Member] | Premiums Admitted To Members Capital [Member]
Partners capital accounts		(12,355)	(32,690)	(12,355)	(39,795)
Investors In Applicant Status [Member] | Premiums Paid On Application By RMC [Member]
Partners capital accounts		5,355	1,120	12,355	33,040
Capital Members [Member]
Beginning balance		79,965,409	69,816,123	79,198,453	66,450,424
Net income		1,331,186	1,192,329	2,507,957	2,323,393
Organization and offering expenses allocated		(81,682)	(74,480)	(162,490)	(144,688)
Early withdrawal penalties			0	0	0
Ending balance		81,934,546	76,346,119	81,934,546	76,346,119	81,934,546
Capital Members [Member] | Contributions Admitted To Members Capital [Member]
Partners capital accounts		2,046,508	6,177,788	3,318,008	9,370,995
Capital Members [Member] | Premiums Admitted To Members Capital [Member]
Partners capital accounts		12,355	32,690	12,355	39,795
Capital Members [Member] | Earnings Distributed To Members [Member]
Partners capital accounts		(1,116,861)	(1,088,573)	(2,227,868)	(2,178,920)
Capital Members [Member] | Earnings Distributed Used In DRIP [Member]
Partners capital accounts		601,285	589,482	1,204,181	1,187,760
Capital Members [Member] | Member's Redemptions [Member]
Partners capital accounts		(823,654)	(299,240)	(1,916,050)	(702,640)
Managers Capital Net [Member]
Beginning balance		138,359	117,527	125,200	102,902
Net income		13,446	12,044	25,333	23,469
Early withdrawal penalties			0	0	0
Ending balance		153,864	97,091	153,864	97,091	153,864
Managers Capital Net [Member] | Contributions Admitted To Members Capital [Member]
Partners capital accounts		2,059	6,210	3,331	9,410
Managers Capital Net [Member] | Earnings Distributed To Members [Member]
Partners capital accounts			(38,690)		(38,690)
Unallocated Organization and Offering Expenses [Member]
Beginning balance		(2,475,629)	(2,395,922)	(2,519,458)	(2,335,325)
Organization and offering expenses		(92,093)	(278,696)	(185,332)	(422,390)
Organization and offering expenses allocated		81,682	74,480	162,490	144,688
Early withdrawal penalties			879	19,415	1,575
Ending balance		(2,460,386)	(2,590,122)	(2,460,386)	(2,590,122)	(2,460,386)
Unallocated Organization and Offering Expenses [Member] | RMC [Member]
Organization and offering expenses repaid by RMC		25,654		62,499
Unallocated Organization and Offering Expenses [Member] | Manager Reimbursement [Member]
Partners capital accounts			9,137		21,330
Members Capital, Net [Member]
Beginning balance		77,628,139	67,537,728	76,804,195	64,218,001
Net income		1,344,632	1,204,373	2,533,290	2,346,862
Organization and offering expenses		(92,093)	(278,696)	(185,332)	(422,390)
Early withdrawal penalties			879	19,415	1,575
Ending balance		79,628,024	73,853,088	79,628,024	73,853,088	$ 79,628,024
Members Capital, Net [Member] | RMC [Member]
Organization and offering expenses repaid by RMC		25,654		62,499
Members Capital, Net [Member] | Contributions Admitted To Members Capital [Member]
Partners capital accounts		2,048,567	6,183,998	3,321,339	9,380,405
Members Capital, Net [Member] | Premiums Admitted To Members Capital [Member]
Partners capital accounts		12,355	32,690	12,355	39,795
Members Capital, Net [Member] | Earnings Distributed To Members [Member]
Partners capital accounts		(1,116,861)	(1,127,263)	(2,227,868)	(2,217,610)
Members Capital, Net [Member] | Earnings Distributed Used In DRIP [Member]
Partners capital accounts		601,285	589,482	1,204,181	1,187,760
Members Capital, Net [Member] | Member's Redemptions [Member]
Partners capital accounts		$ (823,654)	(299,240)	$ (1,916,050)	(702,640)
Members Capital, Net [Member] | Manager Reimbursement [Member]
Partners capital accounts			$ 9,137		$ 21,330

[1] Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

XML

Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Operations
Interest received	$ 1,486,895	$ 1,224,758	$ 2,761,760	$ 2,385,819
Other loan income	9,742	4,483	26,877	9,344
Loan administrative fee reimbursed				3,130
Operations expense	(194,942)	(163,236)	(369,481)	(165,839)
Total cash provided by operations	1,301,695	1,066,005	2,419,156	2,232,454
Investing – loan principal/advances
Principal collected on loans	10,088,604	6,855,023	21,978,196	19,594,640
Loans originated	(14,595,000)	(16,594,000)	(30,922,000)	(26,540,500)
Loans sold to non-affiliate, net		14,163,158	143,000	14,163,158
Loans transferred from affiliates				(5,889,819)
Advances made on loans	2,471	565	(4,532)	(2,083)
Total cash (used in) provided by investing	(4,503,925)	4,424,746	(8,805,336)	1,325,396
Contributions by members, net
Organization and offering expenses paid, net	(66,439)	(269,560)	(122,833)	(401,060)
Formation loan funding	(45,728)	(211,727)	(186,656)	(569,521)
Total cash provided by members, net	449,419	2,619,943	2,372,665	6,479,411
Distributions to members
Distributions to Member	(1,323,646)	(837,021)	(2,878,653)	(1,732,490)
Total cash (used in) provided by financing	(874,227)	1,782,922	(505,988)	4,746,921
Net (decrease) increase in cash	(4,076,457)	7,273,673	(6,892,168)	8,304,771
Cash, beginning of period	7,859,242	9,540,950	10,674,953	8,509,852
Cash, June 30,	3,782,785	16,814,623	3,782,785	16,814,623
Net income	1,344,632	1,204,373	2,533,290	2,346,862
Adjustments to reconcile net income to net cash provided by operating activities
(Gain) on sale, loans		(14,246)		(14,246)
Amortization of loan administrative fees		3,254		3,254
Change in operating assets and liabilities
Prepaid interest	52,500		52,500
Accrued interest	(83,478)	(94,411)	(169,605)	(111,083)
Receivable from affiliate		(135)		(135)
Loan administrative fees reimbursed				3,130
Accounts payable and accrued liabilities	(11,959)	(33,803)	2,971	1,951
Other		973		2,721
Total adjustments	(42,937)	(138,368)	(114,134)	(114,408)
Total cash provided by operations	1,301,695	1,066,005	2,419,156	2,232,454
Members Equity Contributions [Member]
Contributions by members, net
Contributions by members/manager	561,586	3,101,230	2,682,154	7,449,992
Earnings Distributed To Members [Member]
Distributions to members
Distributions to Member	(515,576)	(537,781)	(1,023,687)	(1,029,850)
Member's Redemptions [Member]
Distributions to members
Distributions to Member	$ (808,070)	$ (299,240)	$ (1,854,966)	$ (702,640)

XML

Statements of Cash Flows (Parenthetical) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement Of Cash Flows [Abstract]
Non cash financing activity in early withdrawal penalties	$ 15,584	$ 2,221	$ 61,084	$ 3,968

XML

Organization and General

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Organization and General

NOTE 1 – ORGANIZATION AND GENERAL

In the opinion of the management of Redwood Mortgage Corp. (RMC or the manager), the accompanying unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information included therein. These financial statements should be read in conjunction with the audited financial statements included in the company’s Form 10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operations results to be expected for the full year.

Redwood Mortgage Investors IX, LLC (RMI IX or the company) is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily through first and second deeds of trust.

The company is externally managed by RMC. The manager is solely responsible for managing the business and affairs of RMI IX, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the company. RMC provides the personnel and services necessary for RMI IX to conduct its business as the company has no employees of its own. The manager was required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members. The mortgage loans the company funds and/or invests in are arranged and generally are serviced by RMC.

The rights, duties and powers of the members and manager of the company are governed by the Ninth Amended and Restated Limited Liability Company Operating Agreement of RMI IX (the “Operating Agreement”), the Delaware Limited Liability Company Act and the California Revised Uniform Limited Liability Company Act.

The following is a summary of certain provisions of the Operating Agreement and is qualified in its entirety by the terms of the Operating Agreement itself. Members should refer to the company’s Operating Agreement for complete disclosure of its provisions.

The company’s primary investment objectives are to:

• yield a favorable rate of return from the company’s business of making and/or investing in loans;

• preserve and protect the company’s capital by making and/or investing in loans secured by California real estate, preferably income-producing properties geographically situated in the San Francisco Bay Area and the coastal metropolitan regions of Southern California; and,

• generate and distribute cash flow from these mortgage lending and investing activities.

The ongoing sources of funds for loans are the proceeds (net of redemption of members’ capital and operating expenses) from:

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• payments from RMC on the outstanding balance of the formation loan;

• sale of members’ units net of reimbursement to RMC of organization and offering expenses (“O&O expenses”) and net of amounts advanced for the formation loan to RMC, including units sold by reinvestment of distributions;

• loan sales to unaffiliated 3^rd parties and loan transfers by executed assignment to affiliated mortgage funds; and,

• a line of credit, if obtained.

The company intends to hold until maturity the loans in which it invests and does not presently intend to invest in mortgage loans primarily for the purpose of reselling such loans in the ordinary course of business; however, the company may sell mortgage loans (or fractional interests therein) when the manager determines that it appears to be advantageous for the company to do so, based upon then current interest rates, the length of time that the loan has been held by the company, the company’s credit risk and concentration risk and the overall investment objectives of the company. Loans sold to third parties may be sold for par, at a premium or, in the case of non-performing or under performing loans, at a discount. Company loans may be sold to third parties or to the manager or its affiliates; however, any loan sold to the manager or an affiliate thereof will not be sold for a purchase price less than the par value of the loan or the fair market value of the loan, whichever is greater. The manager will not receive commissions or broker fees with respect loan sales conducted for the company; however, selling loans will increase members’ capital available for investing in new loans for which the manager will earn brokerage fees and other forms of compensation.

Net income and losses are allocated monthly among the members according to their respective capital accounts after one percent (1%) of the profits and losses are allocated to the manager. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the company to provide tax benefits of the type commonly associated with limited liability company tax shelter investments. Federal and state income taxes are the obligation of the members, if and when taxes apply, other than the annual California franchise tax and the California LLC cash receipts taxes paid by 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. Where there is only one manager, a majority in interest of the members is required to elect a new manager to continue the company business after a manager ceases to be a manager due to its withdrawal.

