Redwood Mortgage Investors Viii POS AM Prospectus update (post-effective amendment)

As filed with the Securities and Exchange Commission

on March 5, 2008

Registration No. 333-125629

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

POST EFFECTIVE AMENDMENT NO. 7 TO THE

REGISTRATION STATEMENT NO. 333-125629

AS FILED ON AUGUST 4, 2005

Under

THE SECURITIES ACT OF 1933

REDWOOD MORTGAGE INVESTORS VIII

(Exact name of registrant as specified in its charter)

CALIFORNIA	6611	94-3158788
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

900 Veterans Blvd., Suite 500, Redwood City, California 94063 (650) 365-5341

(Address and telephone number of principal executive offices)

900 Veterans Blvd., Suite 500, Redwood City, California 94063 (650) 365-5341

(Address of principal place of business

or intended principal place of business)

Michael R. Burwell

900 Veterans Blvd., Suite 500, Redwood City, California 94063 (650) 365-5341

(Name, address, including zip code and telephone number,

including area code of agent for service)

Copies to:

Stephan J Schrader

Baker & McKenzie LLP

Two Embarcadero Center, 11^th Floor

San Francisco, CA 94111-3802

Approximate date of commencement

of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:[x]

Supplement No. 5 dated March 5, 2008

to the Prospectus dated August 4, 2005

Redwood Mortgage Investors VIII,

A California Limited Partnership

The following information updates the Prospectus of Redwood Mortgage Investors VIII, a California limited partnership (the “Partnership”) dated August 4, 2005 (“the Prospectus”). This Supplement No. 5 replaces in its entirety, Supplement No. 4. You should no longer refer to or rely on the information contained in Supplement No. 4.

This supplement updates certain information regarding the Partnership and its General Partners. Important additional information regarding the business of the Partnership and the risks involved in investing in the Partnership are contained in the Prospectus. You should carefully read the Prospectus along with this Supplement.

This supplement also updates the accompanying prospectus by adding the following:

1. Summary of Partnership Activities. The Partnership is engaged in business as a mortgage lender. The Partnership makes loans to individuals and business entities secured by residential, investment or commercial property. In order to ensure repayment of the loans, the loans are secured by first and second, and in some limited cases, third deeds of trust on the property. For a more detailed discussion of deeds of trust and other factors affecting the loans made by the Partnership, you should carefully review the Section of the Prospectus entitled “CERTAIN LEGAL ASPECTS OF PARTNERSHIP LOANS.”

Current Offering. In August, 2005, we elected to continue offering Units in the Partnership in order to increase the Partnership’s loan portfolio. By increasing the Partnership’s loan portfolio, we can continue to increase diversity and add additional safety to the Portfolio. In August, 2005, the Partnership began offering Units in its sixth Offering of $100,000,000.

¡ Status of Current Offering. As of September 30, 2007, the Partnership had sold $71,823,000 of Units from the current Offering. This brings the total proceeds received from the initial Offerings and the current Offering to $271,636,000 as of September 30, 2007. The Partnership had outstanding secured loans with a total principal balance of $285,092,000 as of September 30, 2007. As of September 30, 2007, the Partnership had, in connection with its current offering of $100,000,000 of Units, incurred no organizational costs and $1,325,000 in syndication costs.

¡ No Adverse Business Development. As of the date of this Supplement, there have been no adverse business developments or conditions in the Partnership, or any prior limited partnerships in which the General Partners are involved, that would be material to a prospective investor.

2. Financial Statements. Financial Statements of the Partnership. The consolidated Financial Statements of the Partnership included in this Supplement have been audited by Armanino McKenna, LLP, independent registered public accounting firm as of December 31, 2006 and 2005 and for each of the years in the three year period ended December 31, 2006. This Supplement also contains unaudited, interim financial statements for the Partnership as of September 30, 2007 and for the three and nine month periods ended September 30, 2007 and September 20, 2006.

Financial Statements of Corporate General Partners. The Balance Sheet of Redwood Mortgage Corp., as of September 30, 2007 included in this Supplement has been audited by Armanino McKenna, LLP, independent registered public accounting firm. The Balance Sheet of Gymno Corporation., as of December 31, 2006 included in this Supplement has been audited by Armanino McKenna, LLP, independent registered public accounting firm.

3. RELATED PARTY POLICIES

For a description of the Partnership’s policies and procedures for the review, approval or ratification of related party transactions, please refer to the discussion under the caption “Compensation of the General Partners and its Affiliates” beginning on page 23 of the Prospectus, the discussion under the caption “Conflicts of Interest” beginning on page 28 and the discussion under the captions “Investment Objectives and Criteria – Loans to General Partners and Affiliates” and “Investment Objectives and Criteria – Purchase of Loans from Affiliates and Other Third Parties” on page 42.

REDWOOD MORTGAGE INVESTORS VIII

INTERIM FINANCIAL STATEMENTS

In the opinion of the management of Redwood Mortgage Investors VIII, a California Limited Partnership, all adjustments necessary for a fair presentation of the financial position as of the interim period presented herein have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that this unaudited financial statement be read in conjunction with the corresponding audited financial statement and the notes thereto included elsewhere in this prospectus.

REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 (unaudited) AND DECEMBER 31, 2006 (audited)
($ in thousands)

ASSETS

	September 30,			December 31,
	2007			2006
Cash and cash equivalents	$	27,698		$	18,096

Loans
Loans, secured by deeds of trust		285,092			261,097
Allowance for loan losses		(3,618	)		(2,786	)
Net loans		281,474			258,311


Interest and other receivables
Accrued interest and late fees		4,734			3,384
Due from affiliate		667			-
Advances on loans		373			96
Total interest and other receivables		5,774			3,480

Loan origination fees, net		26			104
Real estate held for sale, net of allowance of $1,417
for September 30, 2007 and $2,348 for December 31, 2006		23,294			25,231
Total other assets		23,320			25,335
Total assets	$	338,266		$	305,222




The accompanying notes are an integral part of the consolidated financial statements.

REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 (unaudited) AND DECEMBER 31, 2006 (audited)
($ in thousands)

LIABILITIES AND PARTNERS' CAPITAL

	September 30,		December 31,
	2007		2006
Liabilities
Line of credit	$	32,450	$	30,700
Accounts payable		184		76
Payable to affiliate		516		481
Total liabilities		33,150		31,257
Minority interest		3,127		3,017
Investors in applicant status		566		557
Partners' capital
Limited partner's capital, subject to redemption net of unallocated
syndication costs of $1,782 for September 30, 2007 and $1,743 for
December 31, 2006; and Formation Loan receivable of $13,338
for September 30, 2007 and $12,693 for December 30, 2006		301,169		270,160

General partners' capital, net of unallocated syndication costs of $18
for September 30, 2007 and $17 for December, 31, 2006		254		231
Total partners' capital		301,423		270,391
Total liabilities and partners' capital	$	338,266	$	305,222



The accompanying notes are an integral part of the consolidated financial statements.

REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (unaudited)
($ in thousands, except for per limited partner amounts)

	THREE MONTHS ENDED				NINE MONTHS ENDED
	SEPTEMBER 30,				SEPTEMBER 30,
	2007		2006		2007		2006
Revenues
Interest on loans	$	7,315	$	6,616	$	21,074	$	19,839
Interest - interest bearing accounts		22		18		63		40
Late fees		74		94		221		230
Imputed interest on Formation loan		176		99		507		295
Other		33		20		53		99
Total revenues		7,620		6,847		21,918		20,503

Expenses
Mortgage servicing fees		-		630		1,310		1,845
Interest expense		480		557		1,455		1,902
Amortization of loan origination fees		26		23		78		67
Provisions for losses on loans and real estate held
for sale		755		301		924		1,155
Asset management fees		293		255		839		726
Clerical costs through Redwood Mortgage Corp.		83		82		249		246
Professional services		208		15		372		166
Amortization of discount on imputed interest		176		99		507		295
Other		47		55		172		233
Total expenses		2,068		2,017		5,906		6,635
Net income	$	5,552	$	4,830	$	16,012	$	13,868

Net income:
General partners ( 1%)	$	55	$	48	$	160	$	138
Limited partners (99%)		5,497		4,782		15,852		13,730
	$	5,552	$	4,830	$	16,012	$	13,868
Net income per $1,000 invested by limited
partners for the entire period

-where income is compounded and retained	$	17	$	17	$	53	$	53

-where partner receives income in monthly
distributions	$	17	$	17	$	52	$	52


The accompanying notes are an integral part of the consolidated financial statements.

REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (unaudited)
($ in thousands)

	2007			2006
Cash flows from operating activities
Net income	$	16,012		$	13,868
Adjustments to reconcile net income to net cash provided by operating activities
Imputed interest income		(507	)		(295	)
Amortization of discount		507			295
Amortization of loan origination fees		78			67
Provision for loan and real estate losses		924			1,155
Change in operating assets and liabilities
Accrued interest and late fees		(1,818	)		(36	)
Advances on loans		(332	)		(52	)
Loan origination fees		-			(19	)
Accounts payable		108			20
Due from/payable to affiliate		(633	)		(62	)
Other liabilities		-			72
Net cash provided by operating activities		14,339			15,013
Cash flows from investing activities
Loans originated		(94,812	)		(131,328	)
Principal collected on loans		69,125			92,893
Payments for development of real estate		(773	)		(280	)
Pay off term loan and related payables		(845	)		-
Proceeds from disposition of real estate		5,680			637
Net cash used in investing activities		(21,625	)		(38,078	)
Cash flows from financing activities
Borrowings (payments) on line of credit, net		1,750			2,700
Contribution by partner applicants		24,824			27,355
Partners' withdrawals		(8,769	)		(7,249	)
Syndication costs paid		(320	)		(297	)
Formation loan lending		(1,874	)		(2,114	)
Formation loan collections		1,167			1,112
Increase/(decrease) in minority interest		110			(53	)
Net cash provided by financing activities		16,888			21,454
Net decrease in cash and cash equivalents		9,602			(1,611	)
Cash and cash equivalents - beginning of period		18,096			28,853
Cash and cash equivalents - end of period	$	27,698		$	27,242
Supplemental disclosures of cash flow information
Cash paid for interest	$	1,455		$	1,902



The accompanying notes are an integral part of the consolidated financial statements.

During the first quarter of 2007, the partnership acquired a single family residence through foreclosure. This resulted in an increase in asset value of real estate held for sale of $2,640,000, an increase in notes payable of $844,000 and a decrease 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 partnership sold a defaulted loan to a third party in return for cash. As a result, $360,000 was written off, which resulted in a decrease in loans receivable and a decrease in the allowance for loan loss reserve.

In the second quarter of 2007, the partnership sold one property held as real estate held for sale and sustained a loss of $602,000, which resulted in a decrease in real estate held for sale receivables and a decrease in the real estate held for sale allowance.

In the third quarter of 2007, the partnership reached a settlement of a note from a defaulted borrower. As a result, $47,000 was written off against the allowance for loan loss reserve including: $13,000 for the note balance, $32,000 for accrued interest and $2,000 in accrued late charges.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 1 – GENERAL

In the opinion of the management of the partnership, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the consolidated financial information included therein. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the partnership’s Form 10-K for the fiscal year ended December 31, 2006 filed with the Securities and Exchange Commission. The results of operations for the nine month period ended September 30, 2007 are not necessarily indicative of the operating results to be expected for the full year.

Formation Loans

The following summarizes Formation Loan transactions to September 30, 2007 ($ in thousands):

	Offerings
	1st			2nd			3rd			4th			5th			6th			Total
Limited partner
contributions	$	14,932		$	29,993		$	29,999		$	49,985		$	74,904		$	71,823		$	271,636

Formation Loan made		1,075			2,272			2,218			3,777			5,661			5,435			20,438
Discount on imputed
interest		-			(118	)		(136	)		(305	)		(1,161	)		(1,397	)		(3,117	)
Formation Loan made,
net		1,075			2,154			2,082			3,472			4,500			4,038			17,321
Repayments to date		(991	)		(1,538	)		(1,075	)		(1,452	)		(1,261	)		(351	)		(6,668	)
Early withdrawal
penalties applied		(84	)		(139	)		(104	)		(46	)		(59	)		-			(432	)
Formation Loan, net
at September 30, 2007		-			477			903			1,974			3,180			3,687			10,221
Unamortized discount
on imputed interest		-			118			136			305			1,161			1,397			3,117
Balance
at September 30, 2007	$	-		$	595		$	1,039		$	2,279		$	4,341		$	5,084		$	13,338
Percent loaned		7.2	%		7.6	%		7.4	%		7.6	%		7.6	%		7.6	%		7.5	%

The Formation Loan has been deducted from limited partners’ capital in the consolidated balance sheets. As amounts are collected from Redwood Mortgage Corp., the deduction from capital will be reduced. Interest has been imputed at the market rate of interest in effect at the date of the offerings’ close. An estimated amount of imputed interest was recorded for the offerings still outstanding. During the three month periods ended September 30, 2007 and 2006, amortization expense of $507,000 and $295,000, respectively, was recorded related to the discount on the imputed interest. For the nine month periods ended September 30, 2007 and 2006, amortization expense of $176,000 and $99,000, respectively, was recorded related to the discount on the imputed interest.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 1 – GENERAL (continued)

Syndication costs

The partnership bears its own syndication costs (other than certain sales commissions), including legal and accounting expenses, printing costs, selling expenses, and filing fees. Syndication costs are charged against partners’ capital and are allocated to the individual partners consistent with the partnership agreement.

Through September 30, 2007, syndication costs of $4,583,000 had been incurred by the partnership for the current (sixth) offering and the previous five offerings with the following distribution ($ in thousands):

Costs incurred	$	4,583
Early withdrawal penalties applied		(143	)
Allocated to date		(2,640	)
September 30, 2007 balance	$	1,800

The sixth offering of 100,000,000 units ($100,000,000) commenced on August 4, 2005. Syndication costs attributable to the sixth offering will be limited to the lesser of 10% of the gross proceeds or $4,000,000 with any excess to be paid by the general partners. As of September 30, 2007, the sixth offering had incurred syndication costs of $1,325,000 (1.84% of contributions). Syndication costs are typically higher in the early stages of an offering.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The partnership’s consolidated financial statements include the accounts of its 100%-owned subsidiaries, Russian Hill Property Company, LLC (“Russian”) and Borrette Property Company, LLC (“Borrette”), and its 72.5%-owned subsidiary, Larkin Property Company, LLC (“Larkin”). All significant intercompany transactions and balances have been eliminated in consolidation.

Loans secured by deeds of trust

At September 30, 2007 and December 31, 2006, the partnership had seventeen and seven loans, respectively, past due 90 days or more in regularly scheduled monthly payment (“90 Day Past Due Loans”) totaling $22,637,000 and $5,519,000, respectively.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans secured by deeds of trust (continued)

Most of the partnership’s loans contain balloon payments at their maturity date, meaning that a lump sum payment of principal and interest is due at the maturity date. Borrowers occasionally are not able to pay the full amount due at the maturity date. The partnership may allow these borrowers to continue making the previously regularly scheduled monthly payments for certain periods of time to assist the borrower in meeting the balloon payment obligation. These loans for which the principal and/or any accrued interest is due and payable, but the borrower has failed to make such payment of principal and/or accrued interest are referred to herein as “Past Maturity Loans”. At September 30, 2007 and December 31, 2006, the partnership had seventeen loans totaling $61,527,000 and seven loans totaling $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, 2007 and December 31, 2006 was 27 totaling $71,787,000 and ten totaling $30,055,000, respectively. Accrued interest, advances and late charge receivables on these loans totaled $2,573,000 and $1,568,000 as of September 30, 2007 and December 31, 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 outstanding amount due to the partnership and the partnership is still accruing interest on these loans. At September 30, 2007 and December 31, 2006 there were no loans categorized as impaired by the partnership.

Allowance for loan losses

The composition of the allowance for loan losses as of September 30, 2007 and December 31, 2006 was as follows (in thousands):

			Percent					Percent
	September 30,		to total			December 31,		to total
	2007		loans			2006		loans
Real estate mortgage
Single-family (1-4 units)	$	2,004		66.56	%	$	1,673		73.10	%
Apartments		134		4.71	%		160		5.71	%
Commercial		1,417		27.89	%		887		20.40	%
Land		63		0.84	%		66		0.79	%
	$	3,618		100.00	%	$	2,786		100.00	%

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

Activity in the allowance for loan losses for the nine months ended September 30, 2007 and for the year ended December 31, 2006 was as follows ($ in thousands):

	September 30,			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		(11	)		-
Commercial		(363	)		(15	)
Land		(46	)		-
		(420	)		(127	)
Recoveries
Domestic
Real estate mortgage
Single-family (1-4 units)		-			-
Apartments		-			-
Commercial		-			-
Land		-			-
		-			-
Net charge-offs		(420	)		(127	)
Additions charged to operations		924			927
Transfer to real estate held for sale reserve		-			(1,152	)
Transfer from real estate held for sale reserve		328			-
Balance at end of period	$	3,618		$	2,786
Ratio of net charge-offs during the period to average
secured loans outstanding during the period		0.15	%		0.05	%

Income taxes

No provision for federal and state income taxes (other than an $800 state minimum tax) is made in the consolidated financial statements since income taxes are the obligation of the limited partners if and when income taxes apply.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net income per $1,000 invested

Amounts reflected in the consolidated statements of income as net income per $1,000 invested by limited partners for the entire period are amounts allocated to limited partners who held their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive periodic distributions of their net income. Individual income is allocated each month based on the 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 selected other options.

