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September 30, December 31, 2006 2005 Cash and cash equivalents $ 27,242 $ 28,853 Loans Loans, secured by deeds of trust 252,924 214,012 Allowance for loan losses (3,692 ) (3,138 ) Net loans 249,232 210,874 Interest and other receivables Accrued interest and late fees 3,290 3,254 Advances on loans 155 103 Total interest and other receivables 3,445 3,357 Loan origination fees, net 24 72 Real estate held for sale, net of allowance of $1,417 and $1,000 for September 30, 2006 and December 31, 2005, respectively 19,893 21,328 Total other assets 19,917 21,400 Total assets $ 299,836 $ 264,484 SEPTEMBER 30, 2006 andMARCH 31, 2007 (unaudited) AND DECEMBER 31, 2005 (unaudited)2006 (audited) March 31, December 31, 2007 2006 Cash and cash equivalents $ 14,454 $ 18,096 Loans Loans, secured by deeds of trust 268,302 261,097 Allowance for loan losses (2,559 ) (2,786 ) Net loans 265,743 258,311 Interest and other receivables Accrued interest and late fees 4,050 3,384 Advances on loans 4 96 Total interest and other receivables 4,054 3,480 Loan origination fees, net 78 104 Real estate held for sale, net of allowance of $2,348 for March 31, 2007 and December 31, 2006 28,035 25,231 Total other assets 28,113 25,335 Total assets $ 312,364 $ 305,222
September 30, December 31, 2006 2005 Liabilities Line of credit $ 34,700 $ 32,000 Accounts payable 30 10 Payable to affiliate 427 489 Other liabilities 72 — Total liabilities 35,229 32,499 Minority interest 2,989 3,042 Investors in applicant status 699 776 Partners’ capital Limited partners’ capital, subject to redemption net of unallocated syndication costs of $1.687 and $1,653 for September 30, 2006 and December 31, 2005, respectively; and Formation Loan receivable of $12,464 and $11,506 for September 30, 2006 and December 31, 2005, respectively 260,695 227,970 General partners’ capital, net of unallocated syndication costs of $17 and $16 for September 30, 2006 and December 31, 2005, respectively 224 197 Total partners’ capital 260,919 228,167 Total liabilities and partners’ capital $ 299,836 $ 264,484 SEPTEMBER 30, 2006 andMARCH 31, 2007 (unaudited) AND DECEMBER 31, 2005 (unaudited)2006 (audited) March 31, December 31, 2007 2006 Liabilities Line of credit $ 28,700 $ 30,700 Accounts payable 52 76 Payable to affiliate 549 481 Accrued liabilities 344 — Note payable 500 — Total liabilities 30,145 31,257 Minority interest 3,035 3,017 Investors in applicant status 971 557 Partners’ capital Limited partners’ capital, subject to redemption net of unallocated syndication costs of $1,745 and $1,743 for March 31, 2007 and December 31, 2006, respectively; and Formation Loan receivable of $12,727 and $12,693 for March 31, 2007 and December 31, 2006, respectively 277,977 270,160 General partners’ capital, net of unallocated syndication costs of $18 and $17 for March 31, 2007 and December 31, 2006, respectively 236 231 Total partners’ capital 278,213 270,391 Total liabilities and partners’ capital $ 312,364 $ 305,222
THREE MONTHS ENDED NINE MONTHS ENDED 2006 2005 2006 2005 Revenues Interest on loans $ 6,616 $ 4,911 $ 19,839 $ 13,305 Interest-bank 18 4 40 88 Late fees 94 28 230 85 Gain on sale of real estate held for sale - - - 183 Imputed interest on Formation Loan 99 100 295 299 Other 20 56 99 162 6,847 5,099 20,503 14,122 Expenses Mortgage servicing fees 630 479 1,845 1,228 Interest expense 557 113 1,902 149 Amortization of loan origination fees 23 15 67 50 Provisions for losses on loans and real estate held for sale 301 77 1,155 168 Asset management fees 255 212 726 592 Clerical costs through Redwood Mortgage Corp. 82 79 246 217 Professional services 15 21 166 101 Amortization of discount on imputed interest 99 100 295 299 Other 55 48 233 123 2,017 1,144 6,635 2,927 Net income $ 4,830 $ 3,955 $ 13,868 $ 11,195 Net income: general partners (1%) $ 48 $ 40 $ 138 $ 112 limited partners (99%) 4,782 3,915 13,730 11,083 $ 4,830 $ 3,955 $ 13,868 $ 11,195 Net income per $1,000 invested by limited partners for entire period -where income is compounded and retained $ 17.42 $ 17.07 $ 52.92 $ 52.32 -where partner receives income in monthly distributions $ 17.31 $ 16.97 $ 51.71 $ 51.14AND NINE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2007 AND 2006 AND 2005 (unaudited)
SEPTEMBER 30,
SEPTEMBER 30, 2007 2006 Revenues Interest on loans $ 6,810 $ 6,422 Interest-bank 24 12 Late fees 93 67 Imputed interest on Formation Loan 159 98 Other 12 60 7,098 6,659 Expenses Mortgage servicing fees 659 571 Interest expense 512 515 Amortization of loan origination fees 26 18 Provisions for losses on loans and real estate held for sale 133 573 Asset management fees 267 228 Clerical costs through Redwood Mortgage Corp. 83 82 Professional services 75 71 Amortization of discount on imputed interest 159 98 Other 44 91 1,958 2,247 Net income $ 5,140 $ 4,412 Net income: general partners (1%) $ 51 $ 44 limited partners (99%) 5,089 4,368 $ 5,140 $ 4,412 Net income per $1,000 invested by limited partners for entire period -where income is compounded and retained $ 17.42 $ 17.26 -where partner receives income in monthly distributions $ 17.32 $ 17.16