Distribution policy

Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager. Cash available for distribution means cash flow from operations (excluding repayments for loan principal and other capital transaction proceeds) less amounts set aside for creation or restoration of reserves. The manager may withhold from cash available for distribution otherwise distributable to the members with respect to any period the respective amounts of organization and offering (O&O expenses) allocated to the members’ accounts for the applicable period pursuant to the company’s reimbursement to RMC and allocation to members’ accounts of O&O expenses. The amount otherwise distributable, less the respective amounts of O&O expenses allocated to members, is the net distribution. Per the terms of the company’s Operating Agreement, cash available for distribution allocated to the members is allocated among the members in proportion to their percentage interests (except with respect to differences in the amounts of O&O expenses allocated to the respective members during the applicable period) and in proportion to the number of days during the applicable month that they owned such percentage interests.

See Note 3 (Manager and Other Related Parties) to the financial statements for a detailed discussion on the allocation of O&O expenses to members’ accounts.

Cash available for distributions allocable to members, other than those participating in the distribution reinvestment plan (DRIP) and the manager, is distributed at the end of each calendar month. Cash available for distribution allocable to members who participate in the DRIP is used to purchase additional units at the end of each calendar month. The manager’s allocable share of cash available for distribution is also distributed not more frequently than with cash distributions to members.

To determine the amount of cash to be distributed in any specific month, the company relies in part on its forecast of full year profits, which takes into account the difference between the forecasted and actual results in the year and the requirement to maintain a cash reserve.

The company’s net income, cash available for distribution, and net-distribution rate fluctuates depending on:

• loan origination volume and the balance of capital available to lend;

• the current and future interest rates negotiated with borrowers;

• the timing and amount of gains received from loan sales, if any;

• payment of fees and cost reimbursements to RMC;

• the amount and timing of other operating expenses, including expenses for professional services;

• financial support, if any, from RMC; and

• payments from RMC on the outstanding balance of the formation loan.

• a line of credit, if obtained.

Financial Support from RMC

Since commencement of operations in 2009, RMC, at its sole discretion, has provided significant financial support to the company which increased the net income, cash available for distribution, and the net-distribution rate, by:

• charging less than the maximum allowable fees;

• not requesting reimbursement of qualifying costs attributable to the company (“Costs from RMC”) on the Statements of Income); and/or,

• absorbing some, and in certain periods, all of the company’s direct expenses, such as professional fees.

Such fee and cost-reimbursement waivers and the absorption of the company’s expenses by RMC were not made for the purpose of providing the company with sufficient funds to satisfy any required level of distributions, as the Operating Agreement has no such required level of distributions, nor to meet withdrawal requests. Any decision to waive fees or cost-reimbursements and/or to absorb direct expenses, and the amount (if any) to be waived or absorbed, is made by RMC in its sole discretion. This assistance has increased the company’s financial performance and resulted in an annual 6.5% net distribution rate since inception (6.95% before O&O expenses allocation of 0.45% when applicable) for periods prior to February 28, 2018.

Following a communication to members of its intention to phase in collection of its fees and cost reimbursements in April 2018, RMI IX began paying all of its direct expenses for professional-service fees (legal and audit/tax compliance) and other operating expenses (postage, printing etc.). In June 2019, RMC began collection of the asset management fee of three quarters of one percent annually (0.75%), and plans to commence collection of reimbursements of costs from RMC in 2020.

Distribution reinvestment plan (DRIP)

Members of record as of April 30, 2019, that previously elected to participate in the DRIP or that provide written notice to the manager may elect to participate in the DRIP, in those states in which approval has been obtained.

Liquidity and unit redemption program

There are substantial restrictions on transferability of units, and there is no established public trading and/or secondary market for the units and none is expected to develop. In order to provide liquidity to members, the company’s Operating Agreement includes a unit redemption program, whereby beginning one year from the date of purchase of the units, a member may redeem all or part of their units, subject to certain limitations.

The price paid for redeemed units is 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 is calculated based on the period from date of purchase as follows:

• after one year, 92% of the purchase price or of the capital account balance, whichever is less;

• after two years, 94% of the purchase price or of the capital account balance, whichever is less;

• after three years, 96% of the purchase price or of the capital account balance, whichever is less;

• after four years, 98% of the purchase price or of the capital account balance, whichever is less;

• after five years, 100% of the purchase price or of the capital account balance, whichever is less.

The company redeems units quarterly, subject to certain limitations as provided for in the Operating Agreement. The maximum number of units which may be redeemed per quarter per individual member shall not exceed the greater of (i) 100,000 units, or (ii) 25% of the member’s total outstanding units. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that, if any, applies when the redemption payments begin continues to apply throughout the redemption period and applies to all units covered by such redemption request regardless of when the final redemption payment is made.

The company has not established a cash reserve from which to fund redemptions. The company’s capacity to redeem units upon request is limited by the availability of cash and the company’s cash flow. As provided in the Operating Agreement, the company will not, in any calendar year, redeem more than five percent (5%) of the weighted average number of units outstanding during the twelve-month period immediately prior to the date of the redemption. In the event unit withdrawal requests exceed 5% in any calendar year, units will be redeemed in the priority provided in the Operating Agreement.

Contributed capital

Prior to April 30, 2019, the manager was required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

Manager’s interest

If a manager is removed, withdrawn or 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. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered.

Unit sales

The company’s Registration Statement on Form S-11 filed with the SEC in June 2016 (SEC File No. 333-208315) to offer up to 120,000,000 units ($120,000,000) to the public and 20,000,000 units ($20,000,000) to its members pursuant to the DRIP, was not renewed in 2019 and the offer expired April 30, 2019. On June 11, 2019, the company filed a Post-Effective Amendment No. 5 with the SEC (SEC File No. 333-208315) to deregister all of the units which were registered under its Form S-11 Registration Statement that remained unsold as of April 30, 2019.

On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP. The Registration Statement on Form S-3 became effective on May 9, 2019.

As of June 30, 2019, the gross proceeds from sales of units from inception (October, 2009) was approximately $90,476,000, of which approximately $9,857,000 were from sales to members under our DRIP.

The company uses the gross proceeds from the sale of the units to:

• make additional loans;

• fund working capital reserves;

• pay RMC up to 4.5% of proceeds from sale of units for organization and offering expenses, excluding units sold in the DRIP; and

• fund a formation loan to RMC at up to 7% of proceeds from sale of units, excluding units sold in the DRIP.

Unit sales – commissions paid to broker-dealers/formation loan

Commissions for unit sales were previously paid to broker-dealers (B/D sales commissions) by RMC and were not paid directly by the company out of offering proceeds. Instead, the company advanced to RMC, from offering proceeds, amounts sufficient to pay the B/D sales commissions and premiums paid to investors up to seven percent (7%) of offering proceeds. The receivable arising from the advances is unsecured, and non-interest bearing and is referred to as the “formation loan.” RMC is required to make annual payments on the formation loan in the amount of one tenth of the principal balance outstanding at December 31 of the prior year.

Term of the company

The term of the company will continue until 2028, unless sooner terminated as provided in the Operating Agreement.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, 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.

Fair value estimates

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.

Fair values of assets and liabilities are determined based on the fair-value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used:

• 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 in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• 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 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. 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).

Management has the requisite familiarity with the real estate 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.

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. At June 30, 2019, certain of the company’s cash balances in banks exceed federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit-worthiness/investment grade credit rating.

Loans and interest income

Performing loans are carried at amortized costs which is generally equal to the unpaid principal balance (principal). 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower.

For performing loans, interest is accrued daily on the principal plus advances, if any. Impaired loans less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or 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. Late fees are recognized in the period received.

The company may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. 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 events and or changes in circumstances cause management to have serious doubts about the collectability of the payments of interest and principal in accordance with the loan agreement, 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, then to the accrued interest, then to advances, and lastly to principal.

In the normal course of the company’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the renewed loan was previously designated as impaired.

From time to time, the company negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant delay or reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. 

The company originates loans with the intent to hold the loans until maturity.  From time to time the company may sell certain loans.  Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. In 2019 and 2018 certain performing loans were sold at an immaterial gain (net of expenses). Therefore, the recorded amount of the preforming loans (i.e., the loan balance) is deemed to approximate fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that collection of the amount owed is assured, including foregone interest, if any).

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the fair value of the collateral, net of any senior liens exceeds 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.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans 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.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

Real estate owned (REO)

Real estate owned, or REO, is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expenses. Any recovery in the fair value subsequent to such a write down is recorded and is not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Recently issued accounting pronouncements

-Accounting and Financial reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. The manager expects to adopt the ASU for interim and annual reporting in 2020.

RMI IX invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral.  The real estate secured programs and low loan-to-value ratios have caused RMC to conclude that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial position.

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Manager and Other Related Parties

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Manager and Other Related Parties

NOTE 3 – MANAGER AND OTHER RELATED PARTIES

The Operating Agreement provides for compensation of the manager, as detailed below. RMC is entitled to 1% of the profits and losses of the company.

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	145,950		$	42,914	$	119,187		$	186,446		$	78,858	$	21,382	$	594,737
RMC support
Waived		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Net charged	$	—		$	42,914	$	39,729		$	—		$	78,858	$	21,382	$	182,883

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the six months ended
Chargeable/reimbursable	$	309,220		$	81,560	$	238,374		$	366,102		$	226,175	$	24,738	$	1,246,169
RMC support
Waived		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Net charged	$	—		$	81,560	$	39,729		$	—		$	226,175	$	24,738	$	372,202

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee                         (as Revised)			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	165,940		$	38,694	$	104,955		$	177,858		$	84,213	$	8,412	$	580,072
RMC support
Waived		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Net charged	$	—		$	38,694	$	—		$	—		$	84,213	$	8,412	$	131,319

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services			Other			Total
For the six months ended
Chargeable/reimbursable	$	324,303		$	73,878	$	209,910		$	362,007		$	232,050		$	22,743		$	1,224,891
RMC support
Waived		(324,303	)		—		(209,910	)		(362,007	)		—			—			(896,220	)
Expenses absorbed by RMC		—			—		—			—			(143,152	)		(14,246	)		(157,398	)
Total RMC support		(324,303	)		—		(209,910	)		(362,007	)		(143,152	)		(14,246	)		(1,053,618	)
Net charged	$	—		$	73,878	$	—		$	—		$	88,898		$	8,497		$	171,273

Loan administrative fees

RMC is entitled to receive a loan administrative fee in an amount up to one percent (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 would be payable by the company upon the closing or acquisition of each loan. Since August 2015, RMC, at its sole discretion, waived and continues to waive, the loan administrative fees.   