Profits and losses

Profits and losses are allocated among the limited partners according to their respective capital accounts monthly after 1% of the profits and losses is allocated to the general partners.

Management estimates

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

NOTE 3 – GENERAL PARTNERS AND RELATED PARTIES

The following are commissions and/or fees, which are paid to the general partners.

Mortgage brokerage commissions

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, Redwood Mortgage Corp. may collect an amount equivalent to 12% of the loaned amount until six months after the termination date of the offering. Thereafter, loan brokerage commissions (points) will be limited to an amount not to exceed 4% of the total partnership assets per year. The loan brokerage commissions are paid by the borrowers and thus, are not an expense of the partnership.

Mortgage servicing fees

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 3 – GENERAL PARTNERS AND RELATED PARTIES (continued)

Asset management fees

The general partners receive monthly fees for managing the partnership’s loan portfolio and operations in an amount up to 1/32 of 1% of the “net asset value” (3/8 of 1% annually), which is the partnership’s total assets less its total liabilities.

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 the general partners.

Operating expenses

Redwood Mortgage Corp., a general partner, is reimbursed by the partnership for all operating expenses incurred 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.

NOTE 4 – REAL ESTATE HELD FOR SALE

The following schedule reflects the cost of the properties and recorded reductions to estimated fair values, including estimated costs to sell, at September 30, 2007 and December 31, 2006 ($ in thousands):

	September 30,			December 31,
	2007			2006
Cost of properties	$	24,711		$	27,579
Reduction in value		(1,417	)		(2,348	)
Real estate held for sale, net	$	23,294		$	25,231

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, 2007 and December 31, 2006, the partnership’s total investment in this property was $1,816,000 and $1,759,000, respectively, net of a valuation allowance of $500,000.

In December 2004, the partnership acquired land through a deed in lieu of foreclosure. At the time the partnership took ownership of the property, the partnership’s investment totaled $4,377,000 including accrued interest and advances. During 2006, management established a $490,000 reserve against this property to reduce the carrying amount to management’s estimate of the net realizable value of the property. During the third quarter of 2006, the partnership sold one of the three parcels at a loss of approximately $73,000, for which a reserve had been previously established. At September 30, 2007 and December 31, 2006, the partnership’s investment in this property was $3,222,000, net of a valuation allowance of $417,000.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 4 – REAL ESTATE HELD FOR SALE (continued)

During 2006, the partnership acquired a single-family residence through foreclosure. At the time the partnership took ownership of the property, the partnership’s investment totaled $6,028,000. As of June 30, 2007 and December 31, 2006, approximately $253,000 and $111,000, respectively, in costs related to the development of this property had been capitalized. In June 2007, the property was sold at a loss of $602,000, which was offset against a valuation allowance of $919,000, which was allocated for this property.

Russian

During 2002, a single-family residence that secured a partnership loan totaling $4,402,000, including accrued interest and advances, was transferred via a statutory warranty deed to a new entity named Russian Hill Property Company, LLC (“Russian”). Russian was formed by the partnership to complete the development and sale of the property. The assets, liabilities and operating results of Russian have been consolidated into the accompanying consolidated financial statements of the partnership. Costs related to the sale and development of this property were capitalized during 2003. Commencing January 2004, costs related to sales and maintenance of the property were expensed. At each of September 30, 2007 and December 31, 2006, the partnership’s total investment in Russian was $3,979,000, net of a valuation allowance of $500,000.

Larkin

During 2005, the partnership acquired a multi-unit property through foreclosure. At the time the partnership took ownership of the property, the partnership’s investment, together with three other affiliate partnerships, totaled $10,595,000, including accrued interest and advances. Upon acquisition, the property was transferred via a statutory warranty deed to a new entity named Larkin Street Property Company, LLC (“Larkin”). The partnership owns a 72.50% interest in the property and the other three affiliates collectively own the remaining 27.50%. No valuation allowance has been established against this property as management is of the opinion that the property will have adequate equity to allow the partnership and its affiliates to recover their investments. The assets, liabilities and operating results of Larkin have been consolidated into the accompanying consolidated financial statements of the partnership. The partnership has commenced making improvements to the property in anticipation of listing the property for sale in late 2008. As of September 30, 2007, approximately $1,299,000 in costs related to the development of this property have been capitalized. The partnership pursued efforts 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, 2007, the partnership’s investment, together with the other affiliated partnerships, totaled $11,463,000.

Borrette

In February 2007, the partnership acquired a single-family residence through foreclosure. At the time the partnership took ownership of the property, the partnership’s investment totaled $2,640,000 including accrued interest, late charges, advances and the balance owed to the senior lien holder, including accrued charges. In September 2007, the senior lien holder was paid in full. A 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 September 30, 2007, the partnership has spent approximately $174,000 for property improvements in anticipation of listing the property for sale. As of September 30, 2007, the partnership’s total investment in Borrette was $2,814,000.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 5 – BANK LINE OF CREDIT

The partnership has a bank line of credit in the maximum amount of the lesser of (1) $75,000,000, (2) one-third of partners’ capital or (3) the borrowing base as defined in the credit agreement. The line of credit matures on November 15, 2008, with borrowings at prime less 0.50% and secured by the partnership’s loan portfolio. The line of credit may be converted to a three year fully amortizing loan at its maturity. The outstanding balances were $32,450,000 and $30,700,000 at September 30, 2007 and December 31, 2006, respectively. The interest rate was 7.25% at September 30, 2007 and 7.75% at December 31, 2006. Each of these rates was 0.50% below the bank’s prime rate of 7.75% and 8.25% respectively. The partnership may be subject to a 0.50% availability fee on specified balances in the event the average usage levels are not maintained. During 2007, the partnership’s average usage fell below the average usage threshold and therefore the partnership was obligated to pay a 0.50% availability fee. The line of credit requires the partnership to comply with certain financial covenants. The partnership was in compliance with these covenants at September 30, 2007 and December 31, 2006.

NOTE 6 – NOTE PAYABLE

During the third quarter of 2007, the partnership paid off its sole note payable of $500,000 and all accrued interest related to the Borrette property (please see Note 4).

The partnership had taken title to the Borrette property subject to an existing loan in the principal amount of $500,000 secured by a senior deed of trust. The loan was past maturity and due in full; however, the partnership had negotiated a forbearance agreement with the note holder to extend the time to repay this obligation. The senior mortgage called for a balloon payment of principal and interest due April 30, 2007, as extended by the forbearance agreement. The note carried an interest rate of 12.50% per annum with a $5,208 monthly payment of interest only.

NOTE 7 – 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 accounts, are subject to immediate withdrawal.

(b)

Secured loans carrying value was $285,092,000 and $261,097,000 at September 30, 2007 and December 31, 2006, respectively. The fair value of these loans of $286,762,000 and $261,692,000, respectively, was 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 loan losses along with accrued interest and advances related thereto should also be considered in evaluating the fair value versus the carrying value.

(c)	Line of credit and loan commitments. The carrying amount equals fair value. All amounts, including interest payable, are subject to immediate repayment.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 8 – ASSET CONCENTRATIONS AND CHARACTERISTICS ($ in thousands)

Loans are secured by recorded deeds of trust. At September 30, 2007 and December 31, 2006 there were 108 and 103 secured loans outstanding, respectively, with the following characteristics:

	September 30,			December 31,
	2007			2006
Number of secured loans outstanding		108			103
Total secured loans outstanding	$	285,092		$	261,097
Average secured loan outstanding	$	2,640		$	2,487
Average secured loan as percent of total secured loans		0.93	%		0.95	%
Average secured loan as percent of partners' capital		0.88	%		0.92	%
Largest secured loan outstanding	$	33,678		$	32,156
Largest secured loan as percent of total secured loans		11.81	%		12.32	%
Largest secured loan as percent of partners' capital		11.17	%		11.89	%
Largest secured loan as percent of total assets		9.95	%		10.54	%
Number of counties where security is located (all California)		29			26
Largest percentage of secured loans in one county		26.63	%		17.69	%
Number of secured loans in foreclosure status		5			2
Amount of secured loans in foreclosure	$	5,170		$	2,108

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 8 – ASSET CONCENTRATIONS AND CHARACTERISTICS (in thousands) (continued)

The following secured loan categories were held at September 30, 2007 and December 31, 2006:

	September 30,			December 31,
	2007			2006
First trust deeds	$	100,960		$	125,061
Second trust deeds		178,729			133,623
Third trust deeds		5,403			2,413
Total loans		285,092			261,097
Prior liens due other lenders at time of loan		417,747			329,554
Total debt	$	702,839		$	590,651
Appraised property value at time of loan	$	1,031,474		$	895,621

Total secured loans as a percent of appraisals
based on appraised values and prior liens
at time loan was consummated		68.14	%		65.95	%

Secured loans by type of property
Single-family (1-4 units)	$	189,737		$	190,859
Apartments		13,422			14,914
Commercial		79,525			53,262
Land		2,408			2,062
Total secured loans	$	285,092		$	261,097

The interest rates on the loans range from 7.00% to 13.00% at September 30, 2007 and December 31, 2006. This range of interest rates is typical of our portfolio.

Scheduled maturity dates of secured loans as of September 30, 2007 are as follows:

	Amount
Prior to December 31, 2007	$	86,696
Between January 1, 2008 and December 31, 2008		103,381
Between January 1, 2009 and December 31, 2009		38,668
Between January 1, 2010 and December 31, 2010		36,508
Between January 1, 2011 and December 31, 2011		6,942
Thereafter		12,897
	$	285,092

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)

NOTE 8 – ASSET CONCENTRATIONS AND CHARACTERISTICS (in thousands) (continued)

The scheduled maturities for 2007 include seventeen Past Maturity Loans totaling $61,527,000 at September 30, 2007. Interest payments on eight of these loans totaling $13,590,000 were categorized as 90 Day Past Due Loans. Occasionally the partnership allows borrowers to continue to make the payments on Past Maturity Loans for periods of time. One of the Past Maturity Loans totaling $4,072,000 was in foreclosure as of September 30, 2007.

At times the partnership’s cash deposits exceed federally insured limits. Management believes deposits are maintained in financially secure financial institutions.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Construction/Rehabilitation Loans

The partnership makes construction and rehabilitation loans which are not fully disbursed at loan inception. The partnership approves 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, 2007, there were $7,491,000 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.

Workout Agreements

The partnership has negotiated various contractual workout agreements with borrowers whose loans are past maturity or who are delinquent in making payments. The partnership was not obligated to fund additional money on these loans as of September 30, 2007. There was one loan totaling $66,000 subject to a workout agreement as of September 30, 2007.

Legal proceedings

From time to time, the partnership is involved in various legal actions arising in the normal course of business. In the opinion of management, such matters will not have a material effect upon the financial position of the partnership.

REDWOOD MORTGAGE INVESTORS VIII

(A CALIFORNIA LIMITED PARTNERSHIP)

CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTAL INFORMATION

DECEMBER 31, 2006 AND 2005

AND FOR EACH OF THE THREE YEARS

IN THE PERIOD ENDED DECEMBER 31, 2006

ARMANINO McKENNA LLP

CERTIFIED PUBLIC ACCOUNTANTS

12667 Alcosta Blvd., Suite 500

San Ramon, CA 94583

(925) 790-2600

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

Redwood Mortgage Investors VIII

Redwood City, California

We have audited the accompanying consolidated balance sheets of Redwood Mortgage Investors VIII (a California limited partnership) as of December 31, 2006 and 2005 and the related consolidated statements of income, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 2006. These consolidated financial statements are the responsibility of Redwood Mortgage Investors VIII's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Redwood Mortgage Investors VIII as of December 31, 2006 and 2005 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

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

/s/ ARMANINO McKENNA LLP

San Ramon, California

________________________

March 26, 2007

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Balance Sheets

December 31, 2006 and 2005

(in thousands)

ASSETS

		2006			2005
Cash and cash equivalents	$	18,096		$	28,853

Loans
Loans, secured by deeds of trust		261,097			214,012
Allowance for loan losses		(2,786	)		(3,138	)
Net loans		258,311			210,874

Interest and other receivables
Accrued interest and late fees		3,384			3,254
Advances on loans		96			103
Total interest and other receivables		3,480			3,357

Other assets
Loan origination fees, net		104			72
Real estate held for sale, net		25,231			21,328
Total other assets		25,335			21,400

Total assets	$	305,222		$	264,484

LIABILITIES AND PARTNERS’ CAPITAL

Liabilities
Line of credit	$	30,700	$	32,000
Accounts payable		76		10
Payable to affiliate		481		489
Total liabilities		31,257		32,499

Investors in applicant status		557		776
Minority interest		3,017		3,042

Partners’ capital
Limited partners’ capital, subject to redemption, net of unallocated
syndication costs of $1,743 and $1,653 for2006 and 2005, respectively;
and net of Formation Loan receivable of $12,693 and $11,506 for
2006 and 2005, respectively		270,160		227,970

General partners’ capital, net of unallocated syndication costs of $18
and $16 for 2006 and 2005, respectively		231		197
Total partners’ capital		270,391		228,167

Total liabilities and partners’ capital	$	305,222	$	264,484

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Income

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands, except for per limited partner amounts)

		2006		2005		2004

Revenues
Interest on loans	$	26,395	$	19,203	$	16,437
Late fees		241		120		218
Other		689		865		478
		27,325		20,188		17,133

Expenses
Mortgage servicing fees		2,479		1,736		1,565
Interest expense		2,344		278		622
Amortization of loan origination fees		91		65		56
Provision for losses on loans and real estate held for sale		1,195		855		1,146
Asset management fees		991		814		630
Clerical costs from Redwood Mortgage Corp.		329		298		307
Professional services		231		147		211
Amortization of discount on imputed interest		500		395		319
Other		293		232		145
		8,453		4,820		5,001

Income before minority interest		18,872		15,368		12,132

Minority interest share of subsidiary loss		—		—		—

Net income	$	18,872	$	15,368	$	12,132

Net income
General partners (1%)	$	188	$	154	$	121
Limited partners (99%)		18,684		15,214		12,011

	$	18,872	$	15,368	$	12,132

Net income per $1,000 invested by
limited partners for entire period
Where income is reinvested	$	71	$	70	$	72
Where partner receives income in monthly distributions	$	69	$	68	$	70

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Changes in Partners’ Capital

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

				Limited Partners
	Investors			Capital									Total
	In			Account			Unallocated			Formation			Limited
	Applicant			Limited			Syndication			Loan,			Partners’
	Status			Partners			Costs			Gross			Capital

Balances at December 31, 2003	$	1,210		$	147,074		$	(875	)	$	(7,550	)	$	138,649
Contributions on application		40,954			—			—			—			—
Formation loan increases		—			—			—			(3,117	)		(3,117	)
Formation loan payments received		—			—			—			855			855
Interest credited to partners in applicant status		20			—			—			—			—
Interest withdrawn		(8	)		—			—			—			—
Transfers to partners’ capital		(41,752	)		41,752			—			—			41,752
Net income		—			12,011			—			—			12,011
Syndication costs incurred		—			—			(417	)		—			(417	)
Allocation of syndication costs		—			(192	)		192			—			—
Partners’ withdrawals		—			(6,365	)		—			—			(6,365	)
Early withdrawal penalties		—			(77	)		16			61			—

Balances at December 31, 2004		424			194,203			(1,084	)		(9,751	)		183,368
Contributions on application		39,816			—			—			—			—
Formation loan increases		—			—			—			(2,978	)		(2,978	)
Formation loan payments received		—			—			—			1,178			1,178
Interest credited to partners in applicant status		41			—			—			—			—
Interest withdrawn		(15	)		—			—			—			—
Transfers to partners’ capital		(39,490	)		39,490			—			—			39,490
Net income		—			15,214			—			—			15,214
Syndication costs incurred		—			—			(837	)		—			(837	)
Allocation of syndication costs		—			(257	)		257			—			—
Partners’ withdrawals		—			(7,465	)		—			—			(7,465	)
Early withdrawal penalties		—			(56	)		11			45			—

Balances at December 31, 2005		776			241,129			(1,653	)		(11,506	)		227,970
Contributions on application		34,811			—			—			—			—
Formation loan increases		—			—			—			(2,674	)		(2,674	)
Formation loan payments received		—			—			—			1,422			1,422
Interest credited to partners in applicant status		21			—			—			—			—
Interest withdrawn		(7	)		—			—			—			—
Transfers to partners’ capital		(35,044	)		35,044			—			—			35,044
Net income		—			18,684			—			—			18,684
Syndication costs incurred		—			—			(440	)		—			(440	)
Allocation of syndication costs		—			(335	)		335			—			—
Partners’ withdrawals		—			(9,846	)		—			—			(9,846	)
Early withdrawal penalties		—			(80	)		15			65			—

