-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, So+sdAgEwIsr1qsQ+t4JQC9X7SlF7uDw95aq8u/QH80WUFqt/I/RP4fM+yctfFvv Gs8jx9W9iXf/zF2UIxCJWw== 0000889123-00-000025.txt : 20000515 0000889123-00-000025.hdr.sgml : 20000515 ACCESSION NUMBER: 0000889123-00-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REDWOOD MORTGAGE INVESTORS VII CENTRAL INDEX KEY: 0000854092 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 943094928 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19992 FILM NUMBER: 627757 BUSINESS ADDRESS: STREET 1: 650 EL CAMINO STE G CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 4153670121 MAIL ADDRESS: STREET 1: 650 EL CAMINO REAL STE K CITY: REDWOOD CITY STATE: CA ZIP: 94063 10-Q 1 10-Q FORM 10-Q SECURITIES & EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Period Ended March 31, 2000 - -------------------------------------------------------------------------------- Commission file number 33-30427 - -------------------------------------------------------------------------------- REDWOOD MORTGAGE INVESTORS VII - -------------------------------------------------------------------------------- (exact name of registrant as specified in its charter) California 94-3094928 - -------------------------------------------------------------------------------- (State or other jurisdiction of I.R.S. Employer incorporation of organization) Identification No. 650 El Camino Real, Suite G, Redwood City, CA. 94063 - -------------------------------------------------------------------------------- (address of principal executive office) (650) 365-5341 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES XX NO ------------------- -------------------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO NOT APPLICABLE X - ----------- ------------- ------------- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest date. NOT APPLICABLE REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) BALANCE SHEETS MARCH 31, 2000 (unaudited) AND DECEMBER 31, 1999 (audited) ASSETS December 31, March 31, 2000 1999 (unaudited) (audited) ------------------ ---------------- Cash $204,497 $388,770 ------------------ ---------------- Accounts receivable: Mortgage Investments, secured by deeds of trust 12,281,853 11,011,660 Accrued Interest on Mortgage Investments 451,403 357,177 Advances on Mortgage Investments 29,101 31,669 Accounts receivables, unsecured 163,941 163,085 ------------------ ---------------- 12,926,298 11,563,591 Less allowance for doubtful accounts 828,563 828,563 ------------------ ---------------- 12,097,735 10,735,028 ------------------ ---------------- Real estate in process of acquisition, to be sold 0 525,510 Real estate owned, acquired through foreclosure, held for sale 840,932 307,931 Prepaid expenses 2,816 0 ------------------ ---------------- $13,145,980 $11,957,239 ================== ================ LIABILITIES AND PARTNERS' CAPITAL Liabilities: Notes payable - bank line of credit $2,200,000 $800,000 Accounts payable and accrued expenses 32,234 32,234 Deferred Interest 115,709 115,709 --------------- -------------- $2,347,943 947,943 --------------- -------------- Partners' Capital Limited Partners' capital, subject to redemption (Note 4E): Net of Formation Loan receivable of $140,885 and $165,499 for 2000 and 1999, respectively 10,786,059 10,997,318 General Partners' capital, 11,978 11,978 --------------- -------------- Total Partners' Capital 10,798,037 11,009,296 --------------- -------------- Total Liabilities and Partners' Capital $13,145,980 $11,957,239 =============== ============== See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999 (unaudited) THREE MONTHS ENDED MARCH 31 --------------------------------------------- 2000 1999 ------------------- ---------------- Revenues: Interest on Mortgage Investments $305,263 $416,849 Interest on bank deposits 697 858 Late charges 318 645 Other 1,553 2,001 ------------------- ---------------- 307,831 420,353 ------------------- ---------------- Expenses: Mortgage servicing fees 20,221 31,563 Interest on note payable - bank 27,123 47,227 Clerical costs through Redwood Mortgage 7,146 7,967 Asset management fee 8,198 3,827 Provision for doubtful accounts and losses on real estate acquired through foreclosure 0 81,531 Professional services 8,452 20,933 Printing, supplies and postage 1,262 3,464 Other 1,863 3,296 ------------------- ---------------- 74,265 199,808 ------------------- ---------------- Net Income $233,566 $220,545 =================== ================ Net income: To General Partners(1%) $2,336 $2,205 To Limited Partners (99%) 231,230 218,340 ------------------- ---------------- $233,566 $220,545 =================== ================ Net income per $1,000 invested by Limited Partners for entire period: -where income is reinvested and compounded $20.74 $17.93 =================== ================ -where partner receives income in monthly distributions $20.60 $17.83 =================== ================ See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL FOR THE THREE YEARS ENDED DECEMBER 31, 1999 (audited) AND THE THREE MONTHS ENDED MARCH 31, 2000 (unaudited) PARTNERS' CAPITAL ----------------------------------------------------- LIMITED PARTNERS' CAPITAL ----------------------------------------------------- Capital Account- Formation Limited Loan Partners Receivable Total --------------- --------------- -------------- Balances at December 31, 1996 $14,002,529 $(429,163) $13,573,366 Formation Loan collections 0 60,223 60,223 Net income 818,610 0 818,610 Early withdrawal penalties (40,258) 27,665 (12,593) Partners' withdrawals (1,572,037) 0 (1,572,037) --------------- --------------- -------------- Balances at December 31, 1997 $13,208,844 $(341,275) $12,867,569 Formation Loan collections 0 66,908 66,908 Net Income 838,105 0 838,105 Early withdrawal penalties (30,529) 20,980 (9,549) Partners' withdrawals (1,826,304) 0 (1,826,304) --------------- --------------- -------------- Balances at December 31, 1998 $12,190,116 $(253,387) $11,936,729 Formation Loan collections 0 75,138 75,138 Net Income 900,485 0 900,485 Early withdrawal penalties (18,553) 12,750 (5,803) Partners' withdrawals (1,909,231) 0 (1,909,231) --------------- --------------- -------------- Balances at December 31, 1999 $11,162,817 $(165,499) $10,997,318 Formation Loan collections 0 21,972 21,972 Net Income 231,230 0 231,230 Early withdrawal penalties (3,844) 2,642 (1,202) Partners' withdrawals (463,259) 0 (463,259) --------------- --------------- -------------- Balances at March 31, 2000 $10,926,944 $(140,885) $10,786,059 =============== =============== ============== See accompanying notes to financial statements
REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL FOR THE THREE YEARS ENDED DECEMBER 31, 1999 (audited) AND THE THREE MONTHS ENDED MARCH 31, 2000 (unaudited) PARTNERS' CAPITAL ------------------------------------------------- GENERAL PARTNER'S CAPITAL ------------------------------------------------- Capital Account General Partners Total Partners' Capital ------------------ ------------------- Balances at December 31, 1996 $11,978 $13,585,344 Formation Loan collections 0 60,223 Net income 8,269 826,879 Early withdrawal penalties 0 (12,593) Partners' withdrawals (8,269) (1,580,306) ------------------ ------------------- Balances at December 31, 1997 $11,978 $12,879,547 Formation Loan collections 0 66,908 Net income 8,466 846,571 Early withdrawal penalties 0 (9,549) Partners' withdrawals (8,466) (1,834,770) ------------------ ------------------- Balances at December 31, 1998 $11,978 $11,948,707 Formation Loan collections 0 75,138 Net income 9,096 909,581 Early withdrawal penalties 0 (5,803) Partners' withdrawals (9,096) (1,918,327) ------------------ ------------------- Balances at December 31, 1999 $11,978 $11,009,296 Formation Loan collections 0 21,972 Net income 2,336 233,566 Early withdrawal penalties 0 (1,202) Partners' withdrawals (2,336) (465,595) ------------------ ------------------- Balances at March 31, 2000 $11,978 $10,798,037 ================== =================== See accompanying notes to financial statements REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (unaudited) THREE MONTHS ENDED MARCH 31, --------------------------------------------------- 2000 1999 -------------- --------------- Cash flows from operating activities: Net income $233,566 $220,545 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 0 81,531 Provision for losses on real estate held for sale 0 0 Early withdrawal penalty credited to income (1,202) (1,401) (Increase) decrease in accrued interest & advances (91,658) 104,805 Increase (decrease) in accounts payable and accrued expenses 0 7,174 Increase (decrease) in deferred interest on Mortgage Investments 0 (131,743) (Increase) decrease in prepaid expenses (2,816) 0 -------------- --------------- Net cash provided by operating activities 137,890 280,911 -------------- --------------- Cash flows from investing activities: Principal collected on mortgage investments 130,227 942,300 Mortgage Investments made (1,400,420) (2,478,115) Additions to Real Estate held for sale (8,347) (2,456) Dispositions of Real Estate held for sale 0 35,993 Investment in Partnership 0 0 Proceeds from unsecured Accounts Receivable 0 0 -------------- --------------- Net cash provided by (used in) investing activities (1,278,540) (1,502,278) -------------- --------------- Cash flows from financing activities: Net increase (decrease) in note payable-bank 1,400,000 1,587,337 Formation loan collections 21,972 14,648 Partners withdrawals (465,595) (461,465) -------------- --------------- Net cash provided by (used in) financing activities 956,377 1,140,520 -------------- --------------- Net increase (decrease) in cash (184,273) (80,847) Cash - beginning of period 388,770 461,544 -------------- --------------- Cash - end of period $204,497 $380,697 ============== =============== See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 1 - ORGANIZATION AND GENERAL Redwood Mortgage Investors VII, (the "Partnership") is a California Limited Partnership, of which the General Partners are D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a California corporation owned and operated by the individual General Partners. The Partnership was organized to engage in business as a mortgage lender for the primary purpose of making Mortgage Investments secured by Deeds of Trust on California real estate. Mortgage Investments are being arranged and serviced by Redwood Mortgage Corp., an affiliate of the General Partners. At September 30, 1992, the offering had been closed with contributed capital totalling $11,998,359 for limited partners. A minimum of 2,500 units ($250,000) and a maximum of 120,000 units ($12,000,000) were offered through qualified broker-dealers. As Mortgage Investments were identified, partners were transferred from applicant status to admitted partners participating in Mortgage Investment operations. Each month's income is allocated to partners based upon their proportionate share of partners capital. Some partners have elected to withdraw income on a monthly, quarterly or annual basis. A. Sales Commissions - Formation Loan Sales commissions ranging from 0% (Units sold by General Partners) to 10% of the gross proceeds were paid by Redwood Mortgage Corp., an affiliate of the General Partners that arranges and services the Mortgage Investments. To finance the sales commissions, the Partnership was authorized to loan to Redwood Mortgage Corp. an amount not to exceed 8.3% of the gross proceeds provided that the Formation Loan for the minimum offering period could be 10% of the gross proceeds for that period. The Formation Loan is unsecured and is being repaid, without interest, in ten installments of principal, over a ten year period commencing January 1, 1992. At December 31, 1992, Redwood Mortgage Corp. had borrowed $914,369 from the Partnership to cover sales commissions relating to $11,998,359 limited partner contributions (7.62%). Through March 31, 2000, $773,484 including $139,515 in early withdrawal penalties, had been repaid leaving a balance of $140,885. The Formation Loan, which is due from an affiliate of the General Partners', has been deducted from Limited Partners' capital in the balance sheet. As amounts are collected from Redwood Mortgage Corp., the deduction from capital will be reduced. B. Other Organizational and Offering Expenses Organizational and offering expenses, other than sales commissions, (including printing costs, attorney and accountant fees, and other costs), were paid by the Partnership. Such costs were limited to 10% of the gross proceeds of the offering or $500,000 whichever was less. The General Partners were to pay any amount of such expenses in excess of 10% of the gross proceeds or $500,000. Organization costs of $10,102 and syndication costs of $415,692 were incurred by the Partnership. The sum of organization and syndication costs, $425,794, approximated 3.55% of the gross proceeds contributed by the Partners. Both the Organization and Syndication Costs have been fully amortized and allocated to the Partners. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Accrual Basis Revenues and expenses are accounted for on the accrual basis of accounting wherein income is recognized as earned and expenses are recognized as incurred. Once a Mortgage Investment is categorized as impaired, interest is no longer accrued thereon. B. Management Estimates In preparing the financial statements, management is required to make estimates based on the information available that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the related periods. Such estimates relate principally to the determination of the allowance for doubtful accounts, including the valuation of impaired Mortgage Investments, and the valuation of real estate acquired through foreclosure. Actual results could differ significantly from these estimates. C. Mortgage Investments, Secured by Deeds of Trust The Partnership has both the intent and ability to hold the Mortgage Investments to maturity, i.e., held for long-term investment. They are therefore valued at cost for financial statement purposes with interest thereon being accrued by the simple interest method. Financial Accounting Standards Board Statements (SFAS) 114 and 118 (effective January 1, 1995) provide that if the probable ultimate recovery of the carrying amount of a Mortgage Investment, with due consideration for the fair value of collateral, is less than the recorded investment, and related amount due and the impairment is considered to be other than temporary, the carrying amount of the investment (cost) shall be reduced to the present value of future cash flows. The adoption of these statements did not have a material effect on the financial statements of the Partnership because that was substantially the valuation method previously used on impaired Mortgage Investments.. At March 31, 2000, December 31, 1999 and December 31, 1998, reductions in the cost of Mortgage Investments categorized as impaired by the Partnership totalled $152,231, $152,231 and $38,634, respectively. The reduction in stated value was accomplished by increasing the allowance for doubtful accounts. As presented in Note 10 to the financial statements as of March 31, 2000, the average mortgage investment to appraised value of security at the time the loans were consummated was 62.35%. When a Mortgage Investment is valued for impairment purposes, an updating is made in the valuation of collateral security. However, such a low loan to value ratio tends to minimize reductions for impairment. D. Cash and Cash Equivalents For purposes of the statements of cash flows, cash and cash equivalents include interest bearing and non-interest bearing bank deposits. E. Real Estate Owned, Held for Sale Real estate owned, held for sale, includes real estate acquired through foreclosure, and is stated at the lower of the recorded investment in the property, net of any senior indebtedness, or at the property's estimated fair value, less estimated costs to sell. At March 31, 2000, one additional property became Real Estate owned. It was valued at fair value of $525,510 based on a current appraisal. The $525,510 is net of a reduction in value of $230,040. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 The following schedule reflects the costs of real estate acquired through foreclosure and the recorded reductions to estimated fair values, less estimated costs to sell as of March 31, 2000 and 1999, including the aforementioned real estate owned: March 31, December 31 --------------- ---------------- 2000 1999 --------------- ---------------- Costs of properties $1,189,612 $1,182,701 Reduction in value (348,680) (349,260) --------------- ----------------- Fair value reflected in financial statements $840,932 $833,441 =============== ================= Effective January 1, 1996, the Partnership adopted the provisions of statement No 121 (SFAS 121) of the Financial Accounting Standards Board, "Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be disposed of". The adoption of SFAS 121 did not have a material impact on the Partnership's financial position because the methods indicated were essentially those previously used by the Partnership. F. Income Taxes No provision for Federal and State income taxes is made in the financial statements since income taxes are the obligation of the partners if and when income taxes apply. G. Organization and Syndication Costs The Partnership bears its own organization and syndication costs (other than certain sales commissions and fees described above) including legal and accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage fee and filing fees. Organizational costs of $10,102 were capitalized and were amortized over a five year period. Syndication costs of $415,692 were charged against partners' capital and were allocated to individual partners consistent with the Partnership Agreement. H. Allowance for Doubtful Accounts Mortgage Investments and the related accrued interest, fees and advances are analyzed on a continuous basis for recoverability. Delinquencies are identified and followed as part of the Mortgage Investment system. A provision is made for doubtful accounts to an amount considered by management to be adequate, with due consideration to collateral value, to provide for unrecoverable accounts receivable, including impaired Mortgage Investments, other Mortgage Investments, accrued interest and advances on Mortgage Investments, and other accounts receivable (unsecured). The composition of the allowance for doubtful accounts as of March 31, 2000 and December 31, 1999 was as follows: REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 March 31 December 31 2000 1999 --------------- ---------------- Impaired mortgage investments $152,231 $152,231 Unspecified mortgage investments 598,803 598,803 Accounts receivable, unsecured 77,529 77,529 --------------- ---------------- $828,563 $828,563 =============== ================ I. Net Income Per $1,000 Invested Amounts reflected in the statements of income as net income per $1,000 invested by Limited Partners for the entire period are actual amounts allocated to Limited Partners who have their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive monthly distributions of their net income. Individual income is allocated each month based on the Limited Partners' pro rata share of Partners' Capital. Because the net income percentage varies from month to month, amounts per $1,000 will vary for those individuals who made or withdrew investments during the period, or select other options. However, the net income per $1,000 average invested has approximated those reflected for those whose investments and options have remained constant. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES The following are commissions and/or fees which will be paid to the General Partners and/or related parties. A. Mortgage Brokerage Commissions Redwood Mortgage Corp. receives mortgage brokerage commissions for services in connection with the review, selection, evaluation, negotiation and extension of Mortgage Investments in an amount up to 12% of the principal amount of the Mortgage Investments through the period ending 6 months after the termination date of the offering. Thereafter, commissions are limited to an amount not to exceed 4% of the total Partnership assets per year. Such commissions are paid by the borrowers, and are not an expense to the Partnership. Loan brokerage fees as of March 31, 2000 and for the years ended 1999, and 1998, totalled $43,838, $207,739 and $166,752, respectively. B. Mortgage Servicing Fees Redwood Mortgage Corp. also receives monthly mortgage servicing fees of up to 1/8 of 1% (1.5% annual) of the unpaid principal, or such lesser amount as is reasonable and customary in the geographic area where the property securing the Mortgage Investment is located. Mortgage servicing fees of $20,221, $127,440 and $128,493 were incurred for three months through March 31, 2000 and for years ended 1999 and 1998, respectively. C. Asset Management Fee The General Partners receive a monthly fee for managing the Partnership's Mortgage Investment portfolio and operations of up to 1/32 of 1% of the "net asset value" (3/8 of 1% annual). Asset management fees were $8,198, $44,524 and $16,141 for the three months through March 31, 2000 and for the years ended 1999 and 1998, respectively. D. Other Fees The Partnership Agreement provides for other fees such as reconveyance, Mortgage assumption and Mortgage extension fees. Such fees are incurred by the borrowers and are paid to parties related to the General Partners. E. Income and Losses All income is credited or charged to partners in relation to their respective partnership interests. The partnership interest of the General Partners (combined) is a total of 1%. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 F. Operating Expenses The General Partners or their affiliate (Redwood Mortgage Corp.) are reimbursed by the Partnership for all operating expenses actually incurred by them on behalf of the Partnership, including without limitation, out-of-pocket general and administration expenses of the Partnership, accounting and audit fees, legal fees and expenses, postage and preparation of reports to Limited Partners. Such reimbursements are reflected as expenses in the Statements of Income. G. General Partners Contributions The General Partners collectively or severally were to contribute 1/10 of 1% in cash contributions as proceeds from the offering were admitted to Limited Partner capital. As of December 31, 1992 a General Partner, GYMNO Corporation, had contributed $11,998, 1/10 of 1% of Limited Partner contributions in accordance with Section 4.02(a) of the Partnership Agreement. NOTE 4 - OTHER PARTNERSHIP PROVISIONS A. Applicant Status Subscription funds received from purchasers of units were not admitted to the Partnership until appropriate lending opportunities were available. During the period prior to the time of admission, which ranged between 1-120 days, purchasers' subscriptions remained irrevocable and earned interest at money market rates, which were lower than the return on the Partnership's Mortgage Investment portfolio. Interest earned prior to admission was credited to partners in applicant status. As Mortgage Investments were made, applicant subscriptions were transferred to Limited Partner status to begin sharing in income from Mortgage Investments secured by deeds of trust. The interest earned prior to admission was either paid to the investors or transferred to Partners' Capital along with the original investment. B. Term of the Partnership The term of the Partnership is approximately 40 years, unless sooner terminated as provided. The provisions provide for no capital withdrawal for the first five years, subject to the penalty provision set forth in (E) below. Thereafter, investors have the right to withdraw over a five-year period, or longer. C. Election to Receive Monthly, Quarterly or Annual Distributions Upon subscriptions, investors elected either to receive monthly, quarterly or annual distributions of earnings allocations, or to allow earnings to compound for at least a period of 5 years. D. Profits and Losses Profits and losses are allocated among the Limited Partners according to their respective capital accounts after 1% is allocated to the General Partners. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 E. Liquidity, Capital Withdrawals and Early Withdrawals There are substantial restrictions on transferability of Units and accordingly an investment in the Partnership is not liquid. Limited Partners had no right to withdraw from the Partnership or to obtain the return of their capital account for at least one year from the date of purchase of Units which in all instances had occurred as of March 31, 2000. In order to provide a certain degree of liquidity to the Limited Partners after the one-year period, Limited Partners may withdraw all or part of their Capital Accounts from the Partnership in four quarterly installments beginning on the last day of the calendar quarter following the quarter in which the notice of withdrawal is given, subject to a 10% early withdrawal penalty. The 10% penalty is applicable to the amount withdrawn early and will be deducted from the Capital Account. Withdrawal after the one-year holding period and before the five-year holding period was permitted only upon the terms set forth above. After five years from the date of purchase of the Units. Limited Partners have the right to withdraw from the Partnership, on an installment basis, generally this is done over a five year period in twenty (20) quarterly installments. Once a Limited Partner has been in the Partnership for the minimum five year period, no penalty will be imposed if withdrawal is made in twenty (20) quarterly installments or longer. Notwithstanding the five-year (or longer) withdrawal period, the General Partners may liquidate all or part of a Limited Partner's capital account in four quarterly installments beginning on the last day of the calendar quarter following the quarter in which the notice of withdrawal is given. This withdrawal is subject to a 10% early withdrawal penalty applicable to any sums withdrawn prior to the time when such sums could have been withdrawn without penalty. The Partnership will not establish a reserve from which to fund withdrawals and, accordingly, the Partnership's capacity to return a Limited Partner's capital account is restricted to the availability of Partnership cash flow. Furthermore, no more than 20% of the total Limited Partners' capital accounts outstanding at the beginning of any year, shall be liquidated during any calendar year. F. Guaranteed Interest Rate For Offering Period During the period commencing with the day a Limited Partner was admitted to the Partnership and ending 3 months after the offering termination date, the General Partners guaranteed an interest rate equal to the greater of actual earnings from mortgage operations or 2% above The Weighted Average Cost of Funds Index for the Eleventh District Savings Institutions (Savings & Loan & Thrift Institutions) as computed by the Federal Home Loan Bank of San Francisco monthly, up to a maximum interest rate of 12%. The guarantee amounted to $12,855 and $5,195 in 1990 and 1991, respectively. In 1992 and 1993, actual realization exceeded the guaranteed amount each month. Beginning with fiscal years after 1993, the guarantee expired. NOTE 5 - LEGAL PROCEEDINGS Legal actions against borrowers and other involved parties have been initiated by the Partnership to help assure payments against unsecured accounts receivable totalling $163,941 at March 31, 2000. The Partnership is a defendant, along with numerous defendants including a developer, contractor and other lenders, in a lawsuit involving the Partnership's attempt to recover it's investment in Real Estate acquired through foreclosure. Management anticipates that the ultimate results of these cases will not have a material adverse effect on the net assets of the Partnership, with due consideration having been given in arriving at the allowance for doubtful accounts. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership has a bank line of credit secured by its Mortgage Investment portfolio of up to $3,500,000 at .25% over prime. The balances outstanding as of March 31, 2000 and December 31, 1999 were $2,200,000 and $800,000, respectively, and the interest rate was 9.25% (9.00% prime + .25%). This line of credit expires May 1, 2003. NOTE 7 - INCOME TAXES The following reflects a reconciliation from net assets (Partners' Capital) reflected in the financial statements to the tax basis of those net assets: March 31, December 31, 2000 1999 --------------- ---------------- Net assets - Partners' Capital per financial statements $10,798,037 $11,009,296 Formation loan receivable 140,885 165,499 Allowance for doubtful accounts 828,563 828,563 -------------- --------------- Net assets tax basis $11,767,485 $12,003,358 ============== =============== In 1999, approximately 69% of taxable income was allocated to tax exempt organizations i.e., retirement plans. Such plans do not have to file income tax returns unless their "unrelated business income" exceeds $1,000. Applicable amounts become taxable when distribution is made to participants. NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of financial instruments: (a) Cash and Cash Equivalents - The carrying amount equals fair value. All amounts, including interest bearing, are subject to immediate withdrawal. (b) The Carrying Value of Mortgage Investments - (see note 2 (c) is $12,281,853. The March 31, 2000 fair value of these investments of $12,660,958 is estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. The applicable amount of the allowance for doubtful accounts along with accrued interest and advances related thereto should also be considered in evaluating the fair value versus the carrying value. REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS The Mortgage Investments are secured by recorded deeds of trust. At March 31, 2000, there were 46 Mortgage Investments outstanding with the following characteristics: Number of Mortgage Investments outstanding 46 Total Mortgage Investments outstanding $12,281,853 Average Mortgage Investment outstanding $266,997 Average Mortgage Investment as percent of total 2.17% Average Mortgage Investment as percent of Partners' Capital 2.47% Largest Mortgage Investment outstanding $1,500,000 Largest Mortgage Investment as percent of total 12.21% Largest Mortgage Investment as percent of Partners' Capital 13.89% Number of counties where security is located (all California) 12 Largest percentage of Mortgage Investments in one county 24.40% Average Mortgage Investment to appraised value of security at time loan was consummated 62.35% Number of Mortgage Investments in foreclosure 0 The following categories of Mortgage Investments are pertinent at March 31, 2000 and December 31, 1999: March 31, December 31, ------------------ ---------------- 2000 1999 ------------------ ---------------- First Trust Deeds $6,679,301 $6,077,532 Second Trust Deeds 4,953,334 4,272,714 Third Trust Deeds 649,218 661,414 ------------------ ---------------- Total Mortgage Investments 12,281,853 11,011,660 Prior liens due other lenders 13,961,898 10,389,233 ------------------ ---------------- Total debt $26,243,751 $21,400,893 ================== ================ Appraised property value at time of loan $42,087,820 $34,223,193 ================== ================ Total investments as a percent of appraisals 62.35% 62.53% ================== ================ Investments by Type of Property Owner occupied homes $391,804 $340,864 Non-Owner occupied homes 2,765,747 2,347,394 Apartments 182,674 182,675 Commercial 8,941,628 8,140,727 ------------------ ---------------- $12,281,853 $11,011,660 ================== ================ REDWOOD MORTGAGE INVESTORS VII (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 Scheduled maturity dates of mortgage investments as of March 31, 2000 are as follows: Year Ending December 31, -------------------- 2000 $4,347,437 2001 6,044,352 2002 893,704 2003 63,916 2004 145,882 Thereafter 786,562 ------------------ $12,281,853 ================== The scheduled maturities for 2000 include approximately $2,383,468 in ten Mortgage Investments which are past maturity at March 31, 2000. Interest payments on most of these loans are current. $814,947 of these Mortgage Investments were categorized as delinquent over 90 days. Six mortgage investments with principal outstanding of $964,224 had interest payments overdue in excess of 90 days. Six Mortgage Investments with principal outstanding of $1,099,474 were considered impaired at March 31, 2000. That is interest accruals are no longer recorded thereon. The cash balance at March 31, 2000 of $204,497 was in three banks with an interest bearing balances totalling $103,669. The balances exceeded FDIC insurance limits (up to $100,000 per bank) by $4,345. The Partnership's main bank is the same financial institution that has provided the Partnership with the $3,500,000 limit line of credit. At March 31, 2000, draw down against this facility was $2,200,000. As and when deposits in the Partnership's bank accounts increase significantly beyond the insured limit, the funds are either placed in new Mortgage Investments or used to pay-down on the line of credit balance. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On September 30, 1992, the Partnership had sold 119,983.59 units and its contributed capital totaled $11,998,359 of the approved $12,000,000 issue, in units of $100 each. As of that date, the offering was formally closed. At March 31, 2000, Partners' Capital totaled $10,798,037. At March 31, 2000, the Partnership Mortgage Investments outstanding totalled $12,281,853. This represents a decline of $927,333 from the December 31, 1998 Mortgage Investments balance. This reduction in Mortgage Investments outstanding as of March 31, 2000 was chiefly due to cash proceeds from Mortgage Investment repayments being used to fund withdrawals to the Limited Partners of $2,394,887, during 1999, and three months through March 31, 2000. This was offset by an increase in Note Payable-Bank of $287,337, reinvestment of earnings of $523,881, reduction in accrued interest, other receivables and investment of cash. To a certain extent, the reduction was also due to significant loan pay-offs towards the latter part of 1999. Mortgage investments decreased from $13,449,741 from 1997 to $13,209,186 in 1998, a decrease of $240,555 chiefly due to the ability of the General Partners to reduce amounts of real estate owned by $289,743, convert it's partnership interest to cash of $346,017, reinvestment of earnings of $390,213, offset by payments to withdrawing Limited Partners $1,856,833, a reduction of outstanding Note