Mortgage servicing fees

RMC earns mortgage servicing fees from the company of up to one-quarter of one percent (0.25%) annually of the unpaid principal balance of the loan portfolio 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 specific mortgage payments are collected. The mortgage servicing fees are accrued monthly on all loans. Remittance to RMC is made monthly unless the loan has been assigned a specific loss reserve, at which point remittance is deferred until the specific loss reserve is no longer required, or the property has been acquired by the company.

Asset management fees

RMC is entitled to receive a monthly asset management fee for managing the company’s portfolio and operations in an amount up to three-quarters of one percent (0.75%) annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to two percent (2%) of working capital reserves.

RMC, in its sole discretion, elected to begin collecting asset management fees in June 2019. In April 2018, the calculation of the asset management fees was adjusted to conform to the specifically applicable provisions of the Operating Agreement, accordingly the 2018 dollar amounts in the table above have been updated. The previously disclosed asset management fees were $82,066 for the three months ended June 30, 2018. This update had no effect on net income or total operating expenses, as all asset management fees were waived in 2018.

Costs from RMC

RMC, per the Operating Agreement, may request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, postage and preparation of reports to members and out-of-pocket general and administration expenses. Certain of these qualifying costs (e.g., postage) can be tracked by RMC as specifically attributable to the company. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g., by the company’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all affiliated mortgage funds managed by RMC. RMC, at its sole discretion, has elected to waive reimbursement for operating expenses during the three and six months ended June 30, 2019 and 2018.  

Professional Services

Professional services consist primarily of legal, regulatory (including SEC/FINRA compliance) and audit and tax compliance expenses. Prior to April 2018, RMC, at its sole discretion, had elected to absorb some or all of RMI IX’s expenses for professional services (and other operating expenses directly incurred by the company).

Commissions and fees paid by the borrowers to RMC

- Brokerage commissions, loan originations – 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 1.5% 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.

- Other fees – RMC receives 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 the ordinary course of business, performing loans may be transferred by executed assignment, in-part or in-full, between the affiliated mortgage funds at par. During the six months ended June 30, 2018, Redwood Mortgage Investors VIII, LP, an affiliated mortgage fund, transferred to the company two performing loans in-full at par value, which approximates fair value, of approximately $5,890,000. The company paid cash for the loans and the affiliated mortgage fund has no continuing obligation or involvement on the loans. No loans were transferred during the six months ended June 30, 2019.

Formation loan

Formation loan transactions are presented in the following table.

	For the six months ended			Since Inception
Balance, beginning of period	$	4,179,343		$	—
Formation loan advances to RMC		186,656			5,626,566
Payments received from RMC		—			(1,199,716	)
Early withdrawal penalties applied		(41,669	)		(102,520	)
Balance, June 30, 2019	$	4,324,330		$	4,324,330
Subscription proceeds since inception				$	80,256,995
Formation loan advance rate					7	%

The future minimum payments on the formation loan, net of early withdrawal penalties, as of June 30, 2019 are presented in the following table.

2019	$	376,265
2020		417,934
2021		417,934
2022		417,934
2023		417,934
Thereafter		2,276,329
Total	$	4,324,330

RMC is required to make annual payments on the formation loan, net of early withdrawal penalties, of one tenth of the principal balance outstanding at December 31 of the prior year. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered. The primary source of repayment of the formation loan are loan brokerage commissions earned by RMC.

Member capital withdrawals

The table below presents the company’s unit redemptions for the three and six months ended June 30, 2019 and 2018.

	Three months ended				Six months ended
	2019		2018		2019		2018
Capital redemptions-without penalty	$	375,080	$	259,817	$	742,476	$	575,867
Capital redemptions-subject to penalty		448,574		39,423		1,173,574		126,773
Total	$	823,654	$	299,240	$	1,916,050	$	702,640
Early withdrawal penalties	$	15,584	$	2,221	$	61,084	$	3,968

At June 30, 2019, scheduled future redemptions of members' capital was $883,523, all of which is scheduled for payment in 2019.

Reimbursement and allocation of organization and offering expenses

Per the Operating Agreement, the manager is reimbursed for, or the company may pay directly, O&O expenses incurred in connection with the organization of the company or offering of the units including, without limitation, attorneys’ fees, accounting fees, printing costs and other selling expenses (other than sales commissions) in a total amount not exceeding 4.5% of the original purchase price of all units (other than DRIP units) sold in all offerings (hereafter, the “maximum O&O expenses”), and the manager pays any O&O expenses in excess of the maximum O&O expenses.

For each calendar quarter or portion thereof after December 31, 2015, that a member holds units (other than DRIP units) and for a maximum of forty (40) such quarters, a portion of the O&O expenses borne by the company is allocated to and debited from that member’s capital account in an annual amount equal to 0.45% of the member’s original purchase price for those units, in equal quarterly installments of 0.1125% each commencing with the later of the first calendar quarter of 2016 or the first full calendar quarter after a member’s purchase of units, and continuing through the quarter in which such units are redeemed. If at any time the aggregate O&O expenses actually paid or reimbursed by the company since inception are less than the maximum O&O expenses, the company shall first reimburse the manager for any O&O expenses previously borne by it so long as it does not result in the company bearing more than the maximum O&O expenses, and any savings thereafter remaining shall be equitably allocated among (and serve to reduce any such subsequent cost allocations to) those members who have not yet received forty (40) quarterly allocations of O&O expenses, as determined in the good faith judgment of the manager.

Unallocated O&O transactions are summarized in the following table.

	2019			Since Inception
Balance, beginning of period	$	2,519,458		$	—
O&O expenses reimbursed to RMC		185,332			3,671,853
Early withdrawal penalties applied (1)		(19,415	)		(60,290	)
O&O expenses allocated(2)		(162,490	)		(848,846	)
O&O expenses repaid to Members' Capital by RMC(3)		(62,499	)		(302,331	)
Balance, June 30	$	2,460,386		$	2,460,386

(1) Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

(2) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters.

(3) RMC is obligated under the Operating Agreement to repay the company for unallocated O&O expenses attributed to units redeemed prior to the 40 quarterly allocations. RMC estimated its future obligations to repay unallocated O&O expenses on scheduled redemptions as of June 30, 2019, to be approximately $20,124, to be offset by early withdrawal penalties. At June 30, 2019, RMI IX owed the manager $11,974 to refund a June 2019 overpayment relating to the transactions described above.

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Loans

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Loans

NOTE 4 – LOANS

Loans generally are funded at a fixed interest rate with a loan term of up to five years.  Loans acquired are generally done so within the first six months of origination, and purchased at the current par value, which approximates fair value.

As of June 30, 2019, 80 of the company’s 82 loans (representing 99% of the aggregate principal of the company’s loan portfolio) have a loan term of five years or less from loan inception. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty provision.

As of June 30, 2019, 56 loans outstanding (representing 56% of the aggregate principal balance of the company’s loan portfolio) provide for monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity. The remaining loans provide for monthly payments of interest only, with the principal balance due at maturity.

Secured loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table for the three and six months ended June 30, 2019.

	For the three months ended			For the six months ended
Principal, beginning of period	$	66,416,481		$	62,115,713
Loans originated		14,595,000			30,922,000
Loans sold to non-affiliate		—			(136,640	)
Principal payments received		(10,088,604	)		(21,978,196	)
Principal June 30, 2019	$	70,922,877		$	70,922,877

In March 2019, one loan with principal of $136,640, that had been designated as impaired and in non-accrual status, was sold to an unaffiliated third party which specializes in the resolution of such loans. The loan was sold for $143,000, of which $1,711 was recognized as interest income, and $4,649 was repayment of outstanding advances, with $10,791 in foregone interest.

On July 29, 2019 the company sold to an unaffiliated third party (the Buyer) 8 loans with aggregate principal of $4,278,490 at a price that netted an immaterial gain (the July 2019 sale). The buyer has 30 days from the sale to request a refund of the gain, for any loans that pay in full.

During the three and six months ended June 30, 2019, the company renewed one loan with principal of $400,000. See Note 3 (Manager and Other Related Parties) for a description of loans transferred by executed assignments between affiliates. The company originates loans with the intent to hold the loans until maturity. 

Borrower payments are deposited into a bank trust account established by RMC, pursuant to California regulation, and are subsequently disbursed to the company after an appropriate holding period, to ensure the funds are collected. At June 30, 2019, the trust account held a balance of $44,308, consisting of borrower payments, all of which was disbursed to RMI IX’s bank account on or before July 17, 2019.

Loan characteristics

Secured loans had the characteristics presented in the following table.

	June 30,			December 31,
	2019			2018
Number of secured loans		82			83
Secured loans – principal	$	70,922,877		$	62,115,713
Secured loans – lowest interest rate (fixed)		7.3	%		7.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	864,913		$	748,382
Average principal as percent of total principal		1.2	%		1.2	%
Average principal as percent of members’ capital, net		1.1	%		1.0	%
Average principal as percent of total assets		1.1	%		1.0	%
Largest secured loan – principal	$	5,500,000		$	4,000,000
Largest principal as percent of total principal		7.8	%		6.4	%
Largest principal as percent of members’ capital, net		6.9	%		5.2	%
Largest principal as percent of total assets		7.3	%		5.5	%
Smallest secured loan – principal	$	58,321		$	74,390
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of members’ capital, net		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of California counties where security is located		18			15
Largest percentage of principal in one California county		20.5	%		25.0	%
Number of secured loans with filed notice of default		2			2
Secured loans in foreclosure – principal	$	2,308,789		$	565,685
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—
Number of secured loans with prepaid interest		1			—
Prepaid interest	$	52,500		$	—

As of June 30, 2019, the company’s largest loan with principal of $5,500,000 is secured by an office building located in Santa Clara County, bears an interest rate of 8.25% and matures on June 1, 2021.

As of June 30, 2019, the company had 2 loans with filed notices of default. As of June 30, 2019, the company had no construction loans outstanding, no rehabilitation loans outstanding, and  no commitments to fund construction or rehabilitation loans.

Lien position

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

	June 30, 2019								December 31, 2018
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		40	$	35,830,376			51	%		41	$	29,699,888			48	%
Second trust deeds		42		35,092,501			49			42		32,415,825			52
Total principal, secured loans		82		70,922,877			100	%		83		62,115,713			100	%
Liens due other lenders at loan closing				72,997,929								65,941,118
Total debt			$	143,920,806							$	128,056,831
Appraised property value at loan closing			$	277,234,000							$	240,307,000
Percent of total debt to appraised values    (LTV) at loan closing(1)				54.5	%							54.5	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders.

The July 2019 loan sale (see Note 6 – Subsequent Events) included 8 loans with principal of $4,278,490 secured by first trust deeds.