Balances at December 31, 2006	$	557		$	284,596		$	(1,743	)	$	(12,693	)	$	270,160

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Changes in Partners’ Capital (continued)

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

	General Partners
	Capital						Total
	Account			Unallocated			General			Total
	General			Syndication			Partners’			Partners’
	Partners			Costs			Capital			Capital

Balances at December 31, 2003	$	132		$	(9	)	$	123		$	138,772
Contributions on application		—			—			—			—
Formation loan increases		—			—			—			(3,117	)
Formation loan payments received		—			—			—			855
Interest credited to partners in applicant status		—			—			—			—
Interest withdrawn		—			—			—			—
Capital contributed		41			—			41			41,793
Net income		121			—			121			12,132
Syndication costs incurred		—			(4	)		(4	)		(421	)
Allocation of syndication costs		(2	)		2			—			—
Partners’ withdrawals		(118	)		—			(118	)		(6,483	)
Early withdrawal penalties		—			—			—			—

Balances at December 31, 2004		174			(11	)		163			183,531
Contributions on application		—			—			—			—
Formation loan increases		—			—			—			(2,978	)
Formation loan payments received		—			—			—			1,178
Interest credited to partners in applicant status		—			—			—			—
Interest withdrawn		—			—			—			—
Capital contributed		40			—			40			39,530
Net income		154			—			154			15,368
Syndication costs incurred		—			(8	)		(8	)		(845	)
Allocation of syndication costs		(3	)		3			—			—
Partners’ withdrawals		(152	)		—			(152	)		(7,617	)
Early withdrawal penalties		—			—			—			—

Balances at December 31, 2005		213			(16	)		197			228,167
Contributions on application		—			—			—			—
Formation loan increases		—			—			—			(2,674	)
Formation loan payments received		—			—			—			1,422
Interest credited to partners in applicant status		—			—			—			—
Interest withdrawn		—			—			—			—
Capital contributed		35			—			35			35,079
Net income		188			—			188			18,872
Syndication costs incurred		—			(5	)		(5	)		(445	)
Allocation of syndication costs		(3	)		3			—			—
Partners’ withdrawals		(184	)		—			(184	)		(10,030	)
Early withdrawal penalties		—			—			—			—

Balances at December 31, 2006	$	249		$	(18	)	$	231		$	270,391

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

		2006			2005			2004
Cash flows from operating activities
Net income	$	18,872		$	15,368		$	12,132
Adjustments to reconcile net income to
net cash provided by operating activities
Amortization of loan origination fees		91			65			56
Imputed interest income		(500	)		(395	)		(319	)
Amortization of discount		500			395			319
Provision for losses on loans and real estate held for sale		1,195			855			1,146
Realized (gain) loss on sale of real estate		—			(183	)		—
Change in operating assets and liabilities
Accrued interest and late fees		(578	)		1,040			(2,566	)
Advances on loans		(109	)		(63	)		74
Loan origination fees		(122	)		(75	)		(74	)
Accounts payable		66			(15	)		(199	)
Payable to affiliate		(8	)		(149	)		190
Net cash provided by operating activities		19,407			16,843			10,759

Cash flows from investing activities
Loans originated		(159,745	)		(169,460	)		(81,579	)
Principal collected on loans		107,656			118,772			52,359
Unsecured loans		—			34			—
Payments for development of real estate		(520	)		(939	)		—
Proceeds from disposition of real estate		635			1,541			—
Net cash used in investing activities		(51,974	)		(50,052	)		(29,220	)

Cash flows from financing activities
Borrowings (repayments) on line of credit, net		(1,300	)		16,000			(6,000	)
Contributions by partner applicants		34,862			39,882			41,007
Partners’ withdrawals		(10,030	)		(7,617	)		(6,483	)
Syndication costs paid		(445	)		(845	)		(421	)
Formation loan lending		(2,674	)		(2,978	)		(3,117	)
Formation loan collections		1,422			1,178			855
Increase to (distribution from) minority interest		(25	)		141			—
Net cash provided by financing activities		21,810			45,761			25,841

Net increase (decrease) in cash and cash equivalents		(10,757	)		12,552			7,380

Cash and cash equivalents - beginning of year		28,853			16,301			8,921

Cash and cash equivalents - end of year	$	18,096		$	28,853		$	16,301

Supplemental disclosures of cash flow information
Cash paid for interest	$	2,344		$	278		$	622

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

1. Organizational and General

Redwood Mortgage Investors VIII, a California Limited Partnership (the “Partnership”), was organized in 1993. The general partners are Michael R. Burwell, an individual, Gymno Corporation and Redwood Mortgage Corp., both California corporations, whose majority owner is Michael R. Burwell. The Partnership was organized to engage in business as a mortgage lender for the primary purpose of making loans secured by deeds of trust on California real estate. Loans are being arranged and serviced by Redwood Mortgage Corp. At December 31, 2006, the Partnership was in its sixth offering stage, wherein contributed capital totaled $246,850,000 of approved aggregate offerings of $300,000,000. As of December 31, 2006 and 2005, $557,000 and $776,000, respectively, remained in applicant status, and total Partnership units sold were in the aggregate of $246,850,000 and $212,037,000, respectively.

A minimum of $250,000 and a maximum of $15,000,000 in Partnership units were initially offered through qualified broker-dealers. This initial offering closed in October 1996. In December 1996, the Partnership commenced a second offering of an additional $30,000,000 which closed on August 30, 2000. On August 31, 2000, the Partnership commenced a third offering for an additional $30,000,000 which closed in April 2002. On October 30, 2002, the Partnership commenced a fourth offering for an additional $50,000,000 which closed in October 2003. On October 7, 2003, the Partnership commenced a fifth offering for an additional $75,000,000 which closed in August 2005. On August 4, 2005, the Partnership commenced a sixth offering for an additional $100,000,000.

Sales commissions - formation loans

Sales commissions are not paid directly by the Partnership out of the offering proceeds. Instead, the Partnership loans to Redwood Mortgage Corp., one of the general partners, amounts to pay all sales commissions and amounts payable in connection with unsolicited orders. This loan is unsecured and non-interest bearing and is referred to as the “formation loan.”

The formation loan relating to the initial offering ($15,000,000) totaled $1,075,000, which was 7.2% of limited partners’ contributions of $14,932,000. It is being repaid, without interest, in ten annual installments of $107,000, which commenced on January 1, 1997, following the year the initial offering closed. Payments on this loan were also made during the offering period prior to the close of the offering. As of December 31, 2006 this Formation Loan has been fully repaid.

The formation loan relating to the second offering ($30,000,000) totaled $2,272,000, which was 7.6% of limited partners’ contributions of $29,993,000. It is being repaid, without interest, in ten equal annual installments of $201,000, which commenced on January 1, 2001, following the year the second offering closed. Payments on this loan were also made during the offering period prior to the close of the offering.

The formation loan relating to the third offering ($30,000,000) totaled $2,218,000, which was 7.4% of the limited partners’ contributions of $29,999,000. It is being repaid, without interest, in ten annual installments of $178,000, which commenced on January 1, 2003, following the year the third offering closed. Payments on this loan were also made during the offering stage prior to the close of the offering.

The formation loan relating to the fourth offering ($50,000,000) totaled $3,777,000, which was 7.6% of the limited partners contributions of $49,985,000. It is being repaid, without interest, in ten annual installments of $365,000, which commenced on January 1, 2004, following the year the fourth offering closed. Payments on this loan were also made during the offering stage prior to the close of the offering.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

1. Organizational and General (continued)

Sales commissions - formation loans (continued)

The formation loan relating to the fifth offering ($75,000,000) totaled $5,661,000, which was 7.6% of the limited partners contributions of $74,904,000. It is being repaid, without interest, in ten annual installments of $526,000, which commenced on January 1, 2006, following the year the fifth offering closed. Payments on this loan were also made during the offering stage prior to the close of the offering.

The formation loan relating to the sixth offering ($100,000,000) totaled $3,562,000 as of December 31, 2006, which was 7.6% of the limited partners contributions of $47,083,000 through December 31, 2006. An equal annual repayment schedule on this loan, without interest, will commence in the year subsequent to the closing of this offering. Payments on this loan are being made during the offering stage prior to the close of the offering.

For the offerings, sales commissions paid to brokers range from 0% (units sold by general partners) to 9% of gross proceeds. The Partnership anticipates that the sales commissions will approximate 7.6% based on the assumption that 65% of investors will elect to reinvest earnings, thus generating full 9% commissions. The principal balance of the formation loan will increase as additional sales of units are made. The amount of the annual installment payment to be made by Redwood Mortgage Corp., during the offering stage, will be determined at annual installments of one-tenth of the principal balance of the formation loan as of December 31 of each year.

The following summarizes formation loan transactions to December 31, 2006 (in thousands):

	Initial			Subsequent			Third			Fourth			Fifth			Sixth
	Offering of			Offering of			Offering of			Offering of			Offering of			Offering of
	$	15,000		$	30,000		$	30,000		$	50,000		$	75,000		$	100,000		Total
Limited Partner
contributions	$	14,932		$	29,993		$	29,999		$	49,985		$	74,904		$	47,037		$	246,850

Formation Loan made	$	1,075		$	2,272		$	2,218		$	3,777		$	5,661		$	3,562		$	18,565
Unamortized discount
on imputed interest		—			(160	)		(175	)		(364	)		(1,344	)		(1,232	)		(3,275	)
Formation Loan
made, net		1,075			2,112			2,043			3,413			4,317			2,330			15,290
Repayments to date		(991	)		(1,397	)		(936	)		(1,194	)		(890	)		(90	)		(5,498	)
Early withdrawal
penalties applied		(84	)		(130	)		(95	)		(30	)		(35	)		—			(374	)
Formation Loan, net
at December 31, 2006		—			585			1,012			2,189			3,392			2,240			9,418
Unamortized discount
on imputed interest		—			160			175			364			1,344			1,232			3,275
Balance,
December 31, 2006	$	—		$	745		$	1,187		$	2,553		$	4,736		$	3,472		$	12,693

Percent loaned		7.2	%		7.6	%		7.4	%		7.6	%		7.6	%		7.6	%		7.5	%

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

1. Organizational and General (continued)

Sales commissions - formation loans (continued)

The formation loan has been deducted from limited partners’ capital in the consolidated balance sheets. As amounts are collected from Redwood Mortgage Corp., the deduction from capital will be reduced. Interest has been imputed at the market rate of interest in effect at the date the offerings closed which ranged from 4.00% to 9.50%. An estimated amount of imputed interest is recorded for offerings still outstanding. During 2006, 2005 and 2004, $500,000, $395,000 and $319,000, respectively, was recorded related to amortization of the discount on imputed interest.

Syndication costs

The Partnership bears its own syndication costs, other than certain sales commissions, including legal and accounting expenses, printing costs, selling expenses and filing fees. Syndication costs are charged against partners’ capital and are being allocated to individual partners consistent with the partnership agreement.

Through December 31, 2006, syndication costs of $4,263,000 had been incurred by the Partnership with the following distribution (in thousands):

Costs incurred	$	4,263
Early withdrawal penalties applied		(129	)
Allocated to date		(2,373	)

December 31, 2006 balance	$	1,761

Syndication costs attributable to the initial offering ($15,000,000) were limited to the lesser of 10% of the gross proceeds or $600,000 with any excess being paid by the general partners. Applicable gross proceeds were $14,932,000. Related expenditures totaled $582,000 ($570,000 syndication costs plus $12,000 organization expense) or 3.9% of contributions.

Syndication costs attributable to the second offering ($30,000,000) were limited to the lesser of 10% of the gross proceeds or $1,200,000 with any excess being paid by the general partners. Gross proceeds of the second offering were $29,993,000. Syndication costs totaled $598,000 or 2% of contributions.

Syndication costs attributable to the third offering ($30,000,000) were limited to the lesser of 10% of the gross proceeds or $1,200,000 with any excess being paid by the general partners. Gross proceeds of the third offering were $29,999,000. Syndication costs totaled $643,000 or 2.1% of contributions.

Syndication costs attributable to the fourth offering ($50,000,000) were limited to the lesser of 10% of the gross proceeds or $2,000,000 with any excess to be paid by the general partners. Gross proceeds of the fourth offering were $49,985,000. Syndication costs totaled $658,000 or 1.3% of contributions.

Syndication costs attributable to the fifth offering ($75,000,000) were limited to the lesser of 10% of the gross proceeds or $3,000,000 with any excess to be paid by the general partners. Gross proceeds of the fifth offering were $74,904,000. Syndication costs totaled $789,000 or 1.1% of contributions.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

1. Organizational and General (continued)

Syndication costs (continued)

Syndication costs attributable to the sixth offering ($100,000,000) will be limited to the lesser of 10% of the gross proceeds or $4,000,000 with any excess to be paid by the general partners. As of December 31, 2006, the sixth offering had incurred syndication costs of $1,005,000 (2.14% of contributions).

Term of the partnership

The Partnership is scheduled to terminate on December 31, 2032, unless sooner terminated as provided in the partnership agreement.

2. Summary of Significant Accounting Policies

Basis of presentation

The Partnership’s consolidated financial statements include the accounts of its 100%-owned subsidiaries, Russian Hill Property Company, LLC (“Russian”) and Borrette Property Company, LLC (“Borrette”), and its 72.50%-owned subsidiary, Larkin Street Property Company, LLC (“Larkin”). All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain 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.

Management estimates

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

Loans, secured by deeds of trust

Loans generally are stated at their outstanding unpaid principal balance with interest thereon being accrued as earned.

If the probable ultimate recovery of the carrying amount of a loan, with due consideration for the fair value of collateral, is less than amounts due according to the contractual terms of the loan agreement, and the shortfall in the amounts due are not insignificant, the carrying amount of the loan is reduced to the present value of future cash flows discounted at the loan’s effective interest rate. If a loan is collateral dependent, it is valued at the estimated fair value of the related collateral.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

2. Summary of Significant Accounting Policies (continued)

Loans, secured by deeds of trust (continued)

If events and or changes in circumstances cause management to have serious doubts about the collectibility of the contractual payments, a loan may be categorized as impaired and interest is no longer accrued. Any subsequent payments on impaired loans are applied to reduce the outstanding loan balances, including accrued interest and advances. At December 31, 2006 and 2005, there were no loans categorized as impaired by the Partnership. The average recorded investment in impaired loans was $0 for 2006, 2005 and 2004.

At December 31, 2006 and 2005, the Partnership had 10 and 9 loans 90 days past maturity and/or past due 90 days or more in interest payments, totaling $30,055,000 and $26,863,000, respectively. In addition, accrued interest, late charges and advances on these loans totaled $1,568,000 and $1,774,000 at December 31, 2006 and 2005, respectively. The Partnership does not consider these loans to be impaired because there is sufficient collateral to cover the amount outstanding to the Partnership and is still accruing interest on these loans. As presented in Note 10 to the consolidated financial statements, the average loan to appraised value of security based upon appraised values and prior indebtedness at the time the loans were consummated for loans outstanding at December 31, 2006 and 2005 was 65.95% and 5.95% respectively. When loans are considered impaired the allowance for loan losses is updated to reflect the change in the valuation of collateral security. However, a low loan to value ratio has the tendency to minimize reductions for impairment.

Allowance for loan losses

Loans and the related accrued interest, late fees and advances are analyzed on a periodic basis for recoverability. Delinquencies are identified and followed as part of the loan system. Delinquencies are determined based upon contractual terms. A provision is made for loan losses to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral values, to provide for unrecoverable loans and receivables, including impaired loans, other loans, accrued interest, late fees and advances on loans and other accounts receivable. The Partnership charges off uncollectible loans and related receivables directly to the allowance account once it is determined that the full amount is not collectible.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

2. Summary of Significant Accounting Policies (continued)

Allowance for loan losses (continued)

The composition of the allowance for loan losses was as follows (in thousands):

	December 31,
	2006					2005					2004

	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
Balance at End of Year
Applicable to:

Domestic
Real estate –
mortgage
Single family
(1-4 units)	$	1,673		73.10	%	$	1,598		54.64	%	$	850		49.12	%
Apartments		160		5.71	%		145		8.98	%		430		18.04	%
Commercial		887		20.40	%		1,140		30.45	%		1,033		31.83	%
Land		66		0.79	%		255		5.93	%		30		1.01	%
Total	$	2,786		100.00	%	$	3,138		100.00	%	$	2,343		100.00	%

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

2. Summary of Significant Accounting Policies (continued)

Allowance for loan losses (continued)

Activity in the allowance for loan losses is as follows (in thousands):

	Years Ended December 31,
		2006			2005			2004
Balance at beginning of year	$	3,138		$	2,343		$	2,649

Charge-offs
Domestic
Real estate - mortgage
Single family (1-4 units)		(112	)		(26	)		(842	)
Apartments		—			—			—
Commercial		(15	)		(34	)		(110	)
Land		—			—			—
		(127	)		(60	)		(952	)
Recoveries
Domestic
Real estate - mortgage
Single family (1-4 units)		—			—			—
Apartments		—			—			—
Commercial		—			—			—
Land		—			—			—
		—			—			—
Net charge-offs		(127	)		(60	)		(952	)
Additions charge to operations		927			855			1,146
Transfer to real estate held for sale reserve		(1,152	)		—			(500	)

Balance at end of year	$	2,786		$	3,138		$	2,343

Ratio of net charge-offs during
the period to average secured loans
outstanding during the period		0.05	%		0.03	%		0.60	%

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

2. Summary of Significant Accounting Policies (continued)

Cash and cash equivalents

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

Real estate held for sale

Real estate held for sale includes real estate acquired through foreclosure and is stated at the lower of the recorded investment in the loan, plus any senior indebtedness, or at the property’s estimated fair value, less estimated costs to sell.