Payable - Bank of $1,112,663 and investment of cash. The Partnership began funding Mortgage Investments on December 27, 1989, and as of March 31, 2000, had credited the Partners accounts with income at an average annualized (compounded) yield of 7.78%. Since the Fall of 1999, mortgage interest rates have been rising due primarily to economic forces and by the Federal Reserve raising its core interest rates. New Mortgage Investments will be originated at higher interest rates which could increase the average return across the entire Mortgage Investment portfolio held by the Partnership. In the future, interest rates likely will change from their current levels. The General Partners cannot at this time predict at what levels interest rates will be in the future. Although the rates charged by the Partnership are influenced by the level of interest rates in the market, the General Partners do not anticipate that rates charged by the Partnership to its borrowers will change significantly from the beginning of 2000 over the next 12 months. As of March 31, 2000 the Partnership Real Estate Owned account and the investment in Partnership account had a combined balance of $840,932. These accounts had combined balances of $397,396 and $307,931 for the years ended December 31, 1998 and 1999, respectively. The General Partners anticipate that the annualized yield for the coming new year, 2000, will be higher than the previous year. The Partnership has a line of credit with a commercial bank secured by its Mortgage Investments to a limit of $3,500,000, at a variable interest rate set at one quarter percent above the prime rate. As of March 31, 2000, December 31, 1999 and December 31, 1998, the balances were $2,200,000, $800,000 and $1,912,663, respectively. This line of credit expires on May 01, 2003. This added source of funds helped in maximizing the Partnership yield by allowing the Partnership to minimize the amount of funds in lower yield investment accounts when appropriate Mortgage Investments are not currently available. Since most of the Mortgage Investments made by the Partnership bear interest at a rate in excess of the rate payable to the bank which extended the line of credit, once the required principal and interest payments on the line of credit are paid to the bank, the Mortgage Investments funded using the line of credit generate revenue for the Partnership. As of March 31, 2000, the Partnership is current with its interest payments on the line of credit. For the years ended December 31, 1998, 1999 and three months period ended March 31, 2000, interest paid was $170,867, $182,350 and $27,123, respectively, reflecting an overall average utilization of the credit line of approximately $2,200,000. The Partnership's income and expenses, accruals and delinquencies are within the normal range of the General Partners' expectations, based upon their experience in managing similar Partnerships over the last twenty-three years. Mortgage Servicing Fees increased in 1998 to $128,493, in 1999 to $127,440 and to $20,221 during three months through March 31, 2000, chiefly due to an increase during the 1998 year of the monthly loan service fee to 1/12% (1% per year). Asset Management Fees increased to $16,141 in 1998, and to $44,524 in 1999. For the three months through March 31, 2000, Management Fees paid was $8,198. In 1997, the General Partners waived or partially waived this fee to the Partnership and increased the Asset Management Fee to its allowed amount of 3/8 of 1% in 1999 and 2000. All other expenses fluctuated in a very close range except for Interest on Note Payable - bank and Provision for Doubtful Accounts and losses on Real Estate acquired through foreclosure each discussed elsewhere in this Management Discussion and Analysis of Financial Condition and Results of Operations. Borrower foreclosures, as set forth under Results of Operations, are a normal aspect of Partnership operations and the General Partners anticipate that they will not have a material effect on liquidity. As of March 31, 2000, there were no properties in foreclosure. Cash is constantly being generated from interest earnings, late charges, pre-payment penalties, amortization of Mortgage Investments and pay-off on notes. Currently, cash flow exceeds Partnership expenses, earnings and capital payout requirements. Excess cash flow will be invested in new Mortgage Investment opportunities when available, used to reduce the Partnership credit line or other Partnership business. The General Partners regularly review the Mortgage Investment portfolio, examining the status of delinquencies, the underlying collateral securing these properties, the REO expenses and sales activities, borrowers payment records, etc. Data on the local real estate market and on the national and local economy are studied. Based upon this information and other data, loss reserves are increased or decreased. Because of the number of variables involved, the magnitude of the possible swings and the General Partners inability to control many of these factors, actual results may and do sometimes differ significantly from estimates made by the General Partners. Management provided $434,495, $423,054, $329,057 and $0 for the first quarter of 2000, as provision for doubtful accounts for the years ended December 31, 1997, 1998 and 1999, respectively. The provision for doubtful accounts was decreased $11,441 to $423,054 in 1998 and by $93,997 to $329,057 in 1999. These decreases reflect reduced expected REO anticipated losses and improved collections of secured and unsecured receivables. The February 18, 2000 issue of the "Alert" publication, published by the California Chamber of Commerce, said the following about California's thriving economy: "Job gains grew in the fourth quarter of 1999, as the California economy accelerated. For the year as a whole, employment grew by 2.9 percent, considerably stronger than in the nation. This gain likely will be revised upward to 3.3 percent, or so, in the benchmark revisions to be released in late February. State unemployment, at 4.9 percent in the last four months, is lower than in more than 30 years. Tax revenues are flooding into Sacramento, in part because of the strong economy, but also because of exercised stock options, strong bonuses and huge realized stock market gains. The state economy's strength has been widespread across major industries, but concern about residential real estate is growing. Housing permits were issued at an annual rate of 139,000 units through November 1999, well below almost everyone's expectations and the 220,000 units averaged annually in the 1980s. Clearly, not enough housing is being built in the state. High land prices, restrictive local land use policies, the re-emergence of the slow growth/no growth movement, and federal environmental regulations are constraining home building. As a result, affordability is declining at an alarming rate. The affordability of existing homes is low in San Diego and Orange