Property type

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

	June 30, 2019							December 31, 2018
	Loans		Principal		Percent			Loans		Principal		Percent
Single family(2)		55	$	38,792,615		55	%		60	$	42,967,253		69	%
Multi-family		9		8,905,869		12			8		8,210,970		13
Commercial		17		21,374,393		30			15		10,937,490		18
Land		1		1,850,000		3			—		—		—
Total principal, secured loans		82	$	70,922,877		100	%		83		62,115,713		100	%

(2) Single family property type as of June 30, 2019 consists of 10 loans with principal of $5,994,661 that are owner occupied and 45 loans with principal of $32,797,954 that are non-owner occupied.  At December 31, 2018, single family property consisted of 14 loans with principal of $11,398,869 that are owner occupied and 46 loans with principal of $31,568,384 that are non-owner occupied.

Distribution of loans within California

The distribution of secured loans by counties is presented in the following table.

	June 30, 2019					December 31, 2018
	Principal		Percent			Principal		Percent
San Francisco Bay Area(3)
Santa Clara	$	14,547,090		20.5	%	$	11,756,695		18.9	%
San Mateo		13,561,032		19.1			9,619,609		15.5
San Francisco		5,067,454		7.1			5,238,008		8.4
Alameda		3,181,644		4.5			7,306,779		11.8
Sonoma		1,295,903		1.8			1,300,000		2.1
Marin		1,071,825		1.5			575,000		0.9
Solano		600,000		0.9			—		—
Contra Costa		210,281		0.3			725,771		1.2
		39,535,229		55.7			36,521,862		58.8
Other Northern California
Sutter		3,815,000		5.4			—		—
Sacramento		2,054,410		2.9			822,500		1.3
Monterey		1,431,281		2.0			322,716		0.5
Placer		634,370		0.9			637,354		1.0
		7,935,061		11.2			1,782,570		2.8
Northern California Total		47,470,290		66.9			38,304,432		61.6
Los Angeles & Coastal
Los Angeles		14,437,415		20.4			15,514,789		25.0
San Diego		5,330,911		7.5			5,563,635		9.0
Orange		1,154,755		1.6			1,177,446		1.9
Santa Barbara		499,506		0.7			—		—
		21,422,587		30.2			22,255,870		35.9
Other Southern California
San Bernardino		1,200,000		1.7			1,200,000		1.9
Riverside		830,000		1.2			355,411		0.6
		2,030,000		2.9			1,555,411		2.5
Southern California Total		23,452,587		33.1			23,811,281		38.4
Total principal, secured loans	$	70,922,877		100.0	%	$	62,115,713		100.0	%

(3) Includes Silicon Valley

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table as of June 30, 2019.

	Loans		Principal		Percent
2019(4)		13	$	11,769,934		17	%
2020		31		23,913,665		34
2021		22		25,156,102		35
2022		6		1,966,163		3
2023		3		829,902		1
Thereafter		2		908,660		1
Total future maturities		77		64,544,426		91
Matured as of June 30, 2019		5		6,378,451		9
Total principal, secured loans		82	$	70,922,877		100	%

(4) Loans scheduled to mature in 2019 from July 1 to December 31.

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.

The July 2019 loan sale (See Note 6 – Subsequent Events) included 8 loans scheduled to mature as follows: $912,628 (3 loans) in 2020, $1,980,000 (2 loans) in 2021, $477,202 (1 loan) in 2023, and $908,660 (2 loans) in 2024.

Matured loans

Secured loans past maturity are summarized in the following table as of June 30, 2019.

	June 30, 2019
Number of loans		5
Principal		6,378,451
Advances		—
Accrued interest		93,324
Total recorded investment	$	6,471,775
Principal past maturity as percent of total principal		9	%

Of the 5 loans past maturity at June 30, 2019, 2 loans with an aggregate principal balance of approximately $987,610 were designated as impaired. One loan with a principal balance of approximately $220,540 was designated as impaired and in non-accrual status. This loan paid in full in July 2019.

Two loans, with aggregate principal of $4,915,279, which were 60 days delinquent and past maturity, paid in full in July 2019. One loan with principal of $475,562, negotiated an extension agreement with the manager in July 2019, and was current with their payments.

Delinquency

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

	June 30, 2019				December 31, 2018
	Loans		Principal		Loans		Principal
Past Due
30-89 days		4	$	5,638,466		5	$	3,828,975
90-179 days		3		1,457,839		—		—
180 or more days		2		2,029,329		2		565,685
Total past due		9		9,125,634		7		4,394,660
Current		73		61,797,243		76		57,721,053
Total principal, secured loans		82	$	70,922,877		83	$	62,115,713

Three loans, with an aggregate principal balance of approximately $5,391,000, were 60 days delinquent and past maturity at June 30, 2019. One loan with a principal balance of approximately $767,000 was 90 days delinquent and past maturity at June 30, 2019. One loan, with a principal balance of approximately $221,000, was 180 days delinquent and at June 30, 2019 was past maturity, paid in full in July 2019.

Loans in non-accrual status

Secured loans in non-accrual status are summarized in the following table as of June 30, 2019 and December 31, 2018.

	June 30, 2019		December 31, 2018
Number of loans	$	2	$	2
Principal		2,029,329		565,685
Advances		10,100		10,688
Accrued interest		85,695		19,831
Total recorded investment	$	2,125,124	$	596,204
Foregone interest	$	39,907	$	33,410

At June 30, 2019, 3 loans with an aggregate principal balance of approximately $1,458,000 were 90 or more days delinquent and not in non-accrual status, as their LTV’s were deemed adequately collateralized. No loans were 90 or more days delinquent and not in non-accrual status at December 31, 2018. In July 2019, one loan with  principal of approximately $220,540 which had been designated as impaired and in non-accrual status, was paid in full.

Impaired loans/allowance for loan losses

	June 30, 2019			December 31, 2018
Principal	$	3,487,167		$	3,841,148
Recorded investment(6)		3,668,610			3,950,157
Impaired loans without allowance		3,668,610			3,950,157
Impaired loans with allowance		—			—
Allowance for loan losses, impaired loans		—			—
Number of loans		5			6
LTV		54.1	%		54.7	%

(6) Recorded investment is the sum of the principal, advances, and interest accrued for financial reporting purposes.

Impaired loans had average balances and interest income recognized and received in cash as presented in the following tables as of and for the six months ended June 30, 2019 and the year ended December 31, 2018.

	June 30, 2019		December 31, 2018
Average recorded investment	$	3,809,384	$	2,050,897
Interest income recognized		138,612		23,848
Interest income received in cash		37,919		21,670

No loan payment modifications were made during the three and six months ended June 30, 2019, and no modifications were in effect at June 30, 2019 and December 31, 2018.  

No allowance for loan losses has been recorded as all loans were deemed to have protective equity (i.e., low loan-to-value ratio) such that collection is reasonably assured for all amounts owing.

Fair Value

In 2019 and 2018 certain performing loans were sold at an immaterial gain (net of expenses). Therefore, the recorded amount of the preforming loans (i.e., the loan balance) is deemed to approximate fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that collection of the amount owed is assured, including foregone interest, if any).

Loans designated impaired (i.e., that are collateral dependent) are measured at fair value on a non-recurring basis when the net realizable value of the real property collateral is determined to be less than the loan balance. No impaired loans were measured at fair value on a non-recurring basis at and for the periods ended June 30, 2019 or December 31, 2018.

Secured loans, performing (i.e. not designated as impaired) (Level 2) - Each loan is reviewed quarterly for its delinquency, LTV adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. The fair value of loan balances secured by deeds of trust is deemed to approximate the recorded amount (per the financial statements) as our loans:

• are of shorter terms at origination than commercial real estate loans by institutional lenders;

• are written without a prepayment penalty causing uncertainty/a lack of predictability as to the expected duration of the loan; and

• have limited marketability and are not yet sellable into an established secondary market.

Secured loans, designated impaired (Level 2) - Secured loans designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. 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 (Level 2 inputs).

The following methods and assumptions are used to determine the fair value of the collateral securing a loan.

Single family – Management’s preferred method for determining the fair market value of its single-family residential assets is the sale comparison method. Management primarily obtains sale comps via its subscription to the RealQuest service, but also uses free online services such as Zillow.com and other available resources to supplement this data. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, number of bedrooms and bathrooms, square footage, sale date, condition and year built.

If applicable sale comps are not available or deemed unreliable, management will seek additional information in the form of brokers’ opinions of value or appraisals.

Multi-family residential – Management’s preferred method for determining the aggregate retail value of its multifamily units is the sale comparison method. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, rental income, number of units, composition of units by the number of bedrooms and bathrooms, square footage, condition, amenities and year built.

Management’s secondary method for valuing its multifamily assets as income-producing rental operations is the direct capitalization method.  In order to determine market cap rates for properties of the same class and location as the subject, management refers to published data from reliable third-party sources such as the CBRE Cap Rate Survey. Management applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Commercial buildings – Where commercial rental income information is available, management’s preferred method for determining the fair value of its commercial real estate assets is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to reputable third-party sources such as the CBRE Cap Rate Survey. Management then applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing commercial rental project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Management supplements the direct capitalization method with additional information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

Commercial land – Commercial land has many variations/uses, thus requiring management to employ a variety of methods depending upon the unique characteristics of the subject land. Management may rely on information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

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Commitments and Contingencies, Other Than Loan Commitments

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies, Other Than Loan Commitments

NOTE 5 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS

Commitments

At June 30, 2019, scheduled future redemptions of members' capital was $883,523, all of which is scheduled for payment in 2019.

Legal proceedings

In the normal course of its business, the company may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect its interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the company. 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.

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 6 – SUBSEQUENT EVENTS

On July 29, 2019 the company sold to an unaffiliated third party 8 loans with aggregate principal of $4,278,490 at a price that netted an immaterial gain. The buyer has 30 days from the sale to request a refund of the gain, for any loans that pay in full.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Management Estimates

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, 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.

Fair Value Estimates

Fair value estimates

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.

Fair values of assets and liabilities are determined based on the fair-value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used:

• 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 in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• 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 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. 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).

Management has the requisite familiarity with the real estate 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.

Cash and Cash Equivalents

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. At June 30, 2019, certain of the company’s cash balances in banks exceed federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit-worthiness/investment grade credit rating.

Loans and Interest Income

Loans and interest income

Performing loans are carried at amortized costs which is generally equal to the unpaid principal balance (principal). 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower.

For performing loans, interest is accrued daily on the principal plus advances, if any. Impaired loans less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or 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. Late fees are recognized in the period received.

The company may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. 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 events and or changes in circumstances cause management to have serious doubts about the collectability of the payments of interest and principal in accordance with the loan agreement, 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, then to the accrued interest, then to advances, and lastly to principal.