The Partnership periodically compares the carrying value of real estate to expected undiscounted future cash flows for the purpose of assessing the recoverability of the recorded amounts. If the carrying value exceeds future undiscounted cash flows, the assets are reduced to estimated fair value. During 2006, the Partnership transferred $1,152,000 from the allowance for loan losses to the allowance for real estate held for sale.

Loan origination fees

The Partnership capitalizes fees for obtaining bank financing. The fees are amortized over the life of the financing using the straight-line method.

Income taxes

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 amounts allocated to limited partners who held their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive periodic distributions of their net income. Individual income is allocated each month based on the 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 selected other options.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

2. Summary of Significant Accounting Policies (continued)

Late fee revenue

Late fees are generally charged at 6% of the monthly installment payment past due. During 2006, 2005 and 2004, late fee revenue of $241,000, $120,000 and $218,000, respectively, was recorded. The Partnership has a recorded late fee receivable at December 31, 2006 and 2005 of $92,000 and $103,000, respectively.

Recently issued accounting pronouncements

In March 2006, the FASB issued SFAS No. 156,, “Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140” (SFAS 156), which permits, but does not require, an entity to account for one or more classes of servicing rights (i.e., mortgage servicing rights) at fair value, with the changes in fair value recorded in the statement of income. SFAS 156 is effective in the first quarter of 2007. The adoption of SFAS 156 is not expected to have a material impact on the Partnership’s financial condition and results of operations.

On September 15, 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 is effective for the Partnership’s financial statements issued for the year beginning on January 1, 2008, with earlier adoption permitted. Management is currently evaluating the impact and timing of the adoption of SFAS 157 on the Partnership’s financial condition and results of operations.

On February 15, 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159), which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. Subsequent changes in fair value of these financial assets and liabilities would be recognized in earnings when they occur. SFAS 159 further establishes certain additional disclosure requirements. SFAS 159 is effective for the Partnership’s financial statements for the year beginning on January 1, 2008, with earlier adoption permitted. Management is currently evaluating the impact and timing of the adoption of SFAS 159 on the Partnership’s financial condition and results of operations.

On July 13, 2006, the FASB released FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the tax law may be uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. The Partnership will adopt FIN 48 in the first quarter of 2007. The adoption of FIN 48 is not expected to have a material impact on the Partnership’s financial condition and results of operations.

On September 13, 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 expresses the SEC Staff’s views regarding the process of quantifying financial statement misstatements. SAB 108 states that in evaluating the materiality of financial statement misstatements, an entity must quantify the impact of correcting misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for the year ended December 31, 2006. The application of SAB 108 did not have an impact on the Partnership’s financial condition and results of operations.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

3.	Other Partnership Provisions

The Partnership is a California limited partnership. The rights, duties and powers of the general and limited partners of the Partnership are governed by the limited partnership agreement and Sections 15611 et seq. of the California Corporations Code.

The general partners are in complete control of the Partnership business, subject to the voting rights of the limited partners on specified matters. Any one of the general partners acting alone has the power and authority to act for and bind the Partnership.

A majority of the outstanding limited partnership interests may, without the permission of the general partners, vote to: (i) terminate the Partnership, (ii) amend the limited partnership agreement, (iii) approve or disapprove the sale of all or substantially all of the assets of the Partnership and (iv) remove or replace one or all of the general partners.

The approval of all the limited partners is required to elect a new general partner to continue the Partnership business where there is no remaining general partner after a general partner ceases to be a general partner other than by removal.

Applicant status

Subscription funds received from purchasers of Partnership units are not admitted to the Partnership until subscription funds are required to fund a loan, fund the formation loan, create appropriate cash reserves, or to pay organizational expenses or other proper partnership purposes. During the period prior to the time of admission, which is anticipated to be between 1 - 90 days, purchasers’ subscriptions will remain irrevocable and will earn interest at money market rates, which are lower than the anticipated return on the Partnership’s loan portfolio.

During 2006, 2005 and 2004, interest totaling $21,000, $41,000 and $20,000, respectively, was credited to partners in applicant status. As loans were made and partners were transferred to regular status to begin sharing in Partnership operating income, the interest credited was either paid to the investors or transferred to partners’ capital along with the original investment.

Election to receive monthly, quarterly or annual distributions

At subscription, investors elect to receive monthly, quarterly or annual distributions of earnings allocations, or to allow earnings to compound. Subject to certain limitations, a compounding investor may subsequently change his election, but an investor’s election to have cash distributions is irrevocable.

Profits and losses

Profits and losses are allocated among the limited partners according to their respective capital accounts monthly after 1% of the profits and losses are allocated to the general partners.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

3.	Other Partnership Provisions (continued)

Liquidity, capital withdrawals and early withdrawals

There are substantial restrictions on transferability of Partnership units and accordingly an investment in the Partnership is non-liquid. Limited partners have 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.

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 as stated in the notice of withdrawal and will be deducted from the capital account.

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 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 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 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.

4.	General Partners and Related Parties

The following are commissions and/or fees that are paid to the general partners:

Mortgage brokerage commissions

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, the general partners may collect an amount equivalent to 12% of the loaned amount until 6 months after the termination date of the offering. Thereafter, loan brokerage commissions (points) will be limited to an amount not to exceed 4% of the total Partnership assets per year. The loan brokerage commissions are paid by the borrowers and thus, are not an expense of the Partnership. In 2006, 2005 and 2004, loan brokerage commissions paid by the borrowers were $3,496,000, $3,697,000, and $2,443,000, respectively.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

4.	General Partners and Related Parties (continued)

Mortgage servicing fees

Monthly mortgage servicing fees of up to 1/8 of 1% (1.5% annual) of the unpaid principal are paid to Redwood Mortgage Corp., based on the unpaid principal balance of the loan portfolio, or such lesser amount as is reasonable and customary in the geographic area where the property securing the mortgage is located. Once a loan is categorized as impaired, mortgage servicing fees are no longer accrued thereon. Additional service fees are recorded upon the receipt of any subsequent payments on impaired loans. Mortgage servicing fees of $2,479,000, $1,736,000 and $1,565,000 were incurred for 2006, 2005 and 2004, respectively. The Partnership had a payable to Redwood Mortgage Corp. for servicing fees of $481,000 and $489,000 at December 31, 2006 and 2005, respectively.

Asset management fee

The general partners receive monthly fees for managing the Partnership’s loan portfolio and operations up to 1/32 of 1% of the “net asset value” (3/8 of 1% annual). Asset management fees of $991,000, $814,000 and $630,000 were incurred for 2006, 2005 and 2004, respectively.

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 the general partners.

Operating expenses

The Partnership receives certain operating and administrative services from Redwood Mortgage Corp., a general partner. Redwood Mortgage Corp. may be reimbursed by the Partnership for operating expenses incurred 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. During 2006, 2005 and 2004, operating expenses totaling $329,000, $298,000 and $307,000, respectively, were reimbursed to Redwood Mortgage Corp. To the extent that some operating and administrative services were not reimbursed, the financial position and results of Partnership operation may be different.

Contributed capital

The general partners jointly or severally are to contribute 1/10 of 1% of limited partners’ contributions in cash contributions as proceeds from the offerings are received from the limited partners. As of December 31, 2006 and 2005, Gymno Corporation, a general partner, had capital in accordance with Section 4.02(a) of the Partnership Agreement.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

5.	Real Estate Held for Sale

The following schedule reflects the cost of the properties and recorded reductions to estimated fair values, including estimated costs to sell, at December 31 (in thousands):

		2006			2005

Costs of properties	$	27,579		$	22,328
Reduction in value		(2,348	)		(1,000	)

Real estate held for sale, net	$	25,231		$	21,328

During 2006, the Partnership acquired a single family residence through foreclosure. At the time the Partnership took ownership of the property, the Partnership’s investment totaled $6,028,000. As of December 31, 2006, approximately $111,000 in costs related to the development of this property have been capitalized. As of December 31, 2006, the Partnership’s investment in this property totaled $5,220,000, net of a valuation allowance of $919,000.

During 2005, the Partnership acquired land through a deed in lieu of 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.

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. During 2006, management established a $490,000 reserve against this property to reduce the carrying amount to management’s estimate of the ultimate net realizable value of the property. One parcel during 2006 was sold. The Partnership incurred a loss on this sale of $73,000, which had been previously reserved for. At December 31, 2006, the Partnership’s total investment in this property was $3,222,000, net of a remaining reserve of $417,000. At December 31, 2005, the Partnership’s total investment in this property was $4,505,000.

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 December 31, 2006 and 2005, the Partnership’s total investment in this property was $1,759,000 and $1,691,000, net of a valuation allowance of $500,000.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

5.	Real Estate Held for Sale (continued)

Larkin

During 2005, the Partnership acquired a multi-unit property through foreclosure. At the time the Partnership took ownership of the property, the Partnership’s investment, together with three other affiliate partnerships, totaled $10,595,000, including accrued interest and advances. Upon acquisition, the property was transferred via a statutory warranty deed to a new entity named Larkin Street Property Company, LLC (“Larkin”). The Partnership owns a 72.50% interest in Larkin and the other three affiliates collectively own the remaining 27.50%. No valuation allowance has been established against this property as management is of the opinion that the property will have adequate equity to recover all partnerships’ investments. The assets, liabilities and operating results of Larkin have been consolidated into the accompanying consolidated financial statements of the Partnership. As of December 31, 2006, approximately $899,000 in costs related to the development of this property have been capitalized. During 2006, the Partnership recovered $431,000 from one of the guarantors of the original loan. As of December 31, 2006, the Partnership’s investment, together with the other affiliated partnerships, totaled $11,063,000.

Russian

During 2002, a single-family residence that secured a Partnership loan totaling $4,402,000, including accrued interest and advances, was transferred via a statutory warranty deed to a new entity named Russian Hill Property Company, LLC (“Russian”). Russian was formed by the Partnership to complete the development and sale of the property. The assets, liabilities and operating results of Russian have been consolidated into the accompanying consolidated financial statements of the Partnership. Costs related to the sale and development of this property were capitalized during 2003. Commencing January 2004, costs related to sales and maintenance of the property were being expensed. At December 31, 2006 and 2005, the Partnership’s total investment in Russian was $3,979,000, net of a valuation allowance of $500,000.

Income Taxes

The following reflects a reconciliation of partners’ capital reflected in the consolidated financial statements to the tax basis of Partnership capital (in thousands):

		2006		2005
Partners’ capital per consolidated
financial statements	$	270,391	$	228,167
Non-allocated syndication costs		1,761		1,669
Allowance for loan losses and
real estate held for sale		5,134		4,138
Formation loans receivable		12,693		11,506

Partners’ capital - tax basis	$	289,979	$	245,480

In 2006 and 2005, approximately 44% and 45%, respectively, of taxable income was allocated to tax-exempt organizations (i.e., retirement plans).

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

7. Bank Line of Credit

The Partnership has a bank line of credit in the maximum amount of the lesser of (1) $75,000,000, (2) one-third of partners’ capital, or (3) the borrowing base as defined in the agreement. The line of credit matures on November 15, 2007, with borrowings at prime less 0.50% and secured by the Partnership’s loan portfolio. The outstanding balances were $30,700,000 and $32,000,000 at December 31, 2006 and 2005, respectively. The interest rate was 7.75% at December 31, 2006 and 6.75% at December 31, 2005. The Partnership may also be subject to a 0.5% fee on specified balances in the event the line is not utilized. The line of credit requires the Partnership to comply with certain financial covenants. The Partnership was in compliance with these covenants at December 31, 2006 and 2005. There is an option to convert the line of credit to a term loan that would be payable over 36 months.

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)

Secured loans carrying value was $261,097,000 and $214,012,000 at December 31, 2006 and 2005, respectively. The fair value of these loans of $261,692,000 and $215,102,000, respectively, was 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 loan losses along with accrued interest and advances related thereto should also be considered in evaluating the fair value versus the carrying value.

Non-Cash Transactions

During 2006, a previous real estate held for sale property was sold with the Partnership providing financing. This resulted in a decrease to real estate held for sale of $588,000 and an increase to secured loans of $588,000.

During 2006, the Partnership foreclosed on one property (see Note 5), which resulted in an increase in real estate held for sale of $6,028,000, and a decrease in secured loans receivable, accrued interest and advances of $5,464,000, $448,000 and $116,000, respectively.

During 2005, the Partnership foreclosed on, or acquired property through deed in lieu of foreclosure, two properties (see Note 5), which resulted in an increase in real estate held for sale and minority interest of $11,954,000 and $2,901,000, respectively, and a decrease in secured loans receivable, accrued interest and advances of $8,361,000, $601,000 and $91,000, respectively.

During 2004, the Partnership foreclosed on, or acquired property through deeds in lieu of foreclosure, four properties (see Note 5), which resulted in an increase in real estate held for sale and allowance for real estate held for sale of $6,315,000 and $500,000, respectively and a decrease in secured loans receivable, accrued interest, advances, and allowance for loan losses of $4,422,000, $1,840,000, $53,000 and $500,000, respectively.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

10.	Loan Concentrations and Characteristics

Most loans are secured by recorded deeds of trust. At December 31, 2006 and 2005, there were 105 and 98 secured loans outstanding, respectively, with the following characteristics (dollars in thousands):

		2006			2005
Number of secured loans outstanding		105			98
Total secured loans outstanding	$	261,097		$	214,012

Average secured loan outstanding	$	2,487		$	2,184
Average secured loan as percent of total
secured loans		0.95	%		1.02	%
Average secured loan as percent
of partners’ capital		0.92	%		.96	%

Largest secured loan outstanding	$	32,156		$	11,927
Largest secured loan as percent of total
secured loans		12.32	%		5.57	%
Largest secured loan as percent
of partners’ capital		11.89	%		5.23	%
Largest secured loan as percent of total assets		10.54	%		4.51	%

Number of counties where security
is located (all California)		26			24
Largest percentage of secured loans
in one county		17.69	%		25.36	%
Average secured loan to appraised value
of security based on appraised values and
prior liens at time loan was consummated		65.95	%		65.03	%

Number of secured loans in foreclosure status		2			1
Amount of secured loans in foreclosure	$	2,108		$	3,600

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

10.	Asset Concentrations and Characteristics (continued)

The following secured loan categories were held at December 31, 2006 and 2005 (in thousands):

		2006			2005
First trust deeds	$	125,061		$	135,945
Second trust deeds		133,623			73,138
Third trust deeds		2,413			4,929
Total loans		261,097			214,012
Prior liens due other lenders at time of loan		329,554			224,573

Total debt	$	590,651		$	438,585

Appraised property value at time of loan	$	895,621		$	674,436

Average secured loan to appraised value
of security based on appraised values and
prior liens at time loan was consummated		65.95	%		65.03	%

Secured loans by type of property
Single family (1-4 units)	$	190,859		$	116,945
Apartments		14,914			19,209
Commercial		53,262			65,167
Land		2,062			12,691

	$	261,097		$	214,012

The interest rates on the loans range from 7.0% to 13.0% at December 31, 2006 and 8.0% to 13.0% at December 31, 2005.

Scheduled maturity dates of secured loans as of December 31, 2006 are as follows (in thousands):

Year Ending December 31,
2007	$	109,841
2008		99,241
2009		27,076
2010		10,470
2011		7,796
Thereafter		6,673

	$	261,097

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

10.	Loan Concentrations and Characteristics (continued)

The scheduled maturities for 2007 include seven loans totaling $28,706,000, and representing 10.99% of the portfolio, which are past maturity at December 31, 2006. Interest payments on four of these loans were delinquent and are included in the total of loans 90 days or more delinquent presented in Note 2. Occasionally, the Partnership allows borrowers to continue to make the payments on debt past maturity for periods of time. It is the partnership’s experience that loans are sometimes refinanced or repaid before the maturity date. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

The Partnership had 12% of its receivable balance due from one borrower at December 31, 2006. Interest revenue for this borrower accounted for approximately 7.14% of interest revenue for the year ended December 31, 2006.