counties and extremely low almost everywhere in the San Francisco Bay Area. In what seems like a paradox, an oversupply of expensive new homes is developing. This also happened under similar circumstances in the late 1980s. In areas of particularly high land prices and long permitting and other building delays, building entry and mid-level housing becomes more difficult to "pencil out". As developers turn increasingly to expensive housing, the supply of expensive housing can quickly outstrip demand. Also, the affordability of new homes can dip considerably below that of existing homes. In Orange County, for example, a relatively low 32 percent of households could afford to buy the median-priced existing home sold in November; only 19 percent could afford to buy the median-priced new home." To the Partnership, the above evaluation of the California economy means an increase in property values, job growth, personal income growth, etc., which all translates into more loan activity, which of course, is healthy for the Partnership's lending activity. The Partnership's interest in land located in East Palo Alto, Ca, was acquired through foreclosure. The investment was previously classified as Investment in Partnership in the Financial Statements and has been reclassified into Real Estate Owned. The Partnership's basis of $18,523, $9,039, and $ 0, for the three months period ended March 31, 2000 and for the years ended December 31, 1999 and 1998, respectively, has been invested with that of two other Partnerships. The Partnership is continuing to explore remediation options available to mitigate the pesticide contamination, which affects the property. This pesticide contamination appears to be the result of agricultural operations by prior owners, and is unrelated to the Arsenic Contamination for which a major chemical company remains responsible. The General Partners do not believe at this time that remediation of the pesticide contaminants will have a material adverse effect on the financial condition of the Partnership. The General Partners are attempting to subdivide this land into two parcels and exploring the ability to obtain new zoning for this property. At the time of subscription to the Partnership, Limited Partners made an irrevocable decision to either take distributions of earnings monthly, quarterly or annually or to compound earnings in their capital account. For the years ended December 31, 1998, 1999 and three months through March 31, 2000, the Partnership made distributions of earnings to Limited Partners after allocation of syndication costs of $456,358, $490,841 and $116,993, respectively. Distribution of Earnings to Limited Partners after allocation of syndication costs for the years ended December 31, 1998, 1999 and three months through March 31, 2000 to Limited Partners' capital accounts and not withdrawn was $381,747, $409,644 and $114,237, respectively. As of December 31 1998, December 31, 1999 and March 31, 2000, Limited Partners electing to withdraw earnings represented 53%, 54% and 52% of the Limited Partners capital. The Partnership also allows the Limited Partners to withdraw their capital account subject to certain limitations (see liquidation provisions of Partnership Agreement). For the years ended December 31, 1998, 1999 and for the three months through March 31, 2000, $381,458, $231,025 and $48,056, were liquidated subject to the 10% penalty for early withdrawal. These withdrawals are within the normally anticipated range that the General Partners would expect in their experience in this and other partnerships. The General Partners expect that a small percentage of Limited Partners will elect to liquidate their capital accounts over one year with a 10% early withdrawal penalty. In originally conceiving the Partnership, the General Partners wanted to provide Limited Partners needing their capital returned a degree of liquidity. Generally, Limited Partners electing to withdraw over one year need to liquidate their investment to raise cash. The trend the Partnership is experiencing in withdrawals by Limited Partners electing a one year liquidation program represents a small percentage of Limited Partner capital as of December 31, 1998, December 31, 1999 and March 31, 2000, respectively and is expected by the General Partners to commonly occur at these levels. Additionally, for the years ended December 31, 1998, December 31, 1999 and three months through March 31, 2000, $1,019,017, $1,205,917 and $302,054, respectively, were liquidated by Limited Partners who have elected a liquidation program over a period of five years or longer. This ability to withdraw after five years by Limited Partners has the effect of providing Limited Partner liquidity which the General Partners then expect a portion of the Limited Partners to avail themselves of. This has the anticipated effect of the Partnership growing, primarily through reinvestment of earnings in years one through five. The General Partners expect to see increasing numbers of Limited Partner withdrawals in years five through eleven, at which time the bulk of those Limited Partners who have sought withdrawal have been liquidated. After year eleven, liquidation generally subsides and the Partnership capital again tends to increase. Actual liquidation of both capital and earnings from year five (1994) through year ten (1999) and three months ended March 31, 2000, is shown hereunder: Years ended December 31, 1994 1995 1996 1997 --------------- -------------- -------------- ---------------- Earnings $263,206 $270,760 $336,341 $399,379 Capital *$340,011 *$184,157 *$722,536 *$1,212,916 --------------- -------------- -------------- ---------------- Total $603,217 $454,917 $1,058,877 $1,612,295 =============== ============== ============== ================ For the three months 1998 1999 through March 31, 2000 --------------- -------------- --------------------------- Earnings $456,358 $490,841 $116,993 Capital *$1,400,475 *$1,436,942 *$350,110 --------------- -------------- ------------ Total $1,856,833 $1,927,783 $467,103 =============== ============== ============ * These amounts represent gross of early withdrawal penalties. The Year 2000 was considered by most to be a challenge for the entire world with respect to the conversion of existing computerized operations. The Partnership relies on Redwood Mortgage Corp., third parties and various software vendors for its hardware and software needs. Since year 2000 has come, we have not experienced any computer hardware breakdowns. We assume that our testing and upgrading of computer hardware prior to year 2000 identified all hardware areas of concern. Computer software programs are all operational with only minor problems being experienced with some programs. These problems are being addressed by the appropriate software vendors or software programmers. All quarterly and annual computerized functions have not yet been run, however testing of the operations has taken place. We do not expect any significant problems. The costs of updating our computer systems were substantially borne by the non affiliated software vendors and the in house system conversion costs to the Partnership were marginal. Year 2000 issues do not appear to have affected, in any significant manner, any industries or businesses in the marketplace in which the Partnership places its loans. We believe that year 2000 issues are a non-event and will have little if any future effect on the Partnership, its affiliates or the people and businesses with which it associates. The foregoing analysis of year 2000 issues includes forward-looking statements and predictions about possible or future events, results of operations, and financial condition. As such, this analysis may prove to be inaccurate because of assumptions made by the General Partners or the actual development of future events. No assurance can be given that any of these statements or predictions will ultimately prove to be correct or substantially correct.