In the normal course of the company’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the renewed loan was previously designated as impaired.

From time to time, the company negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant delay or reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. 

The company originates loans with the intent to hold the loans until maturity.  From time to time the company may sell certain loans.  Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. In 2019 and 2018 certain performing loans were sold at an immaterial gain (net of expenses). Therefore, the recorded amount of the preforming loans (i.e., the loan balance) is deemed to approximate fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that collection of the amount owed is assured, including foregone interest, if any).

Allowance for Loan Losses

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the fair value of the collateral, net of any senior liens exceeds 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.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans 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.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

Real Estate Owned (REO)

Real estate owned (REO)

Real estate owned, or REO, is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expenses. Any recovery in the fair value subsequent to such a write down is recorded and is not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements

-Accounting and Financial reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. The manager expects to adopt the ASU for interim and annual reporting in 2020.

RMI IX invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral.  The real estate secured programs and low loan-to-value ratios have caused RMC to conclude that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial position.

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Manager and Other Related Parties (Tables)

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Summary of Loan Administrative Fees and Operating Expenses, for Fees and Cost Reimbursements Waived and Expenses Absorbed

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	145,950		$	42,914	$	119,187		$	186,446		$	78,858	$	21,382	$	594,737
RMC support
Waived		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(145,950	)		—		(79,458	)		(186,446	)		—		—		(411,854	)
Net charged	$	—		$	42,914	$	39,729		$	—		$	78,858	$	21,382	$	182,883

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2019 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services		Other		Total
For the six months ended
Chargeable/reimbursable	$	309,220		$	81,560	$	238,374		$	366,102		$	226,175	$	24,738	$	1,246,169
RMC support
Waived		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(309,220	)		—		(198,645	)		(366,102	)		—		—		(873,967	)
Net charged	$	—		$	81,560	$	39,729		$	—		$	226,175	$	24,738	$	372,202

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the three months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee                         (as Revised)			Costs from RMC			Professional Services		Other		Total
For the three months ended
Chargeable/reimbursable	$	165,940		$	38,694	$	104,955		$	177,858		$	84,213	$	8,412	$	580,072
RMC support
Waived		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Expenses absorbed by RMC		—			—		—			—			—		—		—
Total RMC support		(165,940	)		—		(104,955	)		(177,858	)		—		—		(448,753	)
Net charged	$	—		$	38,694	$	—		$	—		$	84,213	$	8,412	$	131,319

Loan administrative fees and operating expenses, including amounts for fees and cost reimbursements waived and/or expenses absorbed by RMC, for the six months ended June 30, 2018 are presented in the following table.

				Operating Expenses
	Loan Admin Fees			Mortgage Servicing Fees		Asset Management Fee			Costs from RMC			Professional Services			Other			Total
For the six months ended
Chargeable/reimbursable	$	324,303		$	73,878	$	209,910		$	362,007		$	232,050		$	22,743		$	1,224,891
RMC support
Waived		(324,303	)		—		(209,910	)		(362,007	)		—			—			(896,220	)
Expenses absorbed by RMC		—			—		—			—			(143,152	)		(14,246	)		(157,398	)
Total RMC support		(324,303	)		—		(209,910	)		(362,007	)		(143,152	)		(14,246	)		(1,053,618	)
Net charged	$	—		$	73,878	$	—		$	—		$	88,898		$	8,497		$	171,273

Schedule of Accounts, Notes, Loans and Financing Receivable

Formation loan transactions are presented in the following table.

	For the six months ended			Since Inception
Balance, beginning of period	$	4,179,343		$	—
Formation loan advances to RMC		186,656			5,626,566
Payments received from RMC		—			(1,199,716	)
Early withdrawal penalties applied		(41,669	)		(102,520	)
Balance, June 30, 2019	$	4,324,330		$	4,324,330
Subscription proceeds since inception				$	80,256,995
Formation loan advance rate					7	%

Formation Loan, Future Minimum Payments Net of Early Withdrawal Penalties

The future minimum payments on the formation loan, net of early withdrawal penalties, as of June 30, 2019 are presented in the following table.

2019	$	376,265
2020		417,934
2021		417,934
2022		417,934
2023		417,934
Thereafter		2,276,329
Total	$	4,324,330

Schedule of Unit Redemptions

The table below presents the company’s unit redemptions for the three and six months ended June 30, 2019 and 2018.

	Three months ended				Six months ended
	2019		2018		2019		2018
Capital redemptions-without penalty	$	375,080	$	259,817	$	742,476	$	575,867
Capital redemptions-subject to penalty		448,574		39,423		1,173,574		126,773
Total	$	823,654	$	299,240	$	1,916,050	$	702,640
Early withdrawal penalties	$	15,584	$	2,221	$	61,084	$	3,968

Summary of Organization and Offering Expenses

Unallocated O&O transactions are summarized in the following table.

	2019			Since Inception
Balance, beginning of period	$	2,519,458		$	—
O&O expenses reimbursed to RMC		185,332			3,671,853
Early withdrawal penalties applied (1)		(19,415	)		(60,290	)
O&O expenses allocated(2)		(162,490	)		(848,846	)
O&O expenses repaid to Members' Capital by RMC(3)		(62,499	)		(302,331	)
Balance, June 30	$	2,460,386		$	2,460,386

(1) Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

(2) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters.

(3) RMC is obligated under the Operating Agreement to repay the company for unallocated O&O expenses attributed to units redeemed prior to the 40 quarterly allocations. RMC estimated its future obligations to repay unallocated O&O expenses on scheduled redemptions as of June 30, 2019, to be approximately $20,124, to be offset by early withdrawal penalties. At June 30, 2019, RMI IX owed the manager $11,974 to refund a June 2019 overpayment relating to the transactions described above.

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Loans (Tables)

6 Months Ended

Jun. 30, 2019

Secured Loan Principal Transactions

Secured loan transactions are summarized in the following table for the three and six months ended June 30, 2019.

	For the three months ended			For the six months ended
Principal, beginning of period	$	66,416,481		$	62,115,713
Loans originated		14,595,000			30,922,000
Loans sold to non-affiliate		—			(136,640	)
Principal payments received		(10,088,604	)		(21,978,196	)
Principal June 30, 2019	$	70,922,877		$	70,922,877

Secured Loans Characteristics

Secured loans had the characteristics presented in the following table.

	June 30,			December 31,
	2019			2018
Number of secured loans		82			83
Secured loans – principal	$	70,922,877		$	62,115,713
Secured loans – lowest interest rate (fixed)		7.3	%		7.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	864,913		$	748,382
Average principal as percent of total principal		1.2	%		1.2	%
Average principal as percent of members’ capital, net		1.1	%		1.0	%
Average principal as percent of total assets		1.1	%		1.0	%
Largest secured loan – principal	$	5,500,000		$	4,000,000
Largest principal as percent of total principal		7.8	%		6.4	%
Largest principal as percent of members’ capital, net		6.9	%		5.2	%
Largest principal as percent of total assets		7.3	%		5.5	%
Smallest secured loan – principal	$	58,321		$	74,390
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of members’ capital, net		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of California counties where security is located		18			15
Largest percentage of principal in one California county		20.5	%		25.0	%
Number of secured loans with filed notice of default		2			2
Secured loans in foreclosure – principal	$	2,308,789		$	565,685
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—
Number of secured loans with prepaid interest		1			—
Prepaid interest	$	52,500		$	—

Secured Loans by Lien Position in the Collateral

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

	June 30, 2019								December 31, 2018
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		40	$	35,830,376			51	%		41	$	29,699,888			48	%
Second trust deeds		42		35,092,501			49			42		32,415,825			52
Total principal, secured loans		82		70,922,877			100	%		83		62,115,713			100	%
Liens due other lenders at loan closing				72,997,929								65,941,118
Total debt			$	143,920,806							$	128,056,831
Appraised property value at loan closing			$	277,234,000							$	240,307,000
Percent of total debt to appraised values    (LTV) at loan closing(1)				54.5	%							54.5	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders.

Secured Loans by Property Type of the Collateral

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

	June 30, 2019							December 31, 2018
	Loans		Principal		Percent			Loans		Principal		Percent
Single family(2)		55	$	38,792,615		55	%		60	$	42,967,253		69	%
Multi-family		9		8,905,869		12			8		8,210,970		13
Commercial		17		21,374,393		30			15		10,937,490		18
Land		1		1,850,000		3			—		—		—
Total principal, secured loans		82	$	70,922,877		100	%		83		62,115,713		100	%

(2) Single family property type as of June 30, 2019 consists of 10 loans with principal of $5,994,661 that are owner occupied and 45 loans with principal of $32,797,954 that are non-owner occupied.  At December 31, 2018, single family property consisted of 14 loans with principal of $11,398,869 that are owner occupied and 46 loans with principal of $31,568,384 that are non-owner occupied.

Secured Loans Distributed within California

The distribution of secured loans by counties is presented in the following table.

	June 30, 2019					December 31, 2018
	Principal		Percent			Principal		Percent
San Francisco Bay Area(3)
Santa Clara	$	14,547,090		20.5	%	$	11,756,695		18.9	%
San Mateo		13,561,032		19.1			9,619,609		15.5
San Francisco		5,067,454		7.1			5,238,008		8.4
Alameda		3,181,644		4.5			7,306,779		11.8
Sonoma		1,295,903		1.8			1,300,000		2.1
Marin		1,071,825		1.5			575,000		0.9
Solano		600,000		0.9			—		—
Contra Costa		210,281		0.3			725,771		1.2
		39,535,229		55.7			36,521,862		58.8
Other Northern California
Sutter		3,815,000		5.4			—		—
Sacramento		2,054,410		2.9			822,500		1.3
Monterey		1,431,281		2.0			322,716		0.5
Placer		634,370		0.9			637,354		1.0
		7,935,061		11.2			1,782,570		2.8
Northern California Total		47,470,290		66.9			38,304,432		61.6
Los Angeles & Coastal
Los Angeles		14,437,415		20.4			15,514,789		25.0
San Diego		5,330,911		7.5			5,563,635		9.0
Orange		1,154,755		1.6			1,177,446		1.9
Santa Barbara		499,506		0.7			—		—
		21,422,587		30.2			22,255,870		35.9
Other Southern California
San Bernardino		1,200,000		1.7			1,200,000		1.9
Riverside		830,000		1.2			355,411		0.6
		2,030,000		2.9			1,555,411		2.5
Southern California Total		23,452,587		33.1			23,811,281		38.4
Total principal, secured loans	$	70,922,877		100.0	%	$	62,115,713		100.0	%

(3) Includes Silicon Valley

Secured Loans Scheduled Maturities

Secured loans are scheduled to mature as presented in the following table as of June 30, 2019.

