NOTE 3 – GENERAL PARTNERS AND OTHER RELATED PARTIES

The general partners are entitled to one percent (1%) of the profits and losses, which amounted to approximately $15,000 and $30,000 for the three months ended, and $26,000 and $41,000 for the six months ended June 30, 2016 and 2015, respectively. Beginning with calendar year 2010, and continuing until January 1, 2020, RMC assigned its right to two-thirds of one percent (0.66%) of profits and losses to Burwell in exchange for Burwell assuming one hundred percent (100%) of the general partners’ equity deficit.

Formation loan/Commissions paid to broker-dealers

Commissions to broker-dealers (B/D sales commissions) for sales of limited partnership interests were paid by RMC and were not paid directly by the partnership out of offering proceeds. Instead, the partnership advanced to RMC amounts sufficient to pay the B/D sales commissions and premiums paid to partners in connection with unsolicited orders 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.” If the general partners are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven, per the terms of the partnership agreement.

The formation loan transactions are summarized in the following table at June 30, 2016 ($ in thousands).

	2016
Balance January 1	$	6,934
Formation loans made		—
Early withdrawal penalties		(204	)
Repayments		—
Balance June 30	$	6,730

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

2016	$	446
2017		650
2018		650
2019		650
2020		650
Thereafter		3,684
Total	$	6,730

The loan brokerage commissions on the mortgage loans originated for RMI VIII are the primary source of the repayments made by RMC for the formation loan.

The following commissions and fees are paid by borrowers directly to RMC.

- Brokerage commissions, loan originations

In connection with the review, selection, evaluation, negotiation and extension of loans, the general partners may collect loan brokerage commissions (points) limited to an amount not to exceed 4% of the total partnership assets per year. The loan brokerage commissions are paid by borrowers, and thus, are not an expense of the partnership. Loan brokerage commissions paid to the general partners by borrowers were $649,682 and $230,808, for the three months ended, and $1,167,601 and $444,657 for the six months ended June 30, 2016 and 2015, respectively.

- Other fees

The partnership agreement provides for other fees such as reconveyance, mortgage assumption and mortgage extension fees. Such fees are incurred by borrowers and are paid to the general partners. Other fees totaled $40,523 and $38,964, for the three months ended, and $51,759 and $44,370 for the six months ended June 30, 2016 and 2015, respectively.

The following commissions and fees are paid by the partnership to RMC.

- Mortgage servicing fees

RMC earns mortgage servicing fees of up to 1.5% annually of the unpaid principal balance of the loan portfolio. 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 partnership.

Mortgage servicing fees paid to RMC were approximately $294,000 and $293,000 for the three months ended, and $527,000 and $577,000 for the six months ended June 30, 2016 and 2015, respectively. No mortgage servicing fees were waived during any period reported.

- Asset management fees

The general partners receive monthly fees for managing the partnership’s loan portfolio and operations of up to 1/32 of 1% of the “net asset value” (3/8 of 1% annually).

Asset management fees were approximately $172,000 and $183,000 for the three months ended, and $348,000 and $367,000 for the six months ended June 30, 2016 and 2015, respectively. No asset management fees were waived during any period reported.

- Costs from Redwood Mortgage Corp.

RMC is reimbursed by the partnership for operations expense incurred on behalf of the partnership, including without limitation, accounting and audit fees, legal fees and expenses, postage and preparation of reports to limited partners and out-of-pocket general and administration expenses. The decision to request reimbursement of any qualifying charges is made by RMC in its sole discretion. Expenses reimbursed to RMC totaled $491,000 and $443,000 for the three months ended, and $975,000 and $971,000 for the six months ended June 30, 2016 and 2015, respectively. RMC did not waive its right to request reimbursement of any qualifying charges during any period reported.