2006 2005 Cash flows from operating activities Net income $ 13,868 $ 11,195 Adjustments to reconcile net income to net cash provided by operating activities Imputed interest income (295 ) (299 ) Amortization of discount 295 299 Amortization of loan origination fees 67 50 Provision for loan and real estate losses 1,155 168 Gain on sale of real estate - (183 ) Change in operating assets and liabilities Accrued interest and late fees (36 ) (994 ) Advances on loans (52 ) (26 ) Loan origination fees (19 ) (3 ) Accounts payable 20 41 Payable to affiliate (62 ) 21 Other liabilities 72 - Net cash provided by operating activities 15,013 10,269 Cash flows from investing activities Loans originated (131,328 ) (137,471 ) Principal collected on loans 92,893 93,545 Payments for development of real estate (280 ) (756 ) Proceeds from disposition of real estate 637 1,541 Net cash used in investing activities (38,078 ) (43,141 ) Cash flows from financing activities Borrowings (payments) on line of credit, net 2,700 1,000 Contributions by partner applicants 27,355 32,167 Partners’ withdrawals (7,249 ) (5,519 ) Syndication costs paid (297 ) (672 ) Formation Loan lending (2,114 ) (2,397 ) Formation Loan collections 1,112 884 Increase/(decrease) in minority interest (53 ) 137 Net cash provided by financing activities 21,454 25,600 Net decrease in cash and cash equivalents (1,611 ) (7,272 ) Cash and cash equivalents – beginning of period 28,853 16,301 Cash and cash equivalents – end of period 27,242 9,029 Supplemental disclosures of cash flow information Cash paid for interest $ 1,902 $ 149 NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2007 AND 2006 AND 2005 (unaudited) 2007 2006 Cash flows from operating activities Net income $ 5,140 $ 4,412 Adjustments to reconcile net income to net cash provided by operating activities Imputed interest income (159 ) (98 ) Amortization of discount 159 98 Amortization of loan origination fees 26 18 Provision for loan and real estate losses 133 573 Change in operating assets and liabilities Accrued interest and late fees (1,089 ) (126 ) Advances on loans 40 60 ) Accounts payable (24 ) 7 Payable to affiliate 68 (28 ) Other liabilities — (7 ) Net cash provided by operating activities 4,294 4,909 Cash flows from investing activities Loans originated (35,580 ) (68,609 ) Principal collected on loans 26,694 13,934 Payments for development of real estate (164 ) (117 ) Net cash used in investing activities (9,050 ) (54,792 ) Cash flows from financing activities Borrowings (payments) on line of credit, net (2,000 ) 18,000 Contributions by partner applicants 6,200 10,178 Partners’ withdrawals (2,939 ) (2,089 ) Syndication costs paid (98 ) (104 ) Formation Loan lending (444 ) (746 ) Formation Loan collections 377 1,112 Increase in minority interest 18 30 Net cash provided by financing activities 1,114 26,381 Net decrease in cash and cash equivalents (3,642 ) (23,502 ) Cash and cash equivalents – beginning of period 18,096 28,853 Cash and cash equivalents – end of period 14,454 5,351 Supplemental disclosures of cash flow information Cash paid for interest $ 512 $ 515 thirdfirst quarter of 2006,2007, the partnership sold oneacquired a single family residence through foreclosure. This resulted in an increase in asset value of its real estate owned properties of $2,640,000, an increase in notes payable of $844,000 and took a note back fromdecrease of $1,320,000 in loans receivable, $399,000 in accrued interest, $52,000 in advances and $25,000 in late charge receivables. In addition, the buyer. Thispartnership sold a defaulted loan to a third party in return for cash. As a result, $360,000 was written off, which resulted in an increasea decrease in loans receivable and a decrease in real estate owned properties of $588,000.allowance for loan loss reserve.
1st 2nd 3rd 4th 5th 6th Total Limited partner contributions $14,932 $29,993 $29,999 $49,985 $74,904 $39,545 $239,358 Formation Loan made 1,075 2,272 2,218 3,777 5,661 3,002 18,005 Discount on imputed interest (2) (174) (188) (387) (1,053) (513) (2,317) Formation Loan made, net 1,073 2,098 2,030 3,390 4,608 2,489 15,688 Repayments to date (968) (1,355) (895) (1,117) (779) (73) (5,187) Early withdrawal penalties applied (83) (127) (91) (25) (28) - (354) Formation Loan, net at September 30, 2006 22 616 1,044 2,248 3,801 2,416 10,147 Unamortized discount on imputed interest 2 174 188 387 1,053 513 2,317 Balance September 30, 2006 $24 $790 $1,232 $2,635 $4,854 $2,929 $12,464 Percent loaned 7.2% 7.6% 7.4% 7.6% 7.6% 7.6% 7.5%SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited)20052006 filed with the Securities and Exchange Commission. The results of operations for the ninethree month period ended September 30, 2006March 31, 2007 are not necessarily indicative of the operating results to be expected for the full year.September 30, 2006March 31, 2007 (in thousands): 1st 2nd 3rd 4th 5th 6th Total Limited partner contributions $ 14,932 $ 29,993 $ 29,999 $ 49,985 $ 74,904 $ 53,227 $ 253,040 Formation Loan made 1,075 2,272 2,218 3,777 5,661 4,006 19,009 Discount on imputed interest — (146 ) (162 ) (341 ) (1,283 ) (1,391 ) (3,323 ) Formation Loan made, net 1,075 2,126 2,056 3,436 4,378 2,615 15,686 Repayments to date (991 ) (1,442 ) (980 ) (1,276 ) (1,008 ) (177 ) (5,874 ) Early withdrawal penalties applied (84 ) (135 ) (100 ) (39 ) (49 ) — (407 ) Formation Loan, net at March 31, 2007 — 549 976 2,121 3,321 2,438 9,405 Unamortized discount on imputed interest — 146 162 341 1,283 1,391 3,323 Balance March 31, 2007 $ — $ 695 $ 1,138 $ 2,462 $ 4,604 $ 3,829 $ 12,728 Percent loaned 7.2 % 7.6 % 7.4 % 7.6 % 7.6 % 7.5 % 7.5 % ninethree month periods ended September 30,March 31, 2007 and 2006, and 2005, amortization expense of $295,000$159,000 and $299,000,$98,000, respectively, was recorded related to the discount on the imputed interest.