11.	Commitments and Contingencies

Construction / rehabilitation loans

The Partnership makes construction and rehabilitation loans which are not fully disbursed at loan inception. The Partnership has approved the borrowers up to a maximum loan balance; however, disbursements are made periodically during completion phases of the construction or rehabilitation or at such other times as required under the loan documents. At December 31, 2006, there were $6,082,000 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.

Workout agreements

The Partnership periodically negotiates various workout agreements with borrowers whose loans are past maturity or who are delinquent in making payments. The Partnership is not obligated to fund additional money as of December 31, 2006. As of December 31, 2006, there are no loans under workout agreements.

Legal proceedings

The Partnership is involved in various legal actions arising in the normal course of business. In the opinion of management, such matters will not have a material effect upon the financial position of the Partnership.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

12.	Selected Financial Information (Unaudited)

	Calendar Quarter
	(in thousands, except for per limited partner amounts)
	First		Second		Third		Fourth		Annual
Revenues
2006	$	6,659	$	6,997	$	6,847	$	6,822	$	27,325
2005	$	4,525	$	4,498	$	5,099	$	6,066	$	20,188

Expenses
2006	$	2,247	$	2,371	$	2,017	$	1,818	$	8,453
2005	$	981	$	802	$	1,144	$	1,893	$	4,820

Net income allocated
to general partners
2006	$	44	$	46	$	48	$	50	$	188
2005	$	35	$	37	$	40	$	42	$	154

Net income allocated
to limited partners
2006	$	4,368	$	4,580	$	4,782	$	4,954	$	18,684
2005	$	3,509	$	3,659	$	3,915	$	4,131	$	15,214

Net income per $1,000
invested where income is
Compounded
2006	$	17	$	17	$	17	$	20	$	71
2005	$	17	$	17	$	17	$	19	$	70

Withdrawn
2006	$	17	$	17	$	17	$	18	$	69
2005	$	17	$	17	$	17	$	17	$	68

13. Subsequent Events

Subsequent to December 31, 2006 and through March 26, 2007, the Partnership has received $5,820,000 of new investor money for the current offering and had admitted $5,776,000 of partners in applicant status into the Partnership. The admitted amount includes $557,000 that awaited admission at December 31, 2006.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Schedule II – Valuation and Qualifying Accounts

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

	B		C
	Balance at		Additions									E
	Beginning		Charged to		Charged							Balance
A	of		Costs and		to Other			D				at End
Description	Period		Expenses		Accounts			Deductions				of Period

Year Ended December 31, 2004

Deducted from asset accounts

Allowance for loan losses	$	2,649	$	1,146	$	(500	)	$	(952	)	(a)	$	2,343

Cumulative write-down of
real estate held for sale (REO)		500		—		500			—				1,000

	$	3,149	$	1,146	$	—		$	(952	)	(a)	$	3,343

Year Ended December 31, 2005

Deducted from asset accounts

Allowance for loan losses	$	2,343	$	855	$	—		$	(60	)	(a)	$	3,138

Cumulative write-down of
real estate held for sale (REO)		1,000		—		—			—				1,000

	$	3,343	$	855	$	—		$	(60	)	(a)	$	4,138

Year Ended December 31, 2006

Deducted from asset accounts

Allowance for loan losses	$	3,138	$	927	$	—		$	(1,279	)	(a)	$	2,786

Cumulative write-down of
real estate held for sale (REO)		1,000		268		—			1,080		(a)		2,348

	$	4,138	$	1,195	$	—		$	(199	)	(a)	$	5,134

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

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

													Col H
													Principal
									Col. F				Amount
									Face		Col. G		of Loans
				Col. C	Col. D				Amount of		Carrying		Subject to			Col. J
	Col. B			Final	Periodic		Col. E		Mortgage		Amount of		Delinquent		Col. I	California
Col. A	Interest			Maturity	Payment		Prior		Original		Mortgage		Principal		Type of	Geographic
Description	Rate			Date	Terms		Liens		Amount		Investments		or Interest		Lien	Location
Comm.		11.75	%	12/01/09	$	3	$	—	$	148	$	85	$	—	1st	Yuba
Res.		12.00	%	05/01/03		13		—		1,210		1,210		1,210	1st	Marin
Apts.		12.50	%	11/15/10		4		53		39		312		—	2nd	Contra Costa
Comm.		12.00	%	05/01/07		9		2,916		799		788		788	2nd	Santa Clara
Res.		12.00	%	03/01/01		13		—		1,325		1,325		1,325	1st	Marin
Land		9.50	%	02/01/07		8		—		987		986		—	1st	Santa Clara
Res.		10.00	%	12/01/02		3		—		318		316		316	1st	San Mateo
Comm.		13.00	%	06/01/05		44		8,100		4,550		4,072		4,072	2nd	Santa Clara
Comm.		10.50	%	10/01/07		4		—		441		429		—	1st	San Mateo
Comm.		11.25	%	12/01/07		9		718		900		768		—	3rd	El Dorado
Res.		10.00	%	11/01/05		11		500		1,320		1,320		1,320	2nd	Napa
Comm.		10.00	%	01/01/08		13		—		1,500		1,500		—	1st	River Side
Comm.		12.00	%	07/01/09		25		—		2,500		2,500		—	1st	Sacramento
Apts.		9.50	%	01/01/09		4		—		413		400		—	1st	San Joaquin
Comm.		9.50	%	01/01/07		13		—		1,610		1,610		—	1st	Alameda
Res.		8.50	%	10/01/10		4		189		500		488		—	2nd	Alameda
Res.		8.50	%	02/02/09		1		42		85		83		—	3rd	San Mateo
Comm.		9.00	%	06/01/09		4		2,850		500		491		—	2nd	Santa Clara
Res.		8.50	%	07/01/09		1		—		100		98		—	1st	San Mateo
Comm.		10.00	%	06/01/07		39		—		4,650		4,650		—	1st	Marin
Res.		9.25	%	07/01/09		6		716		690		679		—	2nd	San Mateo
Comm.		9.00	%	08/01/09		12		—		2,000		1,600		—	1st	San Francisco
Comm.		9.50	%	08/01/09		16		—		1,947		1,917		—	1st	Alameda
Res.		8.75	%	09/01/06		85		—		11,684		11,684		11,684	1st	Contra Costa
Res.		10.00	%	09/01/06		99		11,684		15,288		8,779		8,779	2nd	Contra Costa
Res.		9.25	%	01/01/10		1		248		75		73		73	2nd	San Mateo
Comm.		9.50	%	03/01/07		25		—		3,113		3,113		—	1st	San Francisco
Res.		8.50	%	03/15/10		10		2,097		450		444		—	2nd	San Francisco
Comm.		10.00	%	02/01/08		16		2,200		2,335		1,750		—	2nd	Amador
Comm.		9.00	%	03/01/10		2		179		204		198		—	2nd	Monterey
Res.		9.25	%	04/01/07		32		—		4,464		2,376		—	1st	Sutter
Apts.		9.25	%	04/01/07		12		—		1,620		1,620		—	1st	San Francisco
Res.		9.25	%	05/01/10		1		411		160		158		—	2nd	San Mateo
Res.		10.00	%	12/01/07		59		36,000		8,165		7,615		—	2nd	San Francisco
Res.		9.00	%	05/01/10		1		286		70		69		—	2nd	El Dorado
Res.		8.50	%	10/01/10		2		379		325		321		—	3rd	Sonoma
Apts.		9.25	%	05/01/07		8		—		1,040		1,040		—	1st	San Francisco
Apts.		8.50	%	06/01/07		13		—		1,800		1,800		—	1st	Sacramento
Apts.		9.25	%	06/01/07		16		—		2,080		2,080		—	1st	San Francisco
Comm.		8.00	%	07/01/07		37		5,731		5,341		5,341		—	2nd	Alameda
Res.		12.50	%	07/01/08		39		19,700		4,250		4,143		—	2nd	San Mateo

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate (continued)

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

													Col H
													Principal
									Col. F				Amount
									Face		Col. G		of Loans
				Col. C	Col. D				Amount of		Carrying		Subject to			Col. J
	Col. B			Final	Periodic		Col. E		Mortgage		Amount of		Delinquent		Col. I	California
Col. A	Interest			Maturity	Payment		Prior		Original		Mortgage		Principal		Type of	Geographic
Description	Rate			Date	Terms		Liens		Amount		Investments		or Interest		Lien	Location
Apts.		9.25	%	07/01/07		17		—		2,200		2,200		—	1st	San Francisco
Apts.		9.25	%	07/01/07		17		—		2,200		2,200		—	1st	San Francisco
Comm.		9.00	%	08/01/15		13		9,500		1,000		913		—	2nd.	San Francisco
Res.		10.00	%	07/01/07		11		2,081		2,675		1,934		—	2nd	Butte
Apts.		11.00	%	06/01/07		7		2,080		1,483		1,418		—	2nd	San Francisco
Res.		9.00	%	08/01/10		1		—		140		139		—	1st	Ventura
Res.		8.50	%	08/01/07		24		—		3,450		2,033		—	1st	Sacramento
Res.		10.00	%	08/01/07		10		2,033		2,325		2,784		—	2nd	Sacramento
Res.		9.25	%	09/01/07		22		—		3,555		3,013		—	1st	San Joaquin
Comm.		9.50	%	10/01/10		11		322		1,250		1,241		—	3rd	Alameda
Res.		9.25	%	09/01/07		8		—		1,265		1,084		—	1st	San Joaquin
Res.		11.00	%	05/01/08		31		18,744		4,080		3,608		—	2nd	Santa Clara
Land		9.50	%	10/1/2007		4		—		488		488		488	1st	Santa Clara
Comm.		9.50	%	10/1/2010		37		—		4,200		4,157		—	1st	Alameda
Apts.		9.25	%	04/01/07		8		—		1,050		1,050		—	1st	San Francisco
Res.		9.25	%	05/01/07		8		—		1,031		1,031		—	1st	San Francisco
Res.		10.00	%	11/01/07		20		11,500		2,564		2,473		—	2nd	Contra Costa
Res.		8.50	%	11/01/10		1		99		120		119		—	2nd	San Mateo
Res.		12.00	%	12/01/07		12		3,797		1,265		1,257		—	2nd	San Diego
Res.		10.50	%	12/01/07		6		2,811		740		740		—	2nd	Placer
Comm.		9.50	%	12/01/07		23		—		2,900		2,900		—	1st	San Francisco
Res.		8.75	%	01/01/08		41		—		5,625		5,625		—	1st	Alameda
Res.		10.00	%	01/01/08		15		5,625		4,500		4,334		—	2nd	Alameda
Res.		9.00	%	02/01/08		114		—		15,188		14,632		—	1st	Los Angeles
Res.		10.25	%	02/01/08		93		14,632		11,529		10,651		—	2nd	Los Angeles
Res.		9.00	%	02/01/11		11		—		1,350		1,342		—	1st	Placer
Res.		10.25	%	09/01/07		65		39,000		8,350		7,659		—	2nd	Los Angeles
Res.		9.25	%	04/01/08		259		22,876		40,444		32,156		—	2nd	Sacramento
Res.		10.00	%	04/01/08		6		1,620		765		701		—	2nd	San Francisco
Res.		10.00	%	04/01/08		6		2,200		790		751		—	2nd	San Francisco
Res.		10.00	%	05/01/08		31		22,155		4,184		3,619		—	2nd	Alameda
Res.		10.00	%	05/01/08		17		12,512		2,200		2,031		—	2nd	Alameda
Res.		10.00	%	05/01/08		13		9,576		1,696		1,515		—	2nd	Alameda
Res.		9.50	%	06/01/07		35		—		6,796		4,276		—	1st	Fresno
Res.		10.00	%	08/01/09		77		32,200		10,175		8,903		—	2nd	San Francisco
Comm.		10.00	%	05/01/07		68		—		8,294		7,932		—	1st.	Los Angeles
Res.		8.50	%	06/01/09		21		—		2,915		2,915		—	1st.	Napa
Res.		8.88	%	07/01/11		16		4,550		2,100		2,100		—	2nd	San Francisco

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate (continued)

For the Years Ended December 31, 2006, 2005 and 2004

(in thousands)

													Col H
													Principal
									Col. F				Amount
									Face		Col. G		of Loans
				Col. C	Col. D				Amount of		Carrying		Subject to			Col. J
	Col. B			Final	Periodic		Col. E		Mortgage		Amount of		Delinquent		Col. I	California
Col. A	Interest			Maturity	Payment		Prior		Original		Mortgage		Principal		Type of	Geographic
Description	Rate			Date	Terms		Liens		Amount		Investments		or Interest		Lien	Location
Res.		8.75	%	07/01/08		40		—		5,520		5,520		—	1st.	Contra Costa
Res.		10.00	%	07/01/08		27		5,520		6,225		3,293		—	2nd	Contra Costa
Comm.		12.00	%	07/01/09		15		2,500		3,858		1,587		—	2nd	Sacramento
Res.		9.75	%	08/01/11		1		165		66		66		—	2nd	Stanislaus
Res.		9.75	%	09/01/11		1		120		120		120		—	2nd	San Bernardino
Res.		9.75	%	09/01/11		7		2,550		850		848		—	2nd	San Francisco
Res.		9.25	%	09/01/11		7		—		800		799		—	1st	San Joaquin
Res.		9.75	%	09/01/11		1		120		80		80		—	2nd	Humboldt
Res.		10.25	%	10/01/08		28		—		3,949		3,137		—	1st	Contra Costa
Res.		10.25	%	10/01/09		4		2,330		450		450		—	2nd	San Francisco
Comm.		10.25	%	10/01/11		6		—		697		695		—	1st	San Mateo
Land		7.00	%	10/01/09		3		—		928		588		—	1st	Stanislaus
Res.		9.25	%	11/01/11		1		—		125		125		—	1st	San Francisco
Res.		9.00	%	11/01/11		1		769		100		100		—	2nd	Los Angeles
Apts.		10.25	%	11/01/11		4		—		450		450		—	1st	Butte
Res.		9.50	%	11/01/12		46		—		6,200		5,632		—	1st	San Mateo
Res.		9.75	%	12/01/11		1		—		165		165		—	1st	Kern
Res.		9.25	%	11/01/07		1		—		100		100		—	1st	Los Angeles
Res.		10.00	%	12/01/11		3		—		345		345		—	1st	Alameda
Comm.		10.25	%	12/01/08		2		—		275		275		—	1st	Kern
Res.		10.25	%	01/01/09		30		—		3,550		3,550		—	1st	Napa
Res.		9.25	%	01/01/12		1		238		130		130		—	2nd	Riverside
Res.		9.75	%	01/01/11		5		330		561		561		—	2nd	San Diego
Res.		10.25	%	01/01/09		6		—		1,372		1,231		—	1st	Santa Clara
Apts.		9.25	%	12/01/07		7		—		345		345		—	1st	San Francisco
Comm.		10.50	%	01/01/10		24		—		2,750		2,750		—	1st	San Francisco

Total							$	329,554	$	297,889	$	261,097	$	30,055

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Schedule IV – Mortgage Loans on Real Estate

Rule 12-29 Loans on Real Estate (continued)

(in thousands)

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

	Year ended December 31,
		2006		2005		2004
Balance at beginning of year	$	214,012	$	171,745	$	147,174

Additions during period
New loans		159,745		169,460		81,579
Other		588		—		—
Total additions		160,333		169,460		81,579

Deductions during period
Collections of principal		107,656		118,772		52,359
Foreclosures		5,464		8,361		4,422
Cost of loans sold		—		—		—
Amortization of premium		—		—		—
Other		128		60		227
Total deductions		113,248		127,193		57,008

Balance at close of year	$	261,097	$	214,012	$	171,745

INDEPENDENT AUDITORS' REPORT

Board of Directors

Gymno Corporation

Redwood City, California

We have audited the accompanying balance sheet of Gymno Corporation as of December 31, 2006. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Gymno Corporation as of December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

/s/ ARMANINO McKENNA LLP

San Ramon, CA

______________________

April 16, 2007

GYMNO CORPORATION

Balance Sheet

December 31, 2006

ASSETS

Cash and cash equivalents	$	201,880
Other current assets		6,203
Total current assets		208,083

Investment in partnerships
Redwood Mortgage Investors IV		7,500
Redwood Mortgage Investors V		5,000
Redwood Mortgage Investors VI		9,773
Redwood Mortgage Investors VII		11,998
Redwood Mortgage Investors VIII		246,949
		281,220

	$	489,303

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities	$	—

Stockholders' equity
Common stock, no par, authorized 1,000,000
shares; issued and outstanding 500 shares		5,000
Additional paid-in capital		7,500
Retained earnings		476,803
Total stockholders' equity	$	489,303

	$	489,303

The accompanying notes are an integral part of this balance sheet

GYMNO CORPORATION

Balance Sheet

December 31, 2006

1.	Organization

Gymno Corporation (the "Company") was formed in July 1986. The Company was formed for the purpose of serving as the corporate general partner of certain California limited partnerships, (Redwood Mortgage Investors ("RMI") I, II, III, IV, V, VI, VII and VIII), which invest in high-yield debt instruments, primarily promissory notes secured by deeds of trust on California real estate. During December 2005, the partners of RMI I, II and III approved the termination of partnership operations. Accordingly, these partnerships were liquidated in 2005.