	Loans		Principal		Percent
2019(4)		13	$	11,769,934		17	%
2020		31		23,913,665		34
2021		22		25,156,102		35
2022		6		1,966,163		3
2023		3		829,902		1
Thereafter		2		908,660		1
Total future maturities		77		64,544,426		91
Matured as of June 30, 2019		5		6,378,451		9
Total principal, secured loans		82	$	70,922,877		100	%

(4) Loans scheduled to mature in 2019 from July 1 to December 31.

Secured Loans Past Maturity

Secured loans past maturity are summarized in the following table as of June 30, 2019.

	June 30, 2019
Number of loans		5
Principal		6,378,451
Advances		—
Accrued interest		93,324
Total recorded investment	$	6,471,775
Principal past maturity as percent of total principal		9	%

Past Due Financing Receivables

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

	June 30, 2019				December 31, 2018
	Loans		Principal		Loans		Principal
Past Due
30-89 days		4	$	5,638,466		5	$	3,828,975
90-179 days		3		1,457,839		—		—
180 or more days		2		2,029,329		2		565,685
Total past due		9		9,125,634		7		4,394,660
Current		73		61,797,243		76		57,721,053
Total principal, secured loans		82	$	70,922,877		83	$	62,115,713

Secured Loans in Non-Accrual Status

Secured loans in non-accrual status are summarized in the following table as of June 30, 2019 and December 31, 2018.

	June 30, 2019		December 31, 2018
Number of loans	$	2	$	2
Principal		2,029,329		565,685
Advances		10,100		10,688
Accrued interest		85,695		19,831
Total recorded investment	$	2,125,124	$	596,204
Foregone interest	$	39,907	$	33,410

Impaired Loans [Member]

Impaired Financing Receivables

Impaired loans/allowance for loan losses

	June 30, 2019			December 31, 2018
Principal	$	3,487,167		$	3,841,148
Recorded investment(6)		3,668,610			3,950,157
Impaired loans without allowance		3,668,610			3,950,157
Impaired loans with allowance		—			—
Allowance for loan losses, impaired loans		—			—
Number of loans		5			6
LTV		54.1	%		54.7	%

(6) Recorded investment is the sum of the principal, advances, and interest accrued for financial reporting purposes.

Average Balances and Interest Income [Member]

Impaired Financing Receivables

Impaired loans had average balances and interest income recognized and received in cash as presented in the following tables as of and for the six months ended June 30, 2019 and the year ended December 31, 2018.

	June 30, 2019		December 31, 2018
Average recorded investment	$	3,809,384	$	2,050,897
Interest income recognized		138,612		23,848
Interest income received in cash		37,919		21,670

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Organization and General - Additional Information (Details)		3 Months Ended		6 Months Ended		101 Months Ended	117 Months Ended
	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019 Unit	Jun. 30, 2018	Feb. 28, 2018	Jun. 30, 2019 USD ($)	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	May 09, 2019 USD ($) shares	Jun. 30, 2016 USD ($) shares
Organization and General (Details) [Line Items]
Ownership interest held by the manager		1.00%	1.00%	1.00%	1.00%
Members or partners capital, description				Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager.
Percentage of distribution allocated to members				99.00%
Annualized net distribution rate				6.50%
Net distribution rate before organization and offering expense percentage						6.95%
Organization and offering expense percentage						0.45%
Unit Redemption Program, Years After Purchase				1 year
Maximum Capital Units for Redemption Per Quarter Per Individual | Unit				100,000
Maximum Percentage of Members Total Outstanding Units for Redemption Per Quarter Per Individual				25.00%
Maximum Percentage of Weighted Average Number of Members Outstanding Units During Twelve Months for Redemption				5.00%
Capital Unit Sold in Public Offering, Shares | shares												120,000,000
Capital Unit Sold in Public Offering, Value												$ 120,000,000
Gross proceeds from unit sales							$ 90,476,000
Maximum [Member]
Organization and General (Details) [Line Items]
Percentage of offering proceeds				7.00%
DRIP [Member]
Organization and General (Details) [Line Items]
Gross proceeds from unit sales							$ 9,857,000
Member Units [Member]
Organization and General (Details) [Line Items]
Capital Unit Sold in Public Offering, Shares | shares											15,000,000	20,000,000
Capital Unit Sold in Public Offering, Value											$ 15,000,000	$ 20,000,000
Redemption Between One to Two Years [Member]
Organization and General (Details) [Line Items]
Redemption Value Percentage of Purchase Price or Capital Account Balance		92.00%		92.00%			92.00%
Redemption Between Two to Three Years [Member]
Organization and General (Details) [Line Items]
Redemption Value Percentage of Purchase Price or Capital Account Balance		94.00%		94.00%			94.00%
Redemption Between Three to Four Years [Member]
Organization and General (Details) [Line Items]
Redemption Value Percentage of Purchase Price or Capital Account Balance		96.00%		96.00%			96.00%
Redemption Between Four to Five Years [Member]
Organization and General (Details) [Line Items]
Redemption Value Percentage of Purchase Price or Capital Account Balance		98.00%		98.00%			98.00%
Redemption After Five Years [Member]
Organization and General (Details) [Line Items]
Redemption Value Percentage of Purchase Price or Capital Account Balance		100.00%		100.00%			100.00%
RMC [Member]
Organization and General (Details) [Line Items]
Ownership interest held by the manager	0.10%			0.10%
Percentage of profits and losses allocated to manager				1.00%
Management Fee, Percentage		0.75%		0.75%			0.75%
RMC [Member] | Maximum [Member]
Organization and General (Details) [Line Items]
Percentage of proceeds from sale of units used to pay for organization and offering expenses,excluding units sold in the DRIP				4.50%
Percentage of proceeds from sale of units used for funding formation loan to related party,excluding units sold in the DRIP				7.00%
RMC [Member] | Scenario, Forecast [Member]
Organization and General (Details) [Line Items]
Management Fee, Percentage								1.00%	1.00%	1.00%

XML

Summary of Significant Accounting Policies - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 USD ($) Approach
Summary Of Significant Accounting Policies [Line Items]
Estimating Real Property Value, Number of Approaches | Approach	3
Cash and Cash Equivalents, Maximum Initial Maturity	3 months
Impaired loans maximum days of delinquent	180 days
Interest Reserve Minimum Length	1 year
Interest Reserve Maximum Length	2 years
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Federal Insurance Limit | $	$ 250,000

XML

Manager and Other Related Parties - Additional Information (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) MortgageLoan	Jun. 30, 2018 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Managers and Other Related Parties (Details) [Line Items]
Managers Share of Profits or Losses			1.00%
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan			82		83
Principal	$ 70,922,877		$ 70,922,877		$ 62,115,713	$ 66,416,481
Future redemptions of member's capital			$ 883,523
Reimbursement as a percentage of member's original purchase price			0.45%
Percentage of original purchase price, quarterly installment percentage			0.1125%
Performing Loans [Member]
Managers and Other Related Parties (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan			0	2
Principal		$ 5,890,000		$ 5,890,000
Maximum [Member]
Managers and Other Related Parties (Details) [Line Items]
Annual mortgage servicing fees, percentage	0.25%		0.25%
Percentage of reimbursement of organization and offering expenses			4.50%
Reimbursement threshold			Maximum of forty (40) such quarters
RMC [Member]
Managers and Other Related Parties (Details) [Line Items]
Administrative Fees, Percentage	1.00%		1.00%
Management Fee, Percentage	0.75%		0.75%
Working Capital Reserve, Percentage	2.00%		2.00%
Asset management fees	$ 411,854	448,753	$ 873,967	1,053,618
Loan Brokerage Commission Percent Minimum	1.50%		1.50%
Loan Brokerage Commission Percent Maximum	5.00%		5.00%
Loan Brokerage Commissions, Maximum Percent of Assets	4.00%		4.00%
Future redemptions of member's capital	$ 823,654	299,240	$ 1,916,050	702,640
RMC [Member] | Asset Management Fee [Member]
Managers and Other Related Parties (Details) [Line Items]
Asset management fees	$ 79,458	104,955	$ 198,645	$ 209,910
RMC [Member] | Asset Management Fee [Member] | Scenario Previously Reported [Member]
Managers and Other Related Parties (Details) [Line Items]
Asset management fees		$ 82,066

XML

Manager and Other Related Parties - Summary of Loan Administrative Fees and Operating Expenses, for Fees and Cost Reimbursements Waived and Expenses Absorbed (Details) - RMC [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	$ 594,737	$ 580,072	$ 1,246,169	$ 1,224,891
Waived	(411,854)	(448,753)	(873,967)	(896,220)
Expenses absorbed by RMC				(157,398)
Total RMC support	(411,854)	(448,753)	(873,967)	(1,053,618)
Net charged	182,883	131,319	372,202	171,273
Loan Admin Fees [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	145,950	165,940	309,220	324,303
Waived	(145,950)	(165,940)	(309,220)	(324,303)
Total RMC support	(145,950)	(165,940)	(309,220)	(324,303)
Mortgage Servicing Fees [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	42,914	38,694	81,560	73,878
Net charged	42,914	38,694	81,560	73,878
Asset Management Fee [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	119,187	104,955	238,374	209,910
Waived	(79,458)	(104,955)	(198,645)	(209,910)
Total RMC support	(79,458)	(104,955)	(198,645)	(209,910)
Net charged	39,729		39,729
Costs from RMC [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	186,446	177,858	366,102	362,007
Waived	(186,446)	(177,858)	(366,102)	(362,007)
Total RMC support	(186,446)	(177,858)	(366,102)	(362,007)
Professional Services [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	78,858	84,213	226,175	232,050
Expenses absorbed by RMC				(143,152)
Total RMC support				(143,152)
Net charged	78,858	84,213	226,175	88,898
Other [Member]
Managers and Other Related Parties (Details) [Line Items]
Chargeable/reimbursable	21,382	8,412	24,738	22,743
Expenses absorbed by RMC				(14,246)
Total RMC support				(14,246)
Net charged	$ 21,382	$ 8,412	$ 24,738	$ 8,497

XML

Manager and Other Related Parties - Formation Loan Transactions (Details) - USD ($)	6 Months Ended	117 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Formation Loan Transactions [Abstract]
Balance, beginning of period	$ 4,179,343
Formation loan advances to RMC	186,656	$ 5,626,566
Payments received from RMC		(1,199,716)
Early withdrawal penalties applied	(41,669)	(102,520)
Balance, June 30, 2019	$ 4,324,330	4,324,330
Subscription proceeds since inception		$ 80,256,995
Formation loan advance rate		7.00%