Syndication costs Costs incurred $ 4,116 Early withdrawal penalties applied (124 ) Allocated to date (2,288 ) September 30, 2006 balance $ 1,704 SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited) (continued)September 30, 2006,March 31, 2007, syndication costs of $4,116,000$4,361,000 had been incurred by the partnership with the following distribution (in thousands):Costs incurred $ 4,361 Early withdrawal penalties applied (137 ) Allocated to date (2,461 ) March 31, 2007 balance $ 1,763 September 30, 2006March 31, 2007 the sixth offering had incurred syndication costs of $858,000 (2.20%$1,103,000 (2.10% of contributions). Syndication costs are typically higher in the early stages of an offering.ReclassificationsCertain reclassifications, not affecting previously reported net income or total partner capital, have been made to the previously issued consolidated financial statements to conform to the current year presentation.
Loans secured by deeds of trust Percent Percent September 30, to total December 31, to total 2006 loans 2005 loans Real estate mortgage Single-family (1-4 units) $ 2,774 72.89 % $ 1,598 54.64 % Apartments 156 6.86 % 145 8.98 % Commercial 717 19.43 % 1,140 30.45 % Land 45 0.82 % 255 5.93 % $ 3,692 100.00 % $ 3,138 100.00 %REDWOOD MORTGAGE INVESTORS VIII(A California Limited Partnership)NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2006 (unaudited)NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)September 30, 2006March 31, 2007 and December 31, 2005,2006, the partnership had sixthirteen and seven loans past due 90 days or more in regularly scheduled monthly payment (“90 Day Past Due Loans”) totaling $10,423,000$38,490,000 and $17,662,000,$5,519,000, respectively.September 30, 2006March 31, 2007 and December 31, 2005,2006, the partnership had tenfive and threeseven loans totaling $33,680,000$21,404,000 and $9,201,000,$28,706,000, respectively, which were Past Maturity Loans. Some of the Past Maturity Loans are also categorized and included in the totals of the 90 Day Past Due Loans when they are both past their maturity date and they are more than 90 days late on regularly scheduled monthly payments. The total combined number of 90 Day Past Due Loans and Past Maturity Loans at September 30, 2006March 31, 2007 and December 31, 20052006 was eleventhirteen and nine,ten, totaling $34,469,000$38,490,000 and $26,863,000,$30,055,000, respectively. Accrued interest, advances and late charge receivables on these loans totaled $1,653,000$1,739,000 and $3,202,000$1,568,000 as of September 30, 2006March 31, 2007 and December 31, 2005,2006, respectively. The partnership does not consider these loans to be impaired because, in the opinion of management, there is sufficient collateral to cover the amount outstanding to the partnership and the partnership is still accruing interest on these loans. At September 30, 2006March 31, 2007 and December 31, 20052006 there were no loans categorized as impaired by the partnership.September 30, 2006March 31, 2007 and December 31, 20052006 was as follows (in thousands):
Allowance for loan losses (continued) September 30, December 31, 2006 2005 Balance at beginning of period $ 3,138 $ 2,343 Charge-offs Domestic Real estate - mortgage Single family (1-4 units) 99 26 Apartments 19 — Commercial — 34 Land — — (118 ) (60 ) Recoveries Domestic Real estate - mortgage �� Single family (1-4 units) — — Apartments 7 — Commercial — — Land — — 7 — Net charge-offs (111 ) (60 ) Additions charge to operations 886 855 Transfer to real estate held for sale reserve (221 ) — Balance at end of period $ 3,692 $ 3,138 Ratio of net charge-offs during the period to average secured loans outstanding during the period 0.05 % 0.03 % Percent Percent March 31, to total December 31, to total 2007 loans 2006 loans Real estate mortgage Single-family (1-4 units) $ 1,506 72.49 % $ 1,673 73.10 % Apartments 197 6.29 % 160 5.71 % Commercial 790 20.45 % 887 20.40 % Land 66 0.77 % 66 0.79 % $ 2,559 100.00 % $ 2,786 100.00 % SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited) (continued) (continued)ninethree months through September 30, 2006ended March 31, 2007 and for the year ended December 31, 20052006 was as follows (in thousands):
Income taxes March 31, December 31, 2007 2006 Balance at beginning of period $ 2,786 $ 3,138 Charge-offs Domestic Real estate - mortgage Single family (1-4 units) — (112 ) Apartments — — Commercial (360 ) (15 ) Land — — (360 ) (127 ) Recoveries Domestic Real estate - mortgage Single family (1-4 units) — — Apartments — — Commercial — — Land — — — — Net charge-offs (360 ) (127 ) Additions charged to operations 133 927 Transfer to real estate held for sale reserve — (1,152 ) Balance at end of period $ 2,559 $ 2,786 Ratio of net charge-offs during the period to average secured loans outstanding during the period 0.14 % 0.05 % SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited) (continued)NOTE 3 – GENERAL PARTNERS AND RELATED PARTIESThe following are commissions and/or fees, which are paid to the general partners.Mortgage brokerage commissionsThe following are commissions and/or fees, which are paid to the general partners.