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP As indicated above in Item 10, the Partnership has no officers or directors. The Partnership is managed by the General Partners. There are certain fees and other items paid to management and related parties. A more complete description of management compensation is found in the Prospectus, pages 12-13, under the section "Compensation of the General partners and the Affiliates", which is incorporated by reference. Such compensation is summarized below. The following compensation has been paid to the General Partners and Affiliates for services rendered during the three months ended March 31, 2000. All such compensation is in compliance with the guidelines and limitations set forth in the Prospectus. Entity Receiving Compensation Description of Compensation and Services Rendered Amount - -------------------------------------------------------------------------------- I. Redwood Mortgage Mortgage Servicing Fee for servicing Corp. Mortgage Investments $20,221 General Partners Asset Management Fee for &/or Affiliates managing assets............................. $8,198 General Partners 1% interest in profits...................... $2,336 General Partners &/or Portion of early withdrawal penalties Affiliates applied to reduce Formation Loan............ $2,642 II. FEES PAID BY BORROWERS ON MORTGAGE INVESTMENTS PLACED BY COMPANIES RELATED TO THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE PARTNERSHIP) Redwood Mortgage Corp. Mortgage Brokerage Commissions for services in connection with the review, selection, evaluation, negotiation, and extension of the Mortgage Investments paid by the borrowers and not by the Partnership ........................... $43,838 Redwood Mortgage Corp. Processing and Escrow Fees for services in connection with notary, document preparation, credit investigation, and escrow fees payable by the borrowers and not by the Partnership...$1,949 Gymno Corporation Inc. Reconveyance Fee.............................. $74 III. IN ADDITION, THE GENERAL PARTNERS AND/OR RELATED COMPANIES PAY CERTAIN EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE STATEMENT OF INCOME. $7,146 MORTGAGE INVESTMENT PORTFOLIO SUMMARY AS OF MARCH 31, 2000 Partnership Highlights Mortgage Investment to Value Ratios First Trust Deeds $6,679,300.60 Appraised Value of Properties * 10,745,559.00 Total Investment as a % of Appraised Value 62.16% First Trust Deed Mortgage Investments 6,679,300.60 Second Trust Deed Mortgage Investments 4,953,334.08 Third Trust Deed Mortgage Investments 649,218.59 ------------------ $12,281,853.27 First Trust Deeds due other Lenders 12,193,339.00 Second Trust Deeds due other Lenders 1,768,559.00 ------------------ Total Debt $26,243,751.27 Appraised Property Value * 42,087,820.00 Total Investment as a % of Appraised Value 62.35% Number of Mortgage Investments Outstanding 46 Average Investment $266,996.81 Average Investment as a % of Net Assets 2.47% Largest Investment Outstanding 1,500,000.00 Largest Investment as a % of Net Assets 13.89% Loans as a Percentage of Total Mortgage Investments First Trust Deed Mortgage Investments 54.38% Second Trust Deed Mortgage Investments 40.33% Third Trust Deed Mortgage Investments 5.29% ----------------- Total 100.00% Mortgage Investments by Type of Property Amount Percent Owner Occupied Homes $391,803.68 3.19% Non Owner Occupied Homes 2,765,746.98 22.52% Apartments 182,674.45 1.49% Commercial 8,941,628.16 72.80% ----------------- ----------------- Total $12,281,853.27 100.00% Statement of Conditions of Mortgage Investments Number of Mortgage Investments in Foreclosure 0 *Values used are the appraisal values utilized at the time the mortgage investment was consummated. Diversification by County County Total Loans Percent Stanislaus $2,996,554.16 24.40% San Mateo 2,869,677.71 23.37% San Francisco 2,048,597.89 16.68% Contra Costa 1,458,122.20 11.87% Alameda 869,643.91 7.08% Santa Clara 583,019.76 4.75% Placer 573,627.54 4.67% Santa Cruz 521,247.78 4.24% Sonoma 158,605.39 1.29% Sacramento 96,716.11 0.79% Shasta 80,040.82 0.65% Ventura 26,000.00 0.21% ------------------- ----------- Total $12,281,853.27 100.00% PART 2 OTHER INFORMATION Item 1. Legal Proceedings None, where the Partnership is a defendant. Please refer to Note 6 of Notes to Financial Statements. Item 2. Changes in the Securities Not Applicable Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Not Applicable (b) Form 8-K The registrant has not filed any reports on Form 8-K during the three month period ending March 31, 2000 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized on the 12th day of May, 2000. REDWOOD MORTGAGE INVESTORS VII By: /S/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, General Partner By: /S/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, General Partner By: Gymno Corporation, General Partner By: /S/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, President By: /S/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, Secretary/Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity indicated on the 12th day of May, 2000. Signature Title Date /S/ D. Russell Burwell - ----------------------------------- D. Russell Burwell General Partner May 12, 2000 /S/ Michael R. Burwell - ----------------------------------- Michael R. Burwell General Partner May 12, 2000 /S/ D. Russell Burwell - ----------------------------------- D. Russell Burwell President of Gymno Corporation, May 12, 2000 (Principal Executive Officer); Director of Gymno Corporation /S/ Michael R. Burwell - ----------------------------------- Michael R. Burwell Secretary/Treasurer of Gymno May 12, 2000 Corporation (Principal Financial and Accounting Officer); Director of Gymno Corporation EX-27 2 FDS --
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 204,497 0 12,926,298 828,563 0 0 0 0 13,145,980 0 0 2,347,943 0 0 10,798,037 13,145,980 0 307,831 0 47,142 0 0 27,123 233,566 0 233,566 0 0 0 233,566 .00 .00
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