XML

Manager and Other Related Parties - Formation Loan, Future Minimum Payments Net of Early Withdrawal Penalties (Details)	Jun. 30, 2019 USD ($)
Formation Loan Future Minimum Payments [Abstract]
2019	$ 376,265
2020	417,934
2021	417,934
2022	417,934
2023	417,934
Thereafter	2,276,329
Total	$ 4,324,330

XML

Manager and Other Related Parties - Schedule of Unit Redemptions (Details) - USD ($)		3 Months Ended		6 Months Ended		117 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019
Managers and Other Related Parties (Details) [Line Items]
Total, Capital redemptions				$ 883,523
Early withdrawal penalties	[1]			19,415		$ 60,290
RMC [Member]
Managers and Other Related Parties (Details) [Line Items]
Total, Capital redemptions		$ 823,654	$ 299,240	1,916,050	$ 702,640
Early withdrawal penalties		15,584	2,221	61,084	3,968
RMC [Member] | Capital Redemptions-without Penalty [Member]
Managers and Other Related Parties (Details) [Line Items]
Total, Capital redemptions		375,080	259,817	742,476	575,867
RMC [Member] | Capital Redemptions-subject to Penalty [Member]
Managers and Other Related Parties (Details) [Line Items]
Total, Capital redemptions		$ 448,574	$ 39,423	$ 1,173,574	$ 126,773

[1] Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

XML

Manager and Other Related Parties - Summary of Organization and Offering Expenses (Details) - USD ($)		6 Months Ended	117 Months Ended
		Jun. 30, 2019	Jun. 30, 2019
Related Party Transactions [Abstract]
Balance, beginning of period		$ 2,519,458
O&O expenses reimbursed to RMC		185,332	$ 3,671,853
Early withdrawal penalties applied	[1]	(19,415)	(60,290)
O&O expenses allocated	[2]	(162,490)	(848,846)
O&O expenses repaid to Members' Capital by RMC	[3]	(62,499)	(302,331)
Balance, June 30		$ 2,460,386	$ 2,460,386

[1] Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company.

[2] Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters.

[3] RMC is obligated under the Operating Agreement to repay the company for unallocated O&O expenses attributed to units redeemed prior to the 40 quarterly allocations. RMC estimated its future obligations to repay unallocated O&O expenses on scheduled redemptions as of June 30, 2019, to be approximately $20,124, to be offset by early withdrawal penalties. At June 30, 2019, RMI IX owed the manager $11,974 to refund a June 2019 overpayment relating to the transactions described above.

XML

Manager and Other Related Parties - Summary of Organization and Offering Expenses (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Managers And Other Related Parties Details Syndication Costs [Line Items]
O&O expenses reimbursed period to RMC	120 months
Unallocated O&O expenses on units rebates period	120 months
Estimated future rebates on scheduled redemptions	$ 20,124
Manager [Member]
Managers And Other Related Parties Details Syndication Costs [Line Items]
Amount due to manager	$ 11,974

XML

Loans - Additional Information (Details)		1 Months Ended	3 Months Ended		6 Months Ended	12 Months Ended
	Jul. 29, 2019 USD ($) MortgageLoan	Jul. 31, 2019 USD ($) MortgageLoan	Jun. 30, 2019 USD ($) MortgageLoan Loan	Mar. 31, 2019 USD ($) MortgageLoan	Jun. 30, 2019 USD ($) MortgageLoan Loan	Dec. 31, 2018 USD ($) MortgageLoan Loan
Loans (Details) [Line Items]
Loans Receivable, Term					5 years
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					82	83
Loans Receivable, Number of Principal and Interest Loans | Loan			56		56
Loans Receivable, Amortization Term					30 years
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan			5		5
Proceeds from sale of loan				$ 143,000
Foregone interest				10,791
Repayment of outstanding				4,649
Mortgage Loans on Real Estate Renewed, Number of Loans | MortgageLoan			1		1
Loans - principal renewed (in Dollars)			$ 400,000		$ 400,000
Balance relating to loan portfolio held in bank trust account			44,308		44,308
Loans Receivable Largest Loan (in Dollars)			5,500,000		5,500,000	$ 4,000,000
Loans - principal (in Dollars)			$ 70,922,877	$ 66,416,481	$ 70,922,877	$ 62,115,713
2020, Loans | MortgageLoan			31		31
2021, Loans | MortgageLoan			22		22
2023, Loans | MortgageLoan			3		3
2020, Principal			$ 23,913,665		$ 23,913,665
2021, Principal			25,156,102		25,156,102
2023, Principal			$ 829,902		$ 829,902
Number of loans | Loan			82		82	83
Principal			$ 70,922,877		$ 70,922,877	$ 62,115,713
Financing receivable, recorded investment, 90 days past due and still accruing			1,458,000		$ 1,458,000	$ 0
Financing Receivable, Modifications, Number of Contracts | Loan					0	0
Fair Value on Non-recurring [Member]
Loans (Details) [Line Items]
Impaired loans measured at fair value on non-recurring basis			$ 0		$ 0	$ 0
Past Due 60 Days [Member]
Loans (Details) [Line Items]
Number of loans | MortgageLoan			3		3
Principal			$ 5,391,000		$ 5,391,000
Past Due 90 Days [Member]
Loans (Details) [Line Items]
Number of loans | MortgageLoan			1		1
Principal			$ 767,000		$ 767,000
Past Due 180 Days [Member]
Loans (Details) [Line Items]
Loans receivable extended maturity date					Jul. 31, 2019
Number of loans | MortgageLoan			1		1
Principal			$ 221,000		$ 221,000
Past Due 90 Or More Days [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					3
First Trust Deeds [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					40	41
Loans - principal (in Dollars)			$ 35,830,376		$ 35,830,376	$ 29,699,888
Subsequent Event [Member]
Loans (Details) [Line Items]
Loans receivable extended maturity date		Jul. 31, 2019
Number of loans | MortgageLoan		1
Principal		$ 475,562
Subsequent Event [Member] | Past Due 60 Days [Member]
Loans (Details) [Line Items]
Number of loans | MortgageLoan		2
Principal		$ 4,915,279
Subsequent Event [Member] | July 2019 Sale [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	8
Loans receivable aggregate principal amount	$ 4,278,490
Term to request refund of gain for loan payment in full	30 days
2020, Loans | MortgageLoan	3
2021, Loans | MortgageLoan	2
2023, Loans | MortgageLoan	1
2024, Loans | MortgageLoan	2
2020, Principal	$ 912,628
2021, Principal	1,980,000
2023, Principal	477,202
2024, Principal	$ 908,660
Subsequent Event [Member] | July 2019 Sale [Member] | First Trust Deeds [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan		8
Loans - principal (in Dollars)		$ 4,278,490
Impaired Loans [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan			2	1	2
Financing Receivable, Recorded Investment, Nonaccrual Status (in Dollars)				$ 136,640
Financing Receivable, Recorded Investment (in Dollars)			$ 987,610		$ 987,610
Impaired Loans and Non Accrual Status [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					1
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan			1		1
Financing Receivable, Recorded Investment (in Dollars)			$ 220,540		$ 220,540
Loans receivable extended maturity date					Jul. 31, 2019
Interest Income [Member]
Loans (Details) [Line Items]
Proceeds from sale of loan				$ 1,711
Five Years Or Less Term Loans [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					80
Loans Receivable, Percent of Aggregate Principal			99.00%		99.00%
Interest Only [Member]
Loans (Details) [Line Items]
Loans Receivable, Percent of Aggregate Principal			56.00%		56.00%
Largest Loan [Member]
Loans (Details) [Line Items]
Loans Receivable, Yield of Loan Acquired			8.25%		8.25%
Loans Receivable Maturity Date					Jun. 01, 2021
Largest Loan [Member] | Filed Notice Of Sale [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan					2
Construction Loans [Member]
Loans (Details) [Line Items]
Loans outstanding			$ 0		$ 0
Rehabilitation Loans [Member]
Loans (Details) [Line Items]
Loans outstanding			0		0
Construction Or Rehabilitation Loans [Member]
Loans (Details) [Line Items]
Loans - principal (in Dollars)			$ 0		$ 0
Minimum [Member]
Loans (Details) [Line Items]
Loans Receivable, Remaining Term					5 years
Maximum [Member]
Loans (Details) [Line Items]
Balance relating to loan portfolio held in bank trust account, disbursement date to partnership					Jul. 17, 2019

XML

Loans - Secured Loan Principal Transactions (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Receivables [Abstract]
Principal, beginning of period	$ 66,416,481	$ 62,115,713
Loans originated	14,595,000	30,922,000
Loans sold to non-affiliate		(136,640)
Principal payments received	(10,088,604)	(21,978,196)
Principal June 30, 2019	$ 70,922,877	$ 70,922,877

XML

Loans - Secured Loans Characteristics (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) MortgageLoan Country	Dec. 31, 2018 USD ($) MortgageLoan Country	Mar. 31, 2019 USD ($)
Secured Loan Transactions [Line Items]
Number of secured loans | MortgageLoan	82	83
Secured loans - principal (in Dollars)	$ 70,922,877	$ 62,115,713	$ 66,416,481
Average secured loan - principal (in Dollars)	$ 864,913	$ 748,382
Average principal as percent of total principal	1.20%	1.20%
Average principal as percent of members’ capital, net	1.10%	1.00%
Average principal as percent of total assets	1.10%	1.00%
Largest secured loan - principal (in Dollars)	$ 5,500,000	$ 4,000,000
Largest principal as percent of total principal	7.80%	6.40%
Largest principal as percent of members’ capital, net	6.90%	5.20%
Largest principal as percent of total assets	7.30%	5.50%
Smallest secured loan - principal (in Dollars)	$ 58,321	$ 74,390
Smallest principal as percent of total principal	0.10%	0.10%
Smallest principal as percent of members’ capital, net	0.10%	0.10%
Smallest principal as percent of total assets	0.10%	0.10%
Number of California counties where security is located | Country	18	15
Largest percentage of principal in one California county	20.50%	25.00%
Secured loans in foreclosure - principal (in Dollars)	$ 2,308,789	$ 565,685
Prepaid interest	$ 52,500
Minimum [Member]
Secured Loan Transactions [Line Items]
Secured loans – interest rate (fixed)	7.30%	7.00%
Maximum [Member]
Secured Loan Transactions [Line Items]
Secured loans – interest rate (fixed)	10.50%	10.50%
Filed Notice of Default [Member]
Secured Loan Transactions [Line Items]
Number of secured loans | MortgageLoan	2	2
Prepaid Interest [Member]
Secured Loan Transactions [Line Items]
Number of secured loans | MortgageLoan	1

XML

Loans - Secured Loans by Lien Position in the Collateral (Details)		6 Months Ended	12 Months Ended
		Jun. 30, 2019 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items]
Loans | MortgageLoan		82	83
Loans - principal (in Dollars)		$ 70,922,877	$ 62,115,713	$ 66,416,481
Liens due other lenders at loan closing		72,997,929	65,941,118
Total debt		143,920,806	128,056,831
Appraised property value at loan closing		$ 277,234,000	$ 240,307,000
Percent of total debt to appraised values (LTV) at loan closing	[1]	54.50%	54.50%
Loans - percent		100.00%	100.00%
First Trust Deeds [Member]
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items]
Loans | MortgageLoan		40	41
Loans - principal (in Dollars)		$ 35,830,376	$ 29,699,888
Loans - percent		51.00%	48.00%
Second Trust Deeds [Member]
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items]
Loans | MortgageLoan		42	42
Loans - principal (in Dollars)		$ 35,092,501	$ 32,415,825
Loans - percent		49.00%	52.00%

[1] Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders.