Mortgage servicing fees September 30, December 31, 2006 2005 Costs of properties $ 21,310 $ 22,328 Reduction in value (1,417 ) (1,000 ) Real estate held for sale, net $ 19,893 $ 21,328 SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited)NOTE 3 – GENERAL PARTNERS AND RELATED PARTIES (continued)Asset management feesannual)annually), which is the partnership’s total assets less its total liabilities.Operating expensesNOTE 4 – REAL ESTATE HELD FOR SALESeptember 30, 2006March 31, 2007 and December 31, 20052006 (in thousands):
the partnership’s total investment in this property was $1,766,000 and $1,759,000, respectively, net of a valuation allowance of $500,000. 2007 (unaudited) March 31, December 31, 2007 2006 Costs of properties $ 30,383 $ 27,579 Reduction in value (2,348 ) (2,348 ) Real estate held for sale, net $ 28,035 $ 25,231 SEPTEMBER 30,MARCH 31, 2007 (unaudited)(unaudited)NOTE 4 – REAL ESTATE HELD FOR SALE (continued)being expensed. At September 30, 2006each of March 31, 2007 and December 31, 20052006 the partnership’s total investment in Russian was $3,979,000, net of a valuation allowance of $500,000.In September 2004, the partnership acquired a single family residence through a foreclosure sale. At the time the partnership took ownership of the property, the partnership’s investment totaled $1,937,000 including accrued interest and advances. The borrower had begun a substantial renovation of the property, which was not completed at the time of foreclosure. The partnership has decided to pursue development of the property by processing plans for the creation of two condominium units on the property. These plans will incorporate the majority of the existing improvements currently located on the property. At September 30, 2006 and December2005 the partnership’s total investment in this property was $1,732,000 and $1,691,000, net of a valuation allowance of $500,000.In December 2004, the partnership acquired land through a deed in lieu of foreclosure. At this date the partnership’s investment totaled $4,377,000 including accrued interest and advances. At September 30, 2006 and December 31, 2005 the partnership’s investment in this property was $3,638,000 and $4,505,000, respectively. During the third quarter of 2006, the partnership sold one of the three parcels at a loss of approximately $73,000. The partnership’s total investment in this property was $3,221,000, net of a valuation allowance of $417,000 at September 30, 2006.During 2005, the partnership acquired land through foreclosure. At the time the partnership took ownership of the property, the partnership’s investment totaled $1,359,000 including accrued interest and advances. The property was subsequently sold for a total of $1,542,000 and the partnership recognized a gain on sale of real estate in the amount of $183,000.September 30, 2006,March 31, 2007, approximately $797,000$967,000 in costs related to the development of this property have been capitalized. The partnership pursued its effortefforts to recover funds from the guarantors of the original loan and during the third quarter of 2006 obtained $431,000, representing the partnership’s pro rata share of the recovery, from one of them. These proceeds were applied to reduce the partnership’s investment and as of September 30, 2006,March 31, 2007, the partnership’s investment, together with the other affiliated partnerships, totaled $10,961,000.$11,131,000.
REDWOOD MORTGAGE INVESTORS VIII
(
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006 (unaudited)
NOTE 5 – BANK LINE OF CREDIT
single asset entity named Borrette Property Company, LLC (“Borrette”) holds title to the property. The partnership beneficially owns 100% of the membership interests in Borrette. As of March 31, 2007 the partnership has spent approximately $35,000 for development work on the property. As of March 31, 2007, the partnership’s total investment in Borrette was $2,674,000.
NOTE 5 – BANK LINE OF CREDIT |
2006.
NOTE 6 – NOTE PAYABLE |
REDWOOD MORTGAGE INVESTORS VIII |
NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS |
(a) | Cash and cash equivalents. The carrying amount equals fair value. All amounts, including interest bearing accounts, are subject to immediate withdrawal. |
(b) | Secured
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| 2006 |
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| 2005 |
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Number of secured loans outstanding |
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| 102 |
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| 98 |
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Total secured loans outstanding |
| $ | 252,924 |
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| $ | 214,012 |
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Average secured loan outstanding |
| $ | 2,480 |
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| $ | 2,184 |
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Average secured loan as percent of total secured loans |
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| 0.98 | % |
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| 1.02 | % |
Average secured loan as percent of partners’ capital |
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| 0.95 | % |
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| 0.96 | % |
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Largest secured loan outstanding |
| $ | 31,428 |
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| $ | 11,927 |
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Largest secured loan as percent of total secured loans |
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| 12.43 | % |
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| 5.57 | % |
Largest secured loan as percent of partners’ capital |
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| 12.05 | % |
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| 5.23 | % |
Largest secured loan as percent of total assets |
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| 10.48 | % |
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| 4.51 | % |
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Number of counties where security is located (all California) |
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| 28 |
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| 24 |
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Largest percentage of secured loans in one county |
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| 18.86 | % |
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| 25.36 | % |
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Average secured loan to appraised value of security |
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based on appraised values and prior liens at time |
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loan was consummated |
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| 65.14 | % |
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| 65.03 | % |