As the corporate general partner, the Company receives management fees and reconveyance fees from the partnerships. In addition, the Company receives its allocation of income from the various partnerships.

2.	Summary of Significant Accounting Policies

Basis of accounting

The accompanying financial statements were prepared on the accrual basis of accounting.

Cash and cash equivalents

Cash represents cash and short-term, highly liquid investments with maturities of three months or less at the time of purchase. Periodically, the Company maintains cash balances in excess of federally insured limits.

Income taxes

The Company provides for income taxes currently payable. Deferred taxes are not recorded as they are not significant.

Investment in partnerships

The Company, as corporate general partner, has the ability to exercise significant influence over the partnerships. Accordingly, the Company accounts for its investment in partnerships using the equity method. Pursuant to the equity method, the Company increases (decreases) its investment account for its share of partnership earnings (losses) and cash contributions (withdrawals) related to the partnerships.

Use of estimates

The preparation of a balance sheet in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

GYMNO CORPORATION

Balance Sheet

December 31, 2006

3.	Investment in Partnerships

The following is a summary of the Company's investments in the RMI partnerships as of December 31, 2006:

							Gymno
					Gymno		Corporation
					Corporation		Investment
	Partnership		Partnership		Partnership		Percent of
	Net Assets		Net Income		Investment		Net Assets

RMI IV	$	6,010,007	$	296,818	$	7,500		0.12	%
RMI V		2,005,592		103,925		5,000		0.25	%
RMI VI		6,265,846		382,126		9,773		0.16	%
RMI VII		9,325,994		505,384		11,998		0.13	%
RMI VIII		270,391,024		18,871,539		246,949		0.09	%

	$	293,998,463	$	20,159,792	$	281,220

4. Related Party Receivable / Payable

The Company has a receivable from an affiliate, Redwood Mortgage Corp. ("RMC"), in the amount of $711 at December 31, 2006. The Company incurs a monthly management fee to RMC for usage of space, utilities, personnel and management expertise.

5.	Guarantees

The Company is a guarantor on two separate line of credit agreements for RMI VII and RMI VIII. RMI VII has a $2,500,000 line of credit agreement secured by its loan portfolio and expiring on December 2, 2011. There were no amounts outstanding on the line of credit at December 31, 2006. RMI VIII has a $75,000,000 line of credit agreement secured by its loan portfolio and expiring on November 15, 2008. The balance on the line of credit at December 31, 2006 was $30,700,000.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors

Redwood Mortgage Corp.

Redwood City, California

We have audited the accompanying balance sheet of Redwood Mortgage Corp. as of September 30, 2007. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on the balance sheet based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Redwood Mortgage Corp. as of September 30, 2007 in conformity with accounting principles generally accepted in the United States of America.

ARMANINO McKENNA LLP

January 21, 2008

Redwood Mortgage Corp

Balance Sheet

September 30, 2007

ASSETS

Cash and equivalents	$	10,342,369
Investment in partnership		50,000
Due from related parties		629,893
Prepaid expenses		15,933
Other receivables		6,535
Loans, unsecured, net of discount of $10,451		312,508
Income-producing property, net		1,078,003
Fixed assets, net		195,981
Deferred costs of brokerage related rights, net		10,182,524

Total assets	$	22,813,746

LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities
Accounts payable and accrued liabilities	$	119,386
Due to related parties		667,378
Accrued compensated absences		231,576
Accrued profit-sharing		59,960
Deferred compensation		381,183
Note payable		23,613
Advances from partnerships, net		10,300,290
Deferred income taxes		4,441,000
Total liabilities		16,224,386

Stockholder's equity
Common stock, wholly-owned by The Redwood Group, Ltd.,
at $4 per share stated value (1,000 shares authorized,
issued and outstanding)		4,000
Retained earnings		6,585,360
Total stockholder's equity		6,589,360

Total liabilities and stockholder's equity	$	22,813,746

The accompanying notes are an integral part of this balance sheet

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

1.	Organization

Redwood Mortgage Corp. (the "Company"), is a wholly-owned subsidiary of The Redwood Group, LTD. (the "Parent"), which is owned by Michael R. Burwell and the Irrevocable Burwell Family Trust. The Company, Michael R. Burwell, and Gymno Corporation (owned 50% by Michael R. Burwell) are general partners in Redwood Mortgage Investors VIII, which invests in high-yield debt instruments, primarily promissory notes secured by deeds of trust on California real estate. Michael R. Burwell and Gymno Corporation are also general partners in four other related limited partnerships.

The Company maintains "trust accounts" to service mortgage investments made principally by the aforementioned five limited partnerships. As a real estate broker licensed with the State of California, the Company arranges loans for the limited partnerships with various maturities, which are secured by deeds of trust. At September 30, 2007, the Company was servicing a portfolio approximating $300,000,000 owned primarily by the aforementioned partnerships.

2.	Summary of Significant Accounting Policies

Accrual basis

The accompanying financial statement was prepared on the accrual basis of accounting wherein revenue is recognized when earned and expenses are recognized when incurred.

Cash and equivalents

Cash represents cash and short-term, highly liquid investments with maturities of three months or less.

Allowance for loan losses

Loans and the related accrued interest, late fees and advances are analyzed on a periodic basis for recoverability. Delinquencies are identified and followed as part of the loan system. Delinquencies are determined based upon contractual terms. A provision is made for loan losses to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral values, to provide for unrecoverable loans and receivables, including impaired loans, other loans, accrued interest, late fees and advances on loans and other accounts receivable (unsecured). If a loan is categorized as impaired, interest is no longer accrued. The Company charges off uncollectible loans and related receivables directly to the allowance account once it is determined that the full amount is not collectible. The Company did not have an allowance for loan losses as of September 30, 2007.

Fixed assets and income-producing property

Fixed assets and income-producing property are stated at cost. Depreciation and amortization are computed primarily using straight-line and accelerated methods over estimated useful lives ranging from 3 to 39 years. The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. Impairment is recognized if the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. When an impairment loss is recognized, the asset's carrying value is reduced to its estimated fair value.

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

2.	Summary of Significant Accounting Policies (continued)

Deferred costs of brokerage related rights

Consistent with Statement of Financial Accounting Standards No. 141, Business Combinations, and 142, Goodwill and Other Intangibles, the Company has recognized as an asset rights to act as the mortgage loan broker for several of its affiliated limited partnerships. Such rights result in brokerage commissions to the Company. The initial costs of these rights include fees paid to broker-dealers on behalf of affiliated partnerships. Such costs are being amortized over the anticipated 25-year period that brokerage fee net cash flows are expected to be received in proportion to the expected receipt of these cash flows.

The Company evaluates the fair value of these rights to determine if the brokerage rights have been impaired. Fair value is determined based on the estimated brokerage fee net cash flows to be received by the Company over the expected 25 year life of each partnership offering's underlying loan portfolio. It is the Company's experience that the underlying loan portfolios increase when partner capital is raised and accumulated for the first seven years after receipt of partners' capital, and then will begin to decline gradually over the subsequent 18 years. If the carrying value of the deferred mortgage brokerage rights exceeds their estimated fair value, an allowance for impairment of value is recognized. The Company has determined that no allowance for impairment was required against its deferred mortgage brokerage rights.

Income taxes

The Company's operating results are included in the consolidated tax returns of the Parent, which files its income tax returns on the cash basis of accounting. Income taxes are allocated to the Company by the Parent for those taxes currently payable and those deferred as if the Company were filing separate tax returns. A provision for income taxes is provided for deferred taxes resulting from differences in the timing of reporting revenue and expense items for financial versus tax purposes.

Use of estimates

In preparing financial statement in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates that affect the reported amounts of assets and liabilities as of the balance sheet date. Such estimates relate principally to the period of recoverability of deferred costs of brokerage related rights and the determination of the allowance for loan losses. Actual results could differ from these estimates.

3.	Partnership Services

The following are commissions and/or fees derived by the Company from services provided to its affiliated partnerships:

Loan servicing fees

The Company earns loan servicing fees of up to 1/8 of 1% monthly (1.5% annually) of the unpaid principal or such lesser amount as is reasonable and customary in the geographic area where the property securing the mortgage is located. Unpaid loan servicing fees as of September 30, 2007 are included in due from related parties in the accompanying balance sheet. During 2007, the Company waived approximately $778,754 in loan servicing fees for certain partnerships and as a result, has recorded a due to related parties of $667,378 to reimburse these partnerships for overpayments of service fees.

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

3.	Partnership Services (continued)

Loan commissions

The Company earns loan commissions in connection with the review, selection, evaluation, negotiation and extension of partnership mortgage investments in an amount up to 12% of the mortgage investments until 6 months after the termination date of a partnership offering. Only 1 of the 5 affiliated limited partnerships is in the offering stage. Thereafter, loan commissions are limited to an amount not to exceed 4% of the total partnership assets per year. The loan commissions are paid by the borrowers, and thus, are not an expense of the partnerships.

Asset management fees

The Company receives monthly fees for managing Redwood Mortgage Investors VIII's loan portfolio and operations.

Other fees and charges

The limited partnership agreements provide for other fees such as reconveyance, mortgage assumption and mortgage extension fees. Such fees are incurred by the borrowers and are paid to the Company. In addition, the Company is reimbursed for expenses and clerical costs associated with accounting and related services incurred on behalf of the limited partnerships.

4.	Unsecured Loans

Scheduled maturity dates of unsecured loans as of September 30, 2007 are as follows:

Year Ending September 30:
2008	$	302,511
2009		2,583
2010		2,726
2011		3,372
2012		3,444
Thereafter		8,323
		322,959

Discount on unsecured loans		(10,451	)

Loans, unsecured, net of discount	$	312,508

5.	Income-Producing Property

Income-producing property consists of the following at September 30, 2007:

Building and improvements	$	602,832
Land		547,168
		1,150,000

Less accumulated depreciation and amortization		(71,997	)

Income-producing property, net	$	1,078,003

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

6.	Fixed Assets

Fixed assets consist of the following at September 30, 2007:

Furniture and equipment	$	429,410
Computer software		57,944
Leasehold Improvements		19,338
		506,692
Less accumulated depreciation and amortization		(310,711	)

Fixed assets, net	$	195,981

7.	Deferred Costs of Brokerage Related Rights

Deferred costs of brokerage related rights consist of the following at September 30, 2007:


Deferred costs of brokerage related rights	$	14,736,726
Less accumulated amortization		(4,554,202	)

Deferred costs of brokerage related rights, net	$	10,182,524

Estimated amortization expense for each of the next five years is as follows:

Year Ending September 30:
2008	$	1,049,611
2009	$	1,002,799
2010	$	912,781
2011	$	828,513
2012	$	724,650

8. Income Taxes

The Company's annual taxable income (loss) is included in the consolidated income tax filing of its parent, The Redwood Group, LTD and its affiliate, A & B Financial Services, Inc. Income taxes are allocated to the Company and reflected in its financial statements as if the Company were filing separate returns.

The Company has net operating loss ("NOL") carry forwards available of approximately $1,567,000 for Federal tax purposes. The NOLs can be carried forward twenty years for federal tax purposes and will expire at various times through the year 2025.

Significant components of the Company's net deferred tax liability include the following:

Deferred costs of brokerage related rights	$	5,666,964
Net operating loss carry forwards		(532,661	)
State deferred taxes		(375,595	)
Cash to accrual differences		(334,333	)
Other		16,625

Net deferred tax liability	$	4,441,000

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

9.	Advances from Partnerships

The Company has financed the payment of brokerage related rights with advances from partnerships. These advances are non-interest bearing and are being repaid equally over an approximate ten-year period commencing the year after the close of a partnership offering. Interest has been imputed at the market rate of interest in effect in the years the offerings closed.

Advances from partnerships mature as follows:

Year Ending September 30:
2008	$	1,797,967
2009		1,797,967
2010		1,797,967
2011		1,597,336
2012		1,597,336
Thereafter		4,757,401
		13,345,974
Less discount on imputed interest		(3,045,684	)

Advances from partnerships, net	$	10,300,290

10. Note Payable

During 2004, the Company entered into a financing agreement for office equipment. The note accrues interest at 5.85% and requires monthly payments in the amount of $1,373 through March 2009.

Future minimum payments at September 30, 2007 are as follows:

2008	$	15,511
2009		8,102

Total	$	23,613

11. Commitments and Guarantees

The Company has contracted with an independent service bureau for computer processing services for the partnership accounting function at approximately $4,820 per month. The contract is subject to renewal at the end of its term which is January 31, 2009. The Company receives reimbursement of a major portion of its computer processing expenses from the five limited partnerships.

The Company is a guarantor on a line of credit for one of the partnerships. The line of credit provides for borrowings up to $75,000,000 at prime less 0.50%. The balance on the line of credit at September 30, 2007 was $32,450,000. Should the Partnership choose not to renew the line of credit, the balance would be converted to a three year fully amortized loan. The Company is a related party of the partnership; therefore the guarantee is not accounted for in this financial statement.

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

11. Commitments and Guarantees (continued)

The Company has guaranteed two loans issued by four of the affiliated partnerships with balances of $640,000 at September 30, 2007. The Company has guaranteed to cover losses sustained by the partnerships related to these loans to the extent such losses exceed the then existing reserves, as defined in the agreement, and related collateral value. The two loans are substantially reserved for in the partnership loan loss reserves. The Company is a related party of the partnerships therefore the guarantee is not accounted for in this financial statement.

In 2002, the Company entered into a noncancelable operating lease agreement for office space. The lease terminates on July 29, 2009. The lease requires monthly payments of $18,946, with stated annual increases. The Company has the option to renew this lease for an additional five years.

Noncancelable future minimum lease payments under these leases as of September 30, 2007 are as follows:

2008	$	229,308
2009		195,980

Total	$	425,288

12.	Profit-Sharing Plan

The Company has a defined contribution profit-sharing plan which provides for Company contributions of 5% of eligible wages, plus any discretionary additional Company contributions.

13. Related Party Transactions

Partnership transactions

As described in Notes 1 and 3, the Company's main source of revenue is from originating and servicing mortgage obligations from five limited partnerships whose general partners are related to the Company (one such general partner is the Company). The Company has received advances from these limited partnerships to help finance the costs of brokerage related rights.

Due from/to related parties

Advances are periodically made to related entities. In addition, as described in Note 3, amounts are periodically due from affiliated partnerships for services provided by the Company. As of September 30, 2007, amounts due to/from related parties were:

Due from related parties
Related party advances to A & B	$	20,853
Partnership services fees due from RMI VIII, RMI VII and RMI VI		609,040
	$	629,893
Due to related parties
Reimbursement of service fee from RMI VIII (see Note 3)	$	667,378

Investment in partnership

During 2003, the Company purchased an investment in Redwood Mortgage Investors VIII from a former investor at that investor's cost. The investment balance was $50,000 at September 30, 2007. This investment is accounted for under the equity method.

Redwood Mortgage Corp

Notes to Balance Sheet

September 30, 2007

14.	Deferred Compensation Agreement

The Company entered into a compensation agreement with its former owner to pay a monthly consulting fee of $9,000. The Company is currently making the monthly payment to the surviving spouse for the remainder of her life or until September 30, 2011, as required by the agreement. As of September 30, 2007, the Company had accrued $381,183, which represents the net present value of the future expected payments.

PRIOR PERFORMANCE TABLES

The prior performance tables as referenced in the Prior Performance Summary of the prospectus presents information on programs previously sponsored by the general partners. The purpose of the tables is to provide information on the performance of these partnerships to assist prospective investors in evaluating the experience of the general partners as sponsors of such partnerships. In the opinion of the general partners, all of the partnerships included in the tables had investment objectives which were similar to those of the partnership. Factors considered in making such determination included the type of investments, expected benefits from investments and structure of the programs. Each of such prior programs had the following objectives: (i) to yield a high rate of return from mortgage lending; and (ii) preservation of the partnership’s capital. The inclusion of these tables does not imply that the investors in this offering of the partnership will experience results comparable to those experienced in the previous offerings of the partnership or prior programs referred to in the tables.

The tables consist of:

TABLE I - EXPERIENCE IN RAISING AND INVESTING FUNDS

Table I summarizes, as a percentage basis, all funds received through December 31, 2006, for the five prior public offerings and the current sixth offering of the partnership.

TABLE II - COMPENSATION TO GENERAL PARTNERS AND AFFILIATES

Table II summarizes the compensation paid to the general partners and affiliates in connection with the five prior offerings and the current sixth offering of the partnership on an aggregate basis.

TABLE III - OPERATING RESULTS OF THE PARTNERSHIP

Table III summarizes the annual operating results from inception in 1993, through December 31, 2006, for the partnership.

TABLE IV- RESULTS OF COMPLETED PARTNERSHIPS

Table IV provides certain information on programs which have concluded operations as of December 31, 2006.