XML

Loans - Secured Loans by Property Type (Details)		6 Months Ended	12 Months Ended
		Jun. 30, 2019 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans | MortgageLoan		82	83
Loans - principal (in Dollars) | $		$ 70,922,877	$ 62,115,713	$ 66,416,481
Loans - percent		100.00%	100.00%
Land [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans | MortgageLoan		1
Loans - principal (in Dollars) | $		$ 1,850,000
Loans - percent		3.00%
Single Family [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans | MortgageLoan	[1]	55	60
Loans - principal (in Dollars) | $	[1]	$ 38,792,615	$ 42,967,253
Loans - percent	[1]	55.00%	69.00%
Multifamily [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans | MortgageLoan		9	8
Loans - principal (in Dollars) | $		$ 8,905,869	$ 8,210,970
Loans - percent		12.00%	13.00%
Commercial [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans | MortgageLoan		17	15
Loans - principal (in Dollars) | $		$ 21,374,393	$ 10,937,490
Loans - percent		30.00%	18.00%

[1] Single family property type as of June 30, 2019 consists of 10 loans with principal of $5,994,661 that are owner occupied and 45 loans with principal of $32,797,954 that are non-owner occupied. At December 31, 2018, single family property consisted of 14 loans with principal of $11,398,869 that are owner occupied and 46 loans with principal of $31,568,384 that are non-owner occupied.

XML

Loans - Secured Loans by Property Type (Parenthetical) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of secured loans | MortgageLoan	82	83
Principal | $	$ 70,922,877	$ 62,115,713	$ 66,416,481
Single Family Property-Owner Occupied [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of secured loans | MortgageLoan	10	14
Principal | $	$ 5,994,661	$ 11,398,869
Single Family Property-NonOwner Occupied [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of secured loans | MortgageLoan	45	46
Principal | $	$ 32,797,954	$ 31,568,384

XML

Loans - Secured Loans Distributed Within California (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 70,922,877	$ 66,416,481	$ 62,115,713
Loans - percent		100.00%		100.00%
Santa Clara [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 14,547,090		$ 11,756,695
Loans - percent	[1]	20.50%		18.90%
San Mateo [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 13,561,032		$ 9,619,609
Loans - percent	[1]	19.10%		15.50%
San Francisco [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 5,067,454		$ 5,238,008
Loans - percent	[1]	7.10%		8.40%
Alameda [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 3,181,644		$ 7,306,779
Loans - percent	[1]	4.50%		11.80%
Sonoma [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 1,295,903		$ 1,300,000
Loans - percent	[1]	1.80%		2.10%
Marin [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 1,071,825		$ 575,000
Loans - percent		1.50%		0.90%
Solano [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 600,000
Loans - percent	[1]	0.90%
Contra Costa [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 210,281		$ 725,771
Loans - percent	[1]	0.30%		1.20%
San Francisco Bay Area [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)	[1]	$ 39,535,229		$ 36,521,862
Loans - percent	[1]	55.70%		58.80%
Sutter [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 3,815,000
Loans - percent		5.40%
Sacramento [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 2,054,410		$ 822,500
Loans - percent		2.90%		1.30%
Monterey [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 1,431,281		$ 322,716
Loans - percent		2.00%		0.50%
Placer [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 634,370		$ 637,354
Loans - percent		0.90%		1.00%
Other Northern California [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 7,935,061		$ 1,782,570
Loans - percent		11.20%		2.80%
Northern California [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 47,470,290		$ 38,304,432
Loans - percent		66.90%		61.60%
Los Angeles [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 14,437,415		$ 15,514,789
Loans - percent		20.40%		25.00%
San Diego [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 5,330,911		$ 5,563,635
Loans - percent		7.50%		9.00%
Orange [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 1,154,755		$ 1,177,446
Loans - percent		1.60%		1.90%
Santa Barbara [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 499,506
Loans - percent		0.70%
Los Angeles & Coastal [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 21,422,587		$ 22,255,870
Loans - percent		30.20%		35.90%
San Bernardino [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 1,200,000		$ 1,200,000
Loans - percent		1.70%		1.90%
Riverside [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 830,000		$ 355,411
Loans - percent		1.20%		0.60%
Other Southern California [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 2,030,000		$ 1,555,411
Loans - percent		2.90%		2.50%
Southern California [Member]
Loans (Details) - Secured Loans Distributed Within California [Line Items]
Loans - principal (in Dollars)		$ 23,452,587		$ 23,811,281
Loans - percent		33.10%		38.40%

[1] Includes Silicon Valley

XML

Loans - Secured Loans Scheduled Maturities (Details)		6 Months Ended	12 Months Ended
		Jun. 30, 2019 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Secured Loans Scheduled Maturities [Abstract]
2019, Loans | MortgageLoan	[1]	13
2020, Loans | MortgageLoan		31
2021, Loans | MortgageLoan		22
2022, Loans | MortgageLoan		6
2023, Loans | MortgageLoan		3
Thereafter, Loans | MortgageLoan		2
Total future maturities, Loans | MortgageLoan		77
Matured as of June 30, 2019, Loans | MortgageLoan		5
Number of secured loans | MortgageLoan		82	83
2019, Principal | $	[1]	$ 11,769,934
2020, Principal | $		23,913,665
2021, Principal | $		25,156,102
2022, Principal | $		1,966,163
2023, Principal | $		829,902
Thereafter, Principal | $		908,660
Total future maturities, Principal | $		64,544,426
Matured as of June 30, 2019, Principal | $		6,378,451
Total principal, secured loans | $		$ 70,922,877	$ 62,115,713	$ 66,416,481
2019, Percent	[1]	17.00%
2020, Percent		34.00%
2021, Percent		35.00%
2022, Percent		3.00%
2023, Percent		1.00%
Thereafter, Percent		1.00%
Total future maturities, Percent		91.00%
Matured as of June 30, 2019, Percent		9.00%
Total principal, secured loans, Percent		100.00%	100.00%

[1] Loans scheduled to mature in 2019 from July 1 to December 31.

XML

Loans - Secured Loans Past Maturity (Details)	Jun. 30, 2019 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Number of loans | MortgageLoan	5
Loans - principal (in Dollars)	$ 70,922,877	$ 66,416,481	$ 62,115,713
Accrued interest	$ 641,861		$ 473,966
Matured Loans [Member]
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Number of loans | MortgageLoan	5
Loans - principal (in Dollars)	$ 6,471,775
Accrued interest	$ 93,324
Principal past maturity as percent of total principal	9.00%
Principal [Member] | Matured Loans [Member]
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Loans - principal (in Dollars)	$ 6,378,451

XML

Loans - Past Due Financing Receivables (Details)	Jun. 30, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	82	83
Principal | $	$ 70,922,877	$ 62,115,713
Past Due 30-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	4	5
Principal | $	$ 5,638,466	$ 3,828,975
Past Due 90-179 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	3
Principal | $	$ 1,457,839
Past Due 180 Or More Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	2	2
Principal | $	$ 2,029,329	$ 565,685
Total Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	9	7
Principal | $	$ 9,125,634	$ 4,394,660
Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of loans | Loan	73	76
Principal | $	$ 61,797,243	$ 57,721,053

XML

Loans - Secured Loans in Non-Accrual Status (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) MortgageLoan	Dec. 31, 2018 USD ($) MortgageLoan	Mar. 31, 2019 USD ($)
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Number of secured loans | MortgageLoan	82	83
Loans - principal (in Dollars)	$ 70,922,877	$ 62,115,713	$ 66,416,481
Accrued interest	$ 641,861	$ 473,966
Foregone interest			$ 10,791
Non-Accrual Status [Member]
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Number of secured loans | MortgageLoan	2	2
Loans - principal (in Dollars)	$ 2,125,124	$ 596,204
Accrued interest	85,695	19,831
Foregone interest	39,907	33,410
Principal [Member] | Non-Accrual Status [Member]
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Loans - principal (in Dollars)	2,029,329	565,685
Advances [Member] | Non-Accrual Status [Member]
Loans Details Secured Loans In Nonaccrual Status [Line Items]
Loans - principal (in Dollars)	$ 10,100	$ 10,688

XML

Loans - Schedule of Impaired Loans/Allowance for Loan Losses (Details)		6 Months Ended	12 Months Ended
		Jun. 30, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Secured Loans Designated as Impaired Loans [Abstract]
Principal		$ 3,487,167	$ 3,841,148
Recorded investment	[1]	3,668,610	3,950,157
Impaired loans without allowance		$ 3,668,610	$ 3,950,157
Number of loans | Loan		5	6
LTV		54.10%	54.70%

[1] Recorded investment is the sum of the principal, advances, and interest accrued for financial reporting purposes.

XML

Loans - Impaired Loans - Average Balances and Interest Income (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Impaired Loans - Average Balances and Interest Income [Abstract]
Average recorded investment	$ 3,809,384	$ 2,050,897
Interest income recognized	138,612	23,848
Interest income received in cash	$ 37,919	$ 21,670

XML

Commitment and Contingencies, Other Than Loan Commitments - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Future redemptions of member's capital	$ 883,523

XML

Subsequent Events - Additional Information (Details)	Jul. 29, 2019 USD ($) MortgageLoan	Jun. 30, 2019 MortgageLoan
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans		5
Subsequent Event [Member] | July 2019 Sale [Member]
Loans (Details) [Line Items]
Mortgage Loans on Real Estate, Number of Loans	8
Loans receivable aggregate principal amount | $	$ 4,278,490
Term to request refund of gain for loan payment in full	30 days