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Number of secured loans in foreclosure status |
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| 2 |
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| 1 |
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Amount of secured loans in foreclosure |
| $ | 6,784 |
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| $ | 3,600 |
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(A California Limited Partnership) September 30, December 31, 2006 2005 First Trust Deeds $ 120,301 $ 135,945 Second Trust Deeds 130,204 73,138 Third Trust Deeds 2,419 4,929 Total loans 252,924 214,012 Prior liens due other lenders at time of loan 335,972 224,573 Total debt $ 588,896 $ 438,585 Appraised property value at time of loan $ 904,009 $ 674,436 Total secured loans as a percent of appraisals based on appraised values and prior liens at time loan was consummated 65.14 % 65.03 % Secured loans by type of property Single-family (1-4 units) $ 184,351 $ 116,945 Apartments 17,359 19,209 Commercial 49,152 65,167 Land 2,062 12,691 $ 252,924 $ 214,012 2006: Amount Prior to December 31, 2006 $ 37,753 Between January 1, 2007 and December 31, 2007 86,205 Between January 1, 2008 and December 31, 2008 92,582 Between January 1, 2009 and December 31, 2009 20,052 Between January 1, 2010 and December 31, 2010 7,789 Thereafter 8,543 $ 252,924 March 31, December 31, 2007 2006 Number of secured loans outstanding 108 103 Total secured loans outstanding $ 268,302 $ 261,097 Average secured loan outstanding $ 2,484 $ 2,487 Average secured loan as percent of total secured loans 0.93 % 0.95 % Average secured loan as percent of partners’ capital 0.89 % 0.92 % Largest secured loan outstanding $ 32,375 $ 32,156 Largest secured loan as percent of total secured loans 12.07 % 12.32 % Largest secured loan as percent of partners’ capital 11.64 % 11.89 % Largest secured loan as percent of total assets 10.36 % 10.54 % Number of counties where security is located (all California) 28 26 Largest percentage of secured loans in one county 21.61 % 17.69 % Average secured loan to appraised value of security based on appraised values and prior liens at time loan was consummated 66.32 % 65.95 % Number of secured loans in foreclosure status — 2 Amount of secured loans in foreclosure $ — $ 2,108 REDWOOD MORTGAGE INVESTORS VIIISEPTEMBER 30, 2006MARCH 31, 2007 (unaudited)78 – ASSET CONCENTRATIONS AND CHARACTERISTICS (in thousands) (continued)September 30, 2006March 31, 2007 and December 31, 2005: March 31, December 31, 2007 2006 First Trust Deeds $ 116,415 $ 125,061 Second Trust Deeds 146,468 133,623 Third Trust Deeds 5,419 2,413 Total loans 268,302 261,097 Prior liens due other lenders at time of loan 373,045 329,554 Total debt $ 641,347 $ 590,651 Appraised property value at time of loan $ 966,998 $ 895,621 Total secured loans as a percent of appraisals based on appraised values and prior liens at time loan was consummated 66.32 % 65.95 % Secured loans by type of property Single-family (1-4 units) $ 194,493 $ 190,859 Apartments 16,874 14,914 Commercial 54,873 53,262 Land 2,062 2,062 $ 268,302 $ 261,097 September 30, 2006March 31, 2007 and December 31, 2005.2006. This range of interest rates is typical of our portfolio.September 30, 2006March 31, 2007 are as follows:
March 31, 2007. March 31, 2007. Amount Prior to December 31, 2007 $ 104,382 Between January 1, 2008 and December 31, 2008 103,307 Between January 1, 2009 and December 31, 2009 34,484 Between January 1, 2010 and December 31, 2010 11,769 Between January 1, 2011 and December 31, 2011 7,623 Thereafter 6,737 $ 268,302 SEPTEMBER 30, 2006MARCH 31, 2007 (unaudited)78 – ASSET CONCENTRATIONS AND CHARACTERISTICS (in thousands) (continued)20062007 include tenfive past maturity loans totaling $33,680,000,$21,404,000, and representing 13.32%7.98% of the portfolio at September 30, 2006.March 31, 2007. Interest payments on fiveall of these loans were categorized as 90 days or more delinquent.past due. Occasionally the partnership allows borrowers to continue to make the payments on debt past maturity for periods of time. Of these tenNone of the past maturity loans the partnership has begunare in foreclosure proceedings by filing a noticeas of default on two with aggregate principal balances totaling $6,784,000.89 – COMMITMENTS AND CONTINGENCIEShas approvedapproves the borrowers up to a maximum loan balance; however, disbursements are made periodically during completion phases of the construction or rehabilitation or at such other times as required under the loan documents. At September 30, 2006March 31, 2007 there were $25,615,000$11,869,000 of undisbursed loan funds which will be funded by a combination of borrower monthly mortgage payments, line of credit draws, retirements of principal on current loans, cash, and capital contributions from investors. The partnership does not maintain a separate cash reserve to hold the undisbursed obligations, which are intended to be funded.iswas not obligated to fund additional money on these loans as of September 30, 2006.March 31, 2007. There is one loan totaling $788,000were no loans in a workout agreementagreements as of September 30, 2006.Legal proceedingsNOTE 9 – SUBSEQUENT EVENTSNone
MANAGEMENT’SMANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE PARTNERSHIPSeptember 30, 2006March 31, 2007 the partnership owned fiveseven real estate properties, which were taken back from defaulted borrowers.
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20062007 and their effects on liquidity, the partnership’s plans to develop certain properties, and recovering certain values for properties through sale. Actual results may be materially different from what is projected by such forward-looking statements. Factors that might cause such a difference include unexpected changes in economic conditions and interest rates, including such conditions in California, the impact of competition and competitive pricing, unexpected shortfalls in cash flow required to develop certain properties, and downturns in the real estate markets in which the partnership has made loans. 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.•$2,960,000$852,000 and $3,063,000 for the nine month periods ended September 30, 2006 and 2005, and $126,000 and $968,000$1,858,000 for the three month periods ended September 30,March 31, 2007 and 2006, and 2005, respectively.•of $1,845,000were $659,000 and $1,228,000 were incurred for the nine month periods ended September 30, 2006 and 2005, and $630,000 and $479,000$571,000 for the three month periods ended September 30,March 31, 2007 and 2006, and 2005, respectively.•of $726,000were $267,000 and $592,000 were incurred for the nine month periods ended September 30, 2006 and 2005, and $255,000 and $212,000$228,000 for the three month periods ended September 30,March 31, 2007 and 2006, and 2005, respectively.•$41,000$18,000 and $57,000 for the nine month periods ended September 30, 2006 and 2005, and $13,000 and $18,000 for the three month periods ended September 30,March 31, 2007 and 2006, and 2005, respectively.