TABLE V - PAYMENT OF MORTGAGE LOANS

Table V presents information on the payment of the partnership and prior partnerships’ mortgages within the three (3) years ended December 31, 2006.

If you purchase interests in the partnership, you will not acquire any ownership interest in any of the prior partnerships to which Table V relates. The inclusion of the following tables in the prospectus does not imply that the partnership will continue to make investments comparable to those reflected in the tables with respect to cash flow, income tax consequences available to investors, or other factors, nor does it imply that the partnership will continue to experience returns, if any, comparable to those experienced by the partnership in the past in any of the previous offerings of the partnership referred to in Table V.

The general partners have sponsored two (2) other public programs registered with the Securities and Exchange Commission. Table IV and Table V includes information about prior non public programs whose investment objectives are similar to those of the partnership. These partnerships were offered without registration under the Securities Act of 1933 with reliance upon intrastate offering, exemption from registration requirements, and/or exemption for transactions not involving a public offering.

Additional information regarding the Description Of Open Loans Of Prior Limited Partnerships is provided in Table VI in Part II of this Registration Statement. The partnership will furnish, without charge to each person to whom this prospectus is delivered, upon request, a copy of Table VI.

As of December 31, 2006, approximately eight percent (8%) of the loans held by the partnership are fractionalized loans and held as undivided interests with other partnerships and third parties. The information presented in Table V as to fractionalized loans represents only that partnership's interest in a certain loan.

DEFINITIONS AND GLOSSARY OF TERMS

The following terms used in the tables have the following meanings:

"Cash Generated From Operations and Financing" shall mean excess or deficiency of operating and financing cash receipts over operating and financing cash expenditures.

"GAAP" shall mean accounting principles generally accepted in the United States of America.

"Months To Invest 90% Of Amount Available For Investment" shall mean the time period from commencement of the offering to date of close of escrow of initial loans aggregating 90% of initial investment amounts.

TABLE I

EXPERIENCE IN RAISING AND INVESTING FUNDS

REDWOOD MORTGAGE INVESTORS VIII

(AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

Table I presents in tabular form on a percentage basis, all proceeds received by Redwood Mortgage Investors VIII in its previous five public offerings and the current 6^th offering through December 31, 2006. Table I also sets forth on a percentage basis, how the proceeds were utilized by the partnership. In addition, Table I sets forth information with respect to the date each offering commenced in this partnership, the length of the offering and how long it took to commit 90% of the amount available for investment. As of December 31, 2006, the General Partners had four private programs which closed in December, 2005. As of December 31, 2006, the general partners did not have any public programs which have closed in the past three years other than the fifth offering in Redwood Mortgage Investors VIII. For consistency, the General Partners have included information for the first, second, third and fourth offerings in Redwood Mortgage Investors VIII even though these offerings were concluded more than three years ago. Please be advised that there can be no assurance that the results of this offering will be comparable to those of prior offerings of the partnership.

(in thousands)


	1^st Offering			2^nd Offering			3^rd Offering			4^th Offering
Dollar Amount Offered	$	15,000		$	30,000		$	30,000		$	50,000
Dollar Amount Raised	$	14,932		$	29,993		$	29,999		$	49,985
Percentage of Amount Raised		99.55	%		99.98	%		100	%		99.97	%
Less Offering Expenses:
Organization Expense		3.90	%		2.00	%		2.05	%		1.30	%
Selling Commissions Paid to
Non Affiliates (1)		0			0			0			0
Selling Commissions Paid to Affiliates		0			0			0			0
Percentage Available for Investment
Net of Offering Expenses		96.10	%		98.00	%		97.95	%		98.70	%
Loans Funded from Offering Proceeds
Secured by Deeds of Trust		87.90	%		89.40	%		89.55	%		90.10	%
Formation Loan		7.20	%		7.60	%		7.40	%		7.60	%
Loan Commitments		0			0			0			0
Loan Application or Mortgage
Processing Fees		0			0			0			0
Funds Available for Future
Commitments		0			0			0			0
Reserve		1.00	%		1.00	%		1.00	%		1.00	%
Total		96.10	%		98.00	%		97.95	%		98.70	%

Date Offering Commenced	03/03/93			12/4/96			08/31/00			10/31/02
Length of Offering	44 months			44 months			20 months			11 months
Months to Commit 90% of Amount
Available for Investment (Measured
from Beginning of Offering)	45 months			45 months			21 months			12 months

(1)	Commissions are paid by Redwood Mortgage Corp. through the Formation Loan (See” PLAN OF DISTRIBUTION - Formation Loan” at Page 88 of the Prospectus).

Table I continued on following page

TABLE I (continued)

EXPERIENCE IN RAISING AND INVESTING FUNDS

REDWOOD MORTGAGE INVESTORS VIII

(AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

(in thousands)


	5^th Offering			6^th Offering
Dollar Amount Offered	$	75,000		$	100,000
Dollar Amount Raised	$	74,904		$	47,037
Percentage of Amount Raised		99.87	%		47.04	%
Less Offering Expenses:
Organization Expense		1.10	%		2.14	%
Selling Commissions Paid to
Non Affiliates (1)		0			0
Selling Commissions Paid to Affiliates		0			0
Percentage Available for Investment
Net of Offering Expenses		98.90	%		97.86	%
Loans Funded from Offering Proceeds
Secured by Deeds of Trust		90.40	%		89.26	%
Formation Loan		7.50	%		7.60	%
Loan Commitments		0			0
Loan Application or Mortgage
Processing Fees		0			0
Funds Available for Future
Commitments		0			0
Reserve		1.00	%		1.00	%
Total		98.90	%		97.86	%

Date Offering Commenced	10/07/03			08/04/05
Length of Offering	22 months
Months to Commit 90% of Amount
Available for Investment (Measured
from Beginning of Offering)	23 months

(1)	Commissions are paid by Redwood Mortgage Corp. through the Formation Loan (See” PLAN OF DISTRIBUTION - Formation Loan” at Page 88 of the Prospectus).

TABLE II

COMPENSATION TO GENERAL PARTNERS AND AFFILIATES

(AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

Table II sets forth in tabular form, the compensation received by the general partners and affiliates in connection with the five previous and current sixth offering of units in the partnership as of December 31, 2006. This information is presented on an aggregated basis for all offerings of the partnership. It is impossible to trace on a dollar for dollar basis, which dollars from which offering are being used to pay fees to the general partners.

	RMI VIII (In thousands)
Date Offering Commenced (1)	03/03/93
Dollar Amount Raised (2)	$	246,850
Amount Paid to General Partners and
Affiliates from:
Offering Proceeds		0
Selling Commissions		0
Loan Application or Loan Processing Fees		0
Reimbursement of Expenses, at Cost		182
Acquisition Fees		0
Advisory Fees		0
Other		0
Loan Points, Processing and Other Fees Paid
by the Borrowers to Affiliates:
Points (3)	$	17,518
Processing Fees (3)		247
Other (3)		75
Dollar Amount of Cash Generated from
Operations Before Deducting
Payments to General Partners and Affiliates:		118,587
Amount Paid to General Partners and Affiliates
from Operations:
Partnership Management Fees		3,581
Earnings Fee		830
Mortgage Servicing Fee		10,113
Reimbursement of Expenses, at Cost		2,126
Early Withdrawal		374
Reconveyance Fees		86

(1) Indicated the date the first offering in the partnership commenced

(2)	Indicated the aggregate dollar amount raised in all five prior and the current sixth offering of the partnership as of December 31, 2006.

(3) These sums were paid by borrowers of partnership funds, and were not expenses of the partnership.

TABLE III

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

Table III presents the annual operating results of this partnership since inception. This information is presented on an aggregate basis for the five prior offerings and the ongoing sixth offering of Redwood Mortgage Investors VIII.

	$’s in thousands except for cash distribution per $1,000
	1993			1994			1995			1996

Gross Revenues	$	119		$	498		$	1,050		$	1,727
Less: General Partners' Mgmt Fee		0			6			12			17
Loan Servicing Fee		6			29			85			156
Administrative Expenses/General
Partners’ Fees		4			27			51			86
Provision for Uncollected Accts		0			13			26			55
Amortization of Organization Costs		1			3			3			3
Offering Period Interest Expense to
Limited Partners		4			14			19			2
Interest Expense		0			0			26			189
Net Income (GAAP Basis) dist. to
Limited Partners	$	104		$	406		$	828		$	1,219
Federal Taxable Income	$	109		$	433		$	873		$	1,299
Sources of Funds - Net Income
distributable to limited partners	$	104		$	406		$	828		$	1,219
Reduction in Assets		0			0			0			0
Increase in Liabilities		0			0			1,914			0
Early Withdrawal Penalties Applied to
Syndication Costs		0			0			0			4
Increase in Applicant's Deposit		129			61			0			311
Increase in Partners' Capital
Collection on Formation Loan		0			0			0			17
Admittance of New Partners		2,766			4,514			3,843			3,864
Cash generated from Operations
and Financing		2,999			4,981			6,585			5,415
Use of Funds-Increase in Assets		(2,364	)		(4,192	)		(5,671	)		(3,860	)
Reduction in Liabilities		(0	)		(0	)		(0	)		(176	)
Decrease in Applicant's Deposit		(0	)		(0	)		(189	)		(0	)
Decrease in Partner’s Capital
Formation Loan		(206	)		(319	)		(250	)		(315	)
Syndication Costs		(200	)		(81	)		(175	)		(214	)
Offering Period Interest Expense to
Limited Partners		(2	)		(6	)		(8	)		(1	)
Investment Income Paid to LP's		(47	)		(166	)		(303	)		(418	)
Return of Capital to LP's		(0	)		(0	)		(6	)		(147	)
Net Increase (Decrease) in Cash		180			217			(17	)		284
Cash at the beginning of the year		0			180			397			380
Cash at the end of the year	$	180		$	397		$	380		$	664

Table III continued on following pages

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	1993		1994		1995		1996

Cash Distribution Credited on
$1,000 Invested for a Compounding
Limited Partner (GAAP Basis)	$	83	$	81	$	83	$	84
Cash Distribution Data paid for
$1,000 Invested for a Limited
Partner Receiving Monthly Earnings
Distribution (GAAP Basis)	$	80	$	79	$	80	$	81
Cash Distribution to All Investors for
$1,000 Invested (2)
Income (1)	$	36	$	33	$	32	$	31
Capital (1)	$	0	$	0	$	0.60	$	11
Federal Income Tax Results for
$1,000 Invested Capital for a
Compounding Limited Partner	$	96	$	92	$	96	$	99
Federal Income Tax Results for $1,000
Invested for a Limited Partner Receiving
Monthly Earnings Distributions	$	93	$	89	$	92	$	95

NOTES: (1) Based upon capital balances as of January 1 for each year.

(2)

Based upon cash distributions actually paid to limited partners receiving monthly earning distributions compared to all limited partners. Cash distributions credited to compounding limited partners are not included for purposes of this calculation.

Table III continued on following pages

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	$’s in thousands except for cash distribution per $1,000
	1997			1998			1999			2000

Gross Revenues	$	2,630		$	3,406		$	4,426		$	6,349
Less: General Partners' Mgmt Fee		25			32			42			61
Loan Servicing Fee		190			295			359			506
Administrative Expenses/General
Partners’ Fees		144			147			174			270
Provision for Uncollected Accts		140			163			409			375
Amortization of Organization Costs		0			0			0			0
Offering Period Interest Expense to
Limited Partners		9			4			2			5
Interest Expense		341			514			527			887
Net Income (GAAP Basis) dist. to
Limited Partners	$	1,781		$	2,251		$	2,913		$	4,245
Federal Taxable Income	$	1,929		$	2,411		$	3,331		$	4,755
Sources of Funds - Net Income
distributable to limited partners	$	1,781		$	2,251		$	2,913		$	4,245
Reduction in Assets		0			0			0			0
Increase in Liabilities		3,988			348			0			16,269
Early Withdrawal Penalties Applied to
Syndication Costs		5			8			13			10
Increase in Applicant's Deposit		0			0			330			0
Increase in Partners' Capital
Collection on Formation Loan		108			150			191			250
Admittance of New Partners		5,572			5,110			9,202			14,997
Cash generated from Operations
and Financing		11,454			7,867			12,649			35,771
Use of Funds-Increase in Assets		(9,905	)		(6,598	)		(3,439	)		(32,472	)
Reduction in Liabilities		(0	)		(0	)		(5,832	)		(0	)
Decrease in Applicant's Deposit		(311	)		(0	)		(0	)		(105	)
Decrease in Partner’s Capital
Formation Loan		(420	)		(404	)		(708	)		(1,102	)
Syndication Costs		(189	)		(126	)		(177	)		(227	)
Offering Period Interest Expense to
Limited Partners		(2	)		(2	)		(1	)		(1	)
Investment Income Paid to LP's		(495	)		(614	)		(826	)		(1,245	)
Return of Capital to LP's		(133	)		(257	)		(592	)		(762	)
Net Increase (Decrease) in Cash	$	(1	)	$	(134	)	$	1,074		$	(143	)
Cash at the beginning of the year		664			663			529			1,603
Cash at the end of the year	$	663		$	529		$	1,603		$	1,460

Table III continued on following pages

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	1997		1998		1999		2000

Cash Distribution Credited on
$1,000 Invested for a Compounding
Limited Partner (GAAP Basis)	$	84	$	84	$	84	$	86
Cash Distribution Paid for
$1,000 Invested for a Limited
Partner Receiving Monthly Earnings
Distribution (GAAP Basis)	$	81	$	81	$	81	$	83
Cash Distribution to All Investors for
$1,000 Invested (2)
Income (1)	$	31	$	29	$	31	$	34
Capital (1)		8		12	$	22	$	21
Federal Income Tax Results for
$1,000 Invested Capital for a
Compounding Limited Partner	$	100	$	98	$	102	$	102
Federal Income Tax Results for $1,000
Invested for a Limited Partner Receiving
Monthly Earnings Distributions	$	97	$	95	$	99	$	98

NOTES: (1) Based upon capital balances as of January 1 for each year.

(2)

Table III continued on following pages

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	$’s in thousands except for cash distribution per $1,000
	2001			2002			2003			2004

Gross Revenues	$	9,088		$	11,691		$	12,958		$	17,133
Less: General Partners' Mgmt Fee		158			325			468			630
Loan Servicing Fee		552			1,098			1,057			1,565
Administrative Expenses/General
Partners’ Fees		416			1,060			1,045			1,139
Provision for Uncollected Accts		957			1,280			782			1,146
Amortization of Organization Costs		0			0			0			0
Offering Period Interest Expense to
Limited Partners		1			1			37			20
Interest Expense		972			516			71			622
Net Income (GAAP Basis) dist. to
Limited Partners	$	6,032		$	7,411		$	9,498		$	12,011
Federal Taxable Income	$	6,926		$	8,719		$	9,072		$	12,212
Sources of Funds - Net Income
distributable to limited partners	$	6,032		$	7,411		$	9,498		$	12,011
Reduction in Assets		0			0			0			0
Increase in Liabilities		0			0			18,822			0
Early Withdrawal Penalties Applied to
Syndication Costs		24			7			17			16
Increase in Applicant's Deposit		448			1,905			0			0
Increase in Partners' Capital
Collection on Formation Loan		346			546			637			916
Admittance of New Partners	$	19,266		$	19,681			41,461			41,793
Cash generated from Operations
and Financing		26,116			29,550			70,435			54,736
Use of Funds-Increase in Assets		(15,480	)		(10,923	)		(58,715	)		(30,583	)
Reduction in Liabilities		(5,038	)		(7,733	)		(0	)		(6,009	)
Decrease in Applicant's Deposit		(0	)		(0	)		(1,368	)		(786	)
Decrease in Partner’s Capital
Formation Loan		(1,462	)		(1,677	)		(2,929	)		(3,117	)
Syndication Costs		(291	)		(381	)		(483	)		(421	)
Offering Period Interest Expense to
Limited Partners		(0	)		(0	)		(0	)		(0	)
Investment Income Paid to LP's		(1,962	)		(2,516	)		(3,362	)		(4,452	)
Return of Capital to LP's		(1,426	)		(1,049	)		(1,845	)		(1,988	)
Net Increase (Decrease) in Cash		457			5,271			1,733			7,380
Cash at the beginning of the year		1,460			1,917			7,188			8,921
Cash at the end of the year	$	1,917		$	7,188		$	8,921		$	16,301

Table III continued on following page

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	2001		2002		2003		2004

Cash Distribution Credited on
$1,000 Invested for a Compounding
Limited Partner (GAAP Basis)	$	90	$	87	$	78	$	72
Cash Distribution Paid for
$1,000 Invested for a Limited
Partner Receiving Monthly Earnings
Distribution (GAAP Basis)	$	87	$	84	$	75	$	70
Cash Distribution to All Investors for
$1,000 Invested (2)
Income (1)	$	37	$	34	$	35	$	32
Capital (1)	$	27	$	19	$	19	$	14
Federal Income Tax Results for
$1,000 Invested Capital for a
Compounding Limited Partner	$	106	$	105	$	76	$	75
Federal Income Tax Results for $1,000
Invested for a Limited Partner Receiving
Monthly Earnings Distributions	$	103	$	101	$	73	$	72

NOTES: (1) Based upon capital balances as of January 1 for each year.