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Changes during the nine months ended September 30, 2006 versus 2005 Changes during the three months ended September 30, 2006 versus 2005 Net income $ 2,673,000 $ 875,000 Revenue Interest on loans 6,534,000 1,705,000 Interest – interest-bearing accounts (48,000 ) 14,000 Late fees 145,000 66,000 Gain on sale of real estate held for sale (183,000 ) — Imputed interest on Formation Loan (4,000 ) (1,000 ) Other (63,000 ) (36,000 ) $ 6,381,000 $ 1,748,000 Expenses Mortgage servicing fees 617,000 151,000 Interest expense 1,753,000 444,000 Amortization of loan origination fees 17,000 8,000 Provision for losses on loans and real estate held for sale 987,000 224,000 Asset management fees 134,000 43,000 Clerical costs through Redwood Mortgage Corp. 29,000 3,000 Professional services 65,000 (6,000 ) Amortization of discount on imputed interest (4,000 ) (1,000 ) Other 110,000 7,000 $ 3,708,000 $ 873,000 Net income increase $ 2,673,000 $ 875,000 nine and three months ended September 30,March 31, 2007 and 2006 and 2005nine and three month periods ended September 30,March 31, 2007 versus 2006 versus 2005 are discussed below: Net income $ 728,000 Revenue Interest on loans 388,000 Interest – interest-bearing accounts 12,000 Late fees 26,000 Imputed interest on Formation Loan 61,000 Other (48,000 ) $ 439,000 Expenses Mortgage servicing fees 88,000 Interest expense (3,000 ) Amortization of loan origination fees 8,000 Provision for losses on loans and real estate held for sale (440,000 ) Asset management fees 39,000 Clerical costs through Redwood Mortgage Corp. 1,000 Professional services 4,000 Amortization of discount on imputed interest 61,000 Other (47,000 ) $ (289,000 ) Net income $ 728,000 $6,534,000 (49%) for the nine month period and $1,705,000 (35%$388,000 (6.04%) for the three month period ended September 30, 2006March 31, 2007 as compared to the same periodsperiod in 2005,2006, was due primarily to the increased size of the partnership average secured loan portfolio of $252,924,000$269,244,000 at September 30, 2006March 31, 2007 as compared to $207,311,000an average balance of $246,961,000 at September 30, 2005.March 31, 2006. The increase in interest on loans for the nine month period ended September 30, 2006 was mitigated byalso due to a lowerhigher average portfolio interest rate of 9.67%9.76% at September 30, 2006March 31, 2007 as compared to 9.98%9.67% at September 30, 2005, and 9.67% and 9.70% for the three month periods ended September 30, 2006 and 2005, respectively. Average loan balances for the nine and three month periods ended September 30, 2006 and 2005 were $256,487,000 and $175,079,000 for the nine month periods and $256,667,000 and $201,273,000 for the three month periods, respectively. Additionally, interest income increased throughMarch 31, 2006. The increase was partially offset by a reduction in the collection of interest enhancements and interest rate provisions due upon repayment of our loans. For the nine and three month periods ended September 30,March 31, 2007 and 2006 and 2005 interest enhancementenhancements and additional interest income totaled $1,225,000$239,000 and $193,000 for the nine month periods and $386,000 and $33,000 for the three month periods,$318,000, respectively.decreaseincrease in interest from interest-bearing accounts of $48,000 (55%$12,000 (100%) for the ninethree month period ended September 30,March 31, 2007 as compared to the same period in 2006 iswas due to smallera larger average monthly depositsdeposit of $2,812,000$3,636,000 for the nine month periodthree months ended September 30, 2006March 31, 2007, as compared to an average monthly deposit of $9,693,000$3,137,000 for the same period in 2005. 2006. In addition, the interest rate averaged 2.69% for the current quarter versus an average interest rate of 1.47% for the same period in 2006.interest from interest-bearing accountslate fee income of $14,000 (350%$26,000 (38.81%) for the three month period ended September 30, 2006March 31, 2007 as compared to the same period in 2005 is2006 was due to a larger average monthly depositan overall increase in loans past maturity and/or delinquent 90 days or more in interest payments. There were thirteen such loans totaling $38,490,000 as of $2,887,000 for the three months ended September 30, 2006,March 31, 2007 as compared to an average monthly depositnine loans totaling $22,999,000 as of $1,224,000 for the same period in 2005. In addition, the monthly percentage rate averaged 2.33% for the current quarter versus the monthly average percentage rate of 1.41% for the same quarter in 2005.March 31, 2006.
The decrease in gain on sale of real estate held for sale of $183,000 (100%) for the nine and three month periods ended September 30, 2006 as compared to the same periods in 2005 was primarily due to a gain realized upon the disposal of a real estate property during the first quarter of 2005. No gain on real estate sales occurred during the first three quarters of 2006.
March 31, 2007.
2006 was 6.82%.
The increase in provision for losses on loans and real estate held for sale of $987,000 (588%) for the nine month period and $224,000 (291%$440,000 (76.79%) for the three month period ended September 30, 2006March 31, 2007 as compared to the same periodsperiod in 2005 is2006 was due to management’s decision to make additional provisions in line with the increase in the partnership’s loan portfolio. Loan balances increased from $207,311,000 as of September 30, 2005 to $252,924,000 as of September 30, 2006; thus management made an increase in total provisiondetermination that accumulated reserves totaling $4,906,000 against loan losses and real estate held for sale from $3,503,000 as of September 30, 2005March 31, 2007 compared to $5,109,000$4,699,000 as of September 30, 2006.
March 31, 2006 was adequate. Secured loan portfolio balances remained relatively unchanged from $268,675,000 as of March 31, 2006 to $268,302,000 as of March 31, 2007.
At September 30, 2006, outstanding loans with filed notices of default totaled two with outstanding principal balances of $6,784,000 or 2.68% of outstanding secured loans2007 as compared to the same period in 2006, was primarily due to increases in the Formation Loan from the sale of additional limited partnership investments.
which we operate.
| September 30, |
| |||||||||||||
| 2006 |
|
| 2005 |
| ||||||||||
Single family homes (1-4 units) | $ | 184,351 |
|
|
| 72.89 | % |
| $ | 102,891 |
|
|
| 49.63 | % |
Commercial |
| 49,152 |
|
|
| 19.43 | % |
|
| 67,777 |
|
|
| 32.69 | % |
Apartments (5+ units) |
| 17,359 |
|
|
| 6.86 | % |
|
| 18,734 |
|
|
| 9.04 | % |
Land |
| 2,062 |
|
|
| 0.82 | % |
|
| 17,909 |
|
|
| 8.64 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | $ | 252,924 |
|
|
| 100.00 | % |
| $ | 207,311 |
|
|
| 100.00 | % |
March 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Single family homes (1-4 units) | $ | 194,493 | 72.49 | % | $ | 169,196 | 62.97 | % | ||||||||
Commercial | 54,873 | 20.45 | % | 68,520 | 25.50 | % | ||||||||||
Apartments (5+ units) | 16,874 | 6.29 | % | 17,996 | 6.70 | % | ||||||||||
Land | 2,062 | 0.77 | % | 12,963 | 4.83 | % | ||||||||||
Total | $ | 268,302 | 100.00 | % | $ | 268,675 | 100.00 | % |
# of Secured Loans Amount Percent 1st Mortgages 49 $ 120,301 47.56% 2nd Mortgages 49 130,204 51.48% 3rd Mortgages 4 2,419 0.96% Total 102 $ 252,924 100.00% Maturing prior to 12/31/06 11 $ 37,753 14.93% Maturing between 01/01/07 and 12/31/07 36 86,205 34.08% Maturing between 01/01/08 and 12/31/08 16 92,582 36.60% Maturing after 12/31/08 39 36,384 14.39% Total 102 $ 252,924 100.00% Average secured loan as a % of secured loan portfolio $ 2,480 0.98% Largest secured loan as a % of secured loan portfolio 31,428 12.43% Smallest secured loan as a % of secured loan portfolio 13 0.01% Average secured loan-to-value at time of loan based on appraisals and prior liens at time of loan 65.14% Largest secured loan as a percent of partnership assets 31,428 10.48% March 31, 2006. interest, principal and loan payoffs. Currently, cash flow greatly exceeds partnership expenses and cash distribution requirements to limited partners. Excess cash flow is invested in new loan opportunities, and for funding the undisbursed portion of Construction and Rehabilitation Loans, and is used to reduce the partnership credit line or for other partnership business. Nine months ended September 30, Three months ended September 30, 2006 2005 2006 2005 Compounding $ 8,521,000 $ 7,003,000 $ 2,958,000 $ 2,476,000 Distributing $ 4,959,000 $ 3,906,000 $ 1,740,000 $ 1,378,000 Nine months ended September 30, Three months ended September 30, 2006 2005 2006 2005 Cash distributions $ 4,959,000 $ 3,906,000 $ 1,740,000 $ 1,378,000 Capital liquidation* $ 2,206,000 $ 1,547,000 $ 969,000 $ 524,000 Total $ 7,165,000 $ 5,453,000 $ 2,709,000 $ 1,902,000September 30, 2006March 31, 2007 (in thousands) # of Secured Loans 52 $ 116,415 43.39 % 51 146,468 54.59 % 5 5,419 2.02 % Total 108 $ 268,302 100.00 % Maturing prior to 12/31/07 31 $ 104,382 38.90 % Maturing between 01/01/08 and 12/31/08 20 103,307 38.51 % Maturing between 01/01/09 and 12/31/09 17 34,484 12.85 % Maturing after 12/31/09 40 26,129 9.74 % Total 108 $ 268,302 100.00 % Average secured loan as a % of secured loan portfolio $ 2,484 0.93 % Largest secured loan as a % of secured loan portfolio 32,375 12.07 % Smallest secured loan as a % of secured loan portfolio 66 0.02 % Average secured loan-to-value at time of loan based on appraisals and prior liens at time of loan 66.32 % Largest secured loan as a percent of partnership assets 32,375 10.36 % ninethree month period ended September 30, 2006.March 31, 2007. The partnership received new limited partner capital contributions of $27,321,000$6,189,000 for the ninethree month period ended September 30, 2006March 31, 2007 as compared to $32,121,000$10,165,000 for the ninethree month period ended September 30, 2005.March 31, 2006. Retained earnings of limited partners that have chosen to compound earnings were $8,521,000$3,121,000 for the ninethree month period ended September 30, 2006,March 31, 2007, as compared to $7,003,000$2,720,000 for the ninethree month period ended September 30, 2005.March 31, 2006. The increased partnership capital assisted in the partnership’s ability to increase loans outstanding to $252,924,000$268,302,000 at September 30, 2006,March 31, 2007, as compared to $207,311,000$268,675,000 at September 30, 2005. The partnership closed the fifth offering in August, 2005 with subscriptions of $74,904,000 for the $75,000,000 offering. The sixth offering of $100,000,000 commenced on August 4, 2005. Of the $32,121,000 in limited partner contributions for the nine month period ended September 30, 2005, $27,592,000 related to the partnership’s fifth offering and $4,529,000 related to the sixth offering. nine and three month periods ended September 30,March 31, 2007 and 2006, and 2005, the partnership, after allocation of syndication costs, made the following allocation of earnings both to the limited partners who elected to compound their earnings, and those that chose to distribute: Three months ended March 31, 2007 2006 Compounding $ 3,121,000 $ 2,720,000 Distributing $ 1,882,000 $ 1,565,000 September 30,March 31, 2007 and 2006 and 2005 limited partners electing to receive cash distributions of earnings represented 38%39% and 37%38%, respectively, of the limited partners’ outstanding capital accounts. These percentages have remained relatively stable. The general partners anticipate that after all capital has been raised, the percentage of limited partners electing to withdraw earnings will decrease due to the dilution effect which occurs when compounding limited partners’ capital accounts grow through compounded earnings.September 30, 2006,March 31, 2007, many limited partners may not have yet opted for such liquidation. Earnings and capital liquidations including early withdrawals during the nine and three month periodsperiod ended September 30,March 31, 2007 and 2006 and 2005 were: Three months ended March 31, 2007 2006 Cash distributions $ 1,882,000 $ 1,565,000 Capital liquidation* $ 1,047,000 $ 491,000 Total $ 2,929,000 $ 2,056,000
Limited partners may liquidate their investment over a one-year period subject to certain limitations and penalties. During the nine and three month periods ended September 30,March 31, 2007 and 2006, and 2005, capital liquidated subject to the 10% penalty for early withdrawal was:
Nine months ended September 30, |
| Three months ended September 30, | ||||
2006 |
| 2005 |
| 2006 |
| 2005 |
$ 578,000 |
| $ 443,000 |
| $ 241,000 |
| $ 198,000 |
Three months ended March 31, | ||||||
2007 | 2006 | |||||
$ | 415,000 | $ | 119,000 |
The rate
San Francisco. The Federal Reserve has now met three times since they had halted their march toward higher interest rates beginningBoard left the Federal Funds Rate unchanged at 5.25% at its April, 2007 meeting and for its previous six consecutive meetings. The 10-year treasury bonds continued to trade in 2004 and has not raised interest rates further. Mortgage rates have been declininga narrow margin during the thirdfirst quarter of 2006. In June of 2006, a 30-year2007 at around 4.7%. This has helped 30 year fixed rate mortgage was pricedmortgages to remain consistent during the first quarter at approximately 6.68% versus a price of approximately 6.4% in September of 2006 and 6.36% in October of 2006. These recent rates are higher than in 2005, but not as appreciably higher as one might think. In September and October of 2005, 30-year fixed rate loans were priced at 6.07% and 5.77%, respectively. In most respects, the United States economy is healthy and there seems to be little likelihood of a recession.