(2) Based upon cash distributions actually paid to limited partners receiving monthly earning distributions compared to all limited partners. Cash distributions credited to compounding limited partners are not included for purposes of this calculation.

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	$’s in thousands except for cash distribution per $1,000

	2005			2006

Gross Revenues	$	20,188		$	27,324
Less: General Partners' Mgmt Fee		814			991
Loan Servicing Fee		1,736			2,479
Administrative Expenses/General
Partners’ Fees		1,250			1,610
Provision for Uncollected Accts		855			1,195
Amortization of Organization Costs		0			0
Offering Period Interest Expense to
Limited Partners		41			21
Interest Expense		278			2,344
Net Income (GAAP Basis) dist. to
Limited Partners	$	15,214		$	18,684
Federal Taxable Income	$	15,995		$	19,671
Sources of Funds - Net Income
distributable to limited partners	$	15,214		$	18,684
Reduction in Assets		0			0
Increase in Liabilities		18,879			0
Early Withdrawal Penalties Applied to
Syndication Costs		11			15
Increase in Applicant's Deposit		352			0
Increase in Partners' Capital
Collection on Formation Loan		1,223			1,487
Admittance of New Partners		39,530			35,079
Cash generated from Operations
and Financing		75,209			55,265
Use of Funds-Increase in Assets		(51,313	)		(51,495	)
Reduction in Liabilities		0			(1,267	)
Decrease in Applicant's Deposit		0			(216	)
Decrease in Partner’s Capital
Formation Loan		(2,978	)		(2,674	)
Syndication Costs		(845	)		(445	)
Offering Period Interest Expense to
Limited Partners		(0	)		(0	)
Investment Income Paid to LP's		(5,480	)		(6,887	)
Return of Capital to LP's		(2,041	)		(3,038	)
Net Increase (Decrease) in Cash		12,552			(10,757	)
Cash at the beginning of the year		16,301			28,853
Cash at the end of the year	$	28,853		$	18,096

Table III continued on following page

TABLE III (continued)

OPERATING RESULTS OF REDWOOD MORTGAGE INVESTORS VIII

RMI VIII – AGGREGATED (AS OF DECEMBER 31, 2006)

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

	2005		2006

Cash Distribution Credited on
$1,000 Invested for a Compounding
Limited Partner (GAAP Basis)	$	70	$	71
Cash Distribution Paid for
$1,000 Invested for a Limited
Partner Receiving Monthly Earnings
Distribution (GAAP Basis)	$	68	$	69
Cash Distribution to All Investors for
$1,000 Invested (2)
Income (1)	$	30	$	30
Capital (1)	$	11	$	13
Federal Income Tax Results for
$1,000 Invested Capital for a
Compounding Limited Partner	$	75	$	76
Federal Income Tax Results for $1,000
Invested for a Limited Partner Receiving
Monthly Earnings Distributions	$	73	$	74

NOTES: (1) Based upon capital balances as of January 1 for each year.

TABLE IV

RESULTS OF COMPLETED PROGRAMS

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM)

Table IV presents summary information on the results of all prior programs which completed operations since December 31, 2001 and which had similar investment objectives to those of Redwood Mortgage Investors VIII. The sponsors have not completed operations of any other public or non public program.

	Corporate		Redwood		Redwood		Redwood
	Mortgage		Mortgage		Mortgage		Mortgage
	Investors		Investors		Investors II		Investors III

Dollar amount raised (1) (2)	$	8,844,444.00	$	1,090,916.00	$	1,282,802.00	$	2,288,424.00
Number of properties purchased (3)		-		-		-		-
Date of Closing of offering (2)	12/31/86		07/31/82		06/30/83		12/31/96
Date of first sale of property (4)		-		-		-		-
Date of final sale of property (5)	12/09/05		12/09/05		12/09/05		12/09/05

Tax and Distribution Data per
$1,000 investment through
Ordinary income (loss)
-from operations (6)	$	7,795.44	$	8,967.06	$	5,045.26	$	4,813.73
-from recapture		-		-		-		-
Capital gain (loss)		-		-		-		-
Deferred gain
-Capital		-		-		-		-
-Ordinary		-		-		-		-
Cash distribution to investors
Source (on GAAP basis)
-Investment income	$	6,658,655.00	$	2,428,735.00	$	1,716,094.00	$	2,801,923.00
-Return of capital	$	8,844,444.00	$	1,090,916.00	$	1,282,802.00	$	2,288,424.00
Source (on cash basis)
-Sales		-		-		-		-
-Refinancing		-		-		-		-
-Operations	$	6,658,655.00	$	2,428,735.00	$	1,716,094.00	$	2,801,923.00
-Other	$	8,844,444.00	$	1,090,916.00	$	1,282,802.00	$	2,288,424.00
Receivable on net purchase
money financing (3)(5)		-		-		-		-

(1)

Represents the amount of capital raised in each limited partnership. Each of the limited partnerships is similar in that the limited partners may elect to have their earnings added to their capital accounts or distributed, subject to restrictions. Earnings added to limited partners’ capital accounts were not included in the total of capital raised.

(2)

Corporate Mortgage Investors began offering units in April 1978 and closed the initial offering of units in December 1983. Subsequently, the partnership began offering additional units in January 1984 and closed the offering in December 1986. Redwood Mortgage Investors III began offering units in February 1984 and closed the initial offering in June 1984. Subsequently, a second offering of units commenced in July 1992 and closed in December 1996. Each of Redwood Mortgage Investors and Redwood Mortgage Investors II had only one offering of units.

(3)	The partnerships were in the business of making mortgage loans secured by real estate. Funds raised in the offerings were not used to purchase property.

(4)

The limited partnerships invest in loans secured by real estate. The partnerships began making loans shortly after commencement of the offerings. Borrowers had the ability to prepay the loans prior to maturity at any time. Upon repayment, the partnerships made additional new loans with the repaid funds. Records are not available for the date of the first loan payoff. Loans were primarily of short duration with typical maturity dates of one to five years.

(5)	The remaining loans at December 9, 2005 owned by the limited partnerships were sold for cash to affiliates of the limited partnerships.

(6)

Limited partners had the option to have their earnings added to their capital accounts and could choose to liquidate from the partnership with certain restrictions. The income per $1000 reflects the results of a limited partner who invested at inception, elected to have their earnings added to their capital account and did not liquidate until operations terminated at December 9, 2005. Results of limited partners investing after inception but before the offering closed, choosing not to have their earnings added to their capital accounts and not staying through the life of the partnership will be different.

TABLE V

PAYMENT OF LOANS

CORPORATE MORTGAGE INVESTORS I & II

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Contra Costa

01/18/01

07/09/04

77,500.00

33,182.90

110,682.90

Marin

11/12/02

07/15/04

105,000.00

18,067.33

123,067.33

San Francisco

06/06/03

01/31/05

100,000.00

17,957.81

117,957.81

Fresno

08/31/91

02/18/05

86,500.00

122,093.39

208,593.39

Contra Costa

03/16/04

03/16/05

100,000.00

9,635.93

109,635.93

Sacramento

07/02/04

10/07/05

42,500.00

8,445.88

50,945.88

MULTIPLE 5+ UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

08/28/03

04/18/04

196,221.25

6,420.08

202,641.33

Contra Costa

06/12/05

08/16/05

100,000.00

2,506.94

102,506.94

COMMERCIAL (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

San Francisco

10/28/92

12/01/04

152,000.00

104,757.32

256,757.32

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS I

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

02/04/03

12/10/04

100,000.00

18,169.37

118,169.37

San Francisco

06/06/03

01/31/05

50,000.00

8,978.91

58,978.91

MULTIPLE 5+ UNITS (county)


		CLOSED	LOAN	INTEREST/	PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT	LATE/MISC	TO DATE

COMMERCIAL (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

San Francisco

04/24/03

07/14/04

80,000.00

9,589.48

89,589.48

Alameda

03/14/02

11/10/05

249,600.00

74,917.35

324,517.35

Santa Clara

03/14/02

11/10/05

272,285.33

81,571.58

353,856.91

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS II

FOR THE THREE YEARS ENDING

SEPTEMBER 30, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)


		CLOSED	LOAN	INTEREST/	PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT	LATE/MISC	TO DATE

MULTIPLE 5+ UNITS (county)


		CLOSED	LOAN	INTEREST/	PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT	LATE/MISC	TO DATE

COMMERCIAL (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

03/14/02

11/10/05

166,400.00

49,944.90

216,344.90

Santa Clara

03/14/02

11/10/05

142,061.33

52,558.91

194,620.24

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS III

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
Contra Costa	03/25/03	01/09/04		68,000.00		5,515.56		73,515.56
San Mateo	07/09/87	06/30/04		5,500.00		6,292.58		11,792.58
San Mateo	07/09/87	06/30/04		82,500.00		90,700.75		173,200.75
Marin	11/12/02	07/15/04		105,000.00		18,067.33		123,067.33
San Francisco	08/25/03	07/19/04		125,000.00		9,761.03		134,761.03
San Francisco	07/12/02	10/07/04		100,000.00		23,524.06		123,524.06
Alameda	02/04/03	12/10/04		105,000.00		19,077.67		124,077.67
San Francisco	06/06/03	01/31/05		50,000.00		8,987.91		58,987.91
Santa Clara	12/02/03	02/17/05		87,000.00		10,180.02		97,180.02
Contra Costa	03/16/04	03/16/05		50,000.00		4,818.02		54,818.02
Santa Clara	04/14/04	04/01/05		112,000.00		20,530.62		132,530.62
San Mateo	03/13/01	04/07/05		125,000.00		61,201.83		186,201.83

MULTIPLE 5+ UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

08/28/03

04/18/04

147,165.94

4,815.01

151,980.95

COMMERCIAL (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

03/14/02

11/10/05

249,600.00

74,917.35

324,517.35

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS IV

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
San Mateo	01/20/98	05/10/04		48,500.00		29,083.54		77,583.54
San Mateo	07/09/87	06/30/04		5,500.00		6,292.58		11,792.58
San Mateo	07/09/87	06/30/04		82,500.00		90,700.75		173,200.75
San Francisco	01/10/05	10/26/05		125,000.00		9,209.65		134,209.65
Los Angles	03/29/05	11/01/05		200,000.00		10,389.06		210,389.06
Sacramento	01/31/05	01/31/06		147,000.00		14,102.66		161,102.66
Santa Clara	06/06/06	07/31/06		100,000.00		892.70		100,892.70
San Diego	02/08/06	08/02/06		300,000.00		13,128.25		313,128.25

MULTIPLE 5+ UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Sacramento

12/24/98

03/18/04

243,000.00

91,819.20

334,819.20

Sacramento

12/24/98

03/18/04

27,000.00

6,608.85

33,608.85

Alameda

08/28/03

04/18/04

44,153.41

1,444.62

45,598.03

San Francisco

01/31/95

10/18/04

26,750.00

18,193.27

44,943.27

Alameda

12/23/03

05/03/05

550,000.00

70,564.12

620,564.12

Contra Costa

06/12/05

08/16/05

75,000.00

1,880.21

76,880.21

COMMERCIAL (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
Contra Costa	06/19/97	06/28/04		91,664.42		56,434.53		148,098.95
Santa Clara	06/13/01	09/12/05		109,768.75		46,031.17		155,799.92
San Francisco	11/04/04	09/30/05		325,000.00		30,807.29		355,807.29
Alameda	03/14/02	11/10/05		956,800.00		287,183.19		1,243,983.19
Santa Clara	03/14/02	11/10/05		1,026,000.00		307,370.36		1,333,370.36
Stanislaus	12/04/00	06/27/06		30,417.55		19,495.75		49,913.30
Stanislaus	12/04/00	06/27/06		142,893.10		89,668.79		232,561.89
Stanislaus	12/04/00	06/27/06		11,406.58		7,310.83		18,717.41
Stanislaus	12/04/00	06/27/06		53,584.90		33,625.45		87,210.35

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS V

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

San Mateo

09/13/02

07/21/04

5,300.00

1,030.17

6,330.17

Stanislaus

08/26/92

09/15/04

49,000.00

71,293.83

120,293.83

Solano

06/02/05

05/25/06

99,790.53

5,307.55

105,098.08

Napa

07/12/05

07/28/06

75,000.00

7,325.10

82,325.10

Santa Clara

06/06/06

07/31/06

200,000.00

1,785.40

201,785.40

San Diego

02/08/06

08/02/06

139,500.00

6,104.64

145,604.64

MULTIPLE 5+ UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Sacramento

06/15/93

11/14/05

300,000.00

408,980.51

708,980.51

COMMERCIAL (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Contra Costa

06/19/97

06/28/04

91,664.42

56,434.53

148,098.95

Shasta

05/10/95

07/14/04

58,333.16

49,690.13

108,023.29

Alameda

03/14/02

11/10/05

158,080.00

47,447.66

205,527.66

Santa Clara

03/14/02

11/10/05

256,500.00

76,842.59

333,342.59

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS VI

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
Marin	11/12/02	07/15/04		105,000.00		18,067.33		123,067.33
San Mateo	09/13/02	07/21/04		53,000.00		10,301.68		63,301.68
San Francisco	07/12/02	10/07/04		250,000.00		58,809.75		308,809.75
Alameda	12/03/03	02/03/05		285,000.00		29,790.64		314,790.64
Alameda	09/13/04	11/01/05		70,000.00		7,927.47		77,927.47
Los Angeles	03/29/05	11/01/05		200,000.00		10,389.05		210,389.05
San Mateo	01/11/05	12/27/05		150,000.00		13,316.31		163,316.31
Santa Clara	06/06/06	07/31/06		400,000.00		3,570.80		403,570.80
San Diego	02/08/06	08/02/06		200,000.00		8,752.18		208,752.18
Alameda	07/26/04	09/21/06		155,000.00		31,490.15		186,490.15
Los Angles	05/30/06	12/05/06		100,000.00		4,821.71		104,821.71

MULTIPLE 5+ UNITS (county)

CLOSED

LOAN

INTEREST/

PROCEEDS

PROPERTY

FUNDED

AMOUNT

LATE/MISC

TO DATE

Alameda

08/28/03

04/18/04

294,319.77

9,629.63

303,949.40

San Francisco

01/31/95

10/18/04

40,125.00

27,289.91

67,414.91

Alameda

12/23/03

05/03/05

650,000.00

83,393.96

733,393.96

Sacramento

06/15/93

11/14/05

75,000.00

102,245.13

177,245.13

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS VI

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

COMMERCIAL (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
San Mateo	02/12/03	04/13/04		46,578.00		5,378.35		51,956.35
San Mateo	02/12/03	04/13/04		116,922.00		13,500.94		130,422.94
Shasta	05/10/95	07/14/04		83,333.42		70,986.19		154,319.61
Santa Clara	06/13/01	09/12/05		109,768.75		46,031.17		155,799.92
San Francisco	11/04/04	09/30/05		325,000.00		30,807.30		355,807.30
Alameda	03/14/02	11/10/05		956,800.00		287,183.19		1,243,983.19
Santa Clara	03/14/02	11/10/05		2,103,300.00		630,109.23		2,733,409.23
Stanislaus	12/04/00	06/27/06		30,417.55		19,495.75		49,913.30
Stanislaus	12/04/00	06/27/06		142,893.10		89,668.79		232,561.89

TABLE V

PAYMENT OF LOANS

REDWOOD MORTGAGE INVESTORS VII

FOR THE THREE YEARS ENDING

DECEMBER 31, 2006

(NOT COVERED BY REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM)

SINGLE FAMILY 1-4 UNITS (county)


		CLOSED	LOAN		INTEREST/		PROCEEDS
PROPERTY	FUNDED	ON	AMOUNT		LATE/MISC		TO DATE
Contra Costa	01/22/03	12/24/03		100,000.00		9,525.27		109,525.27
Santa Clara	07/08/03	12/11/03		210,000.00		7,556.38		217,556.38
San Mateo	07/31/02	01/14/04		300,000.00		26,852.75		326,852.75
Santa Clara	08/13/02	02/04/04		275,000.00		47,002.23		322,002.23
San Francisco	04/16/04	07/23/04		156,000.00		3,488.48		159,488.48
Stanislaus	04/14/04	08/20/04		153,750.00		5,114.83		158,864.83
Contra Costa	04/23/04	09/20/04		250,000.00		9,304.97		259,304.97
Sacramento	03/09/04	01/05/05		193,000.00		15,108.36		208,108.36
San Francisco	06/06/03	01/31/05		100,000.00		17,957.81		117,957.81
Alameda	12/03/03	02/03/05		285,000.00		29,790.64		314,790.64
Contra Costa	03/16/04	03/16/05		131,250.00		12,647.22		143,897.22

Redwood Mortgage Investors Viii POS AMProspectus update (post-effective amendment)