6.2%.
Appreciation in
lenders who secure loans on commercial properties.
Contractual Obligation Total Less than 1 Year 1-3 Years 3-5 Years Line of credit $ 34,700 $ — $ 24,101 $ 10,599 Construction loans 4,156 4,156 — — Rehabilitation loans 21,459 21,459 — — Total $ 60,315 $ 25,615 $ 24,101 $ 10,599 2006 2007 2008 2009 2010 Thereafter Total Interest earning assets: Money market accounts $23,788 $23,788 Average interest rate 2.75% 2.75% Loans secured by deeds of trust $37,753 86,205 92,582 20,052 7,789 8,543 $252,924 Average interest rate 10.28% 9.65% 9.60% 9.82% 9.41% 9.47% 9.73% Average interest rate — — Interest bearing liabilities: Line of credit $967 11,567 11,567 10,599 $34,700 Average interest rate 7.84% 7.84%September 30, 2006March 31, 2007 is set forth below (in thousands):Part I – Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKContractual Obligation Total Less than 1 Year 1-3 Years 3-5 Years Line of credit $ 28,700 $ — $ 19,933 $ 8,767 Construction loans 929 929 — — Term loans 500 500 — — Rehabilitation loans 10,940 10,940 — — Total $ 41,069 $ 12,369 $ 19,933 $ 8,767 September 30, 2006.March 31, 2007. The presentation, for each category of information, aggregates the assets and liabilities by their maturity dates for maturities occurring in each of the years 20062007 through 20102011 and separately aggregates the information for all maturities arising after 2010.2011. The carrying values of these assets and liabilities approximate their fair market values as of September 30, 2006March 31, 2007 (in thousands): 2007 2008 2009 2010 2011 Thereafter Total Interest earning assets: Money market accounts $ 12,543 $ 12,543 Average interest rate 2.75 % 2.75 % Loans secured by deeds of trust $ 104,382 103,307 34,484 11,769 7,623 6,737 $ 268,302 Average interest rate 9.81 % 9.85 % 10.20 % 9.77 % 9.39 % 9.46 % 9.86 % Interest bearing liabilities: Line of credit $ 798 9,567 9,568 8,767 $ 28,700 Average interest rate 8.25 % 8.25 % Term loan $ 500 $ 500 Average interest rate 12.50 % 12.50 %
| Complete Construction |
| Rehabilitation | ||||
Disbursed funds | $12,815,000 |
| $79,671,000 |
| |||
Undisbursed funds | $4,156,000 |
| $21,459,000 |
| |||
| $16,971,000 |
| $101,130,000 |
| |||
Complete Construction | Rehabilitation | |||||||
Disbursed funds | $ | 5,866,000 | $ | 57,666,000 | ||||
Undisbursed funds | $ | 929,000 | $ | 10,940,000 | ||||
$ | 6,795,000 | $ | 68,606,000 |
September 30, 2006,March 31, 2007, the partnership carried out an evaluation, under the supervision and with the participation of the general partners of the effectiveness of the design and operation of the partnership’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the general partners concluded that the partnership’s disclosure controls and procedures are effective for the purposes set forth in Rule 13a-15. There were no changes in the partnership’s internal control over financial reporting during the partnership’s thirdfirst fiscal quarter that have materially affected, or are reasonably likely to materially affect, the partnership’s internal control over financial reporting.Item 1.Legal ProceedingsItem 1A.Risk FactorsNot Applicable.Item 2.Unregistered Sales of Equity Securities and Use of ProceedsItem 3.Defaults Upon Senior SecuritiesItem 4.Submission of Matters to a Vote of Security HoldersItem 5.Other InformationItem 6.Exhibits
|
By: | /S/ Michael R. Burwell | ||
Michael R. Burwell, General Partner | |||
By: |
| ||
By: | /S/ Michael R. Burwell | ||
Michael R. Burwell, President, Secretary/Treasurer & Chief Financial Officer | |||
By: |
| ||
By: | /S/ Michael R. Burwell | ||
Michael R. Burwell, President, Secretary/Treasurer | |||
1. | I have reviewed this quarterly report on Form 10-Q of Redwood Mortgage Investors VIII, a California Limited Partnership (the “Registrant”); |
2. | Based on my knowledge, this quarterly 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 quarterly report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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)) for the Registrant and we 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 quarterly report is being prepared; |
(b) | 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 |
(c) | 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 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. |
November 14, 2006
Exhibit 31.2
1. | I have reviewed this quarterly report on Form 10-Q of Redwood Mortgage Investors VIII, a California Limited Partnership (the “Registrant”); |
2. | Based on my knowledge, this quarterly 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 quarterly report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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)) for the Registrant and we 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 quarterly report is being prepared; |
(b) | 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 |
(c) | 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 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. |
November 14, 2006
Exhibit 32.1
(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 Partnership at the dates and for the periods indicated. |
/s/ Michael R. Burwell
_____________________________
Michael R. Burwell, General Partner
November 14, 2006
/s/ Michael R. Burwell |
_____________________________ |
Michael R. Burwell, General Partner |
May 15, 2007 |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION PURSUANT TO |
18 U.S.C. SECTION 1350 |
AS ADOPTED PURSUANT TO |
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |
(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 Partnership at the dates and for the periods indicated. |
/s/ Michael R. Burwell
Michael R. Burwell, President,
Secretary/Treasurer & Chief Financial
Officer of Gymno Corporation, General Partner,
and Redwood Mortgage Corp., General Partner
November 14, 2006
/s/ Michael R. Burwell |
______________________________________ |
Michael R. Burwell, President, |
Secretary/Treasurer & Chief Financial |
Officer of Gymno Corporation, General Partner, |
and Redwood Mortgage Corp., General Partner |
May 15, 2007 |