FORM 10-Q SECURITIES & EXCHANGE COMMISSION WASHINGTON DC 20549 Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Period Ended March 31, 1997 - ------------------------------------------------------------------------------- Commission file number 33-12519 - ------------------------------------------------------------------------------- REDWOOD MORTGAGE INVESTORS VI (exact name of registrant as specified in its charter) California 94-3031211 - ------------------------------------------------------------------------------- (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification No. 650 El Camino Real, Suite G, Redwood City, CA. 94063 - -------------------------------------------------------------------------------- (address of principal executive office) (415) 365-5341 - ------------------------------------------------------------------------------ (Registrants telephone number, including area code) NOT APPLICABLE - ------------------------------------------------------------------------------- (Former name,former address and former fiscal year,if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES XX NO ---------------- ------------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO NOT APPLICABLE XX ------------- ---------------- ------------- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuers class of common stock, as of the latest date. NOT APPLICABLE Part I Item 1 REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) Balance Sheets December 31, 1996 (audited) and March 31, 1997 (unaudited) ASSETS March 31, 1997 Dec. 31, 1996 (unaudited) (audited) ================= ================ Cash $119,481 $180,597 --------------- --------------- Accounts receivable: Mortgage Investments, secured by deeds of trust 9,249,045 9,313,924 Accrued interest on mortgage investments 498,904 405,783 Advances on mortgage investments 133,581 108,019 Accounts receivable-unsecured 251,531 251,531 --------------- --------------- 10,133,061 10,079,257 Less allowance for doubtful accounts 252,000 252,850 --------------- --------------- 9,881,061 9,826,407 --------------- --------------- Real Estate Owned, acquired through foreclosure, at estimated net realizable value 1,097,735 1,441,007 Investment in Partnership 540,735 496,040 Formation loan due from Redwood Mortgage 104,241 121,849 --------------- --------------- $11,743,253 $12,065,900 =============== =============== LIABILITIES AND PARTNERS CAPITAL Liabilities: Deferred Interest $0 $18,522 Note payable - bank line of credit $1,475,011 $1,530,511 ---------------- --------------- Total liabilities $1,475,011 $1,549,033 Partners capital 10,268,242 10,516,867 --------------- --------------- $11,743,253 $12,065,900 =============== =============== <FN> See accompanying notes to financial statements. </FN> REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (unaudited) 3 mos. ended 3 mos. ended March 31, 1997 March 31, 1996 (unaudited) (unaudited) ================= ================= Revenues: Interest on mortgage investments $241,398 $269,902 Interest on bank deposits 1,939 1,075 Late charges, prepayment, penalties and fees 2,217 6,901 -------------- -------------- 245,554 277,878 -------------- -------------- Expenses: General partners asset management fees 0 0 Clerical costs through Redwood Mortgage 7,341 7,838 Interest and line of credit costs 34,860 45,443 Provision for loss on real estate acquired through foreclosure and doubtful accounts 50,200 52,003 Professional services 11,067 15,474 Other 5,268 5,706 -------------- -------------- 108,736 126,464 -------------- -------------- Net Income $136,818 $151,414 ============== ============== Net Income: to General Partners (1%) $1,368 $1,514 to Limited Partners (99%) $135,450 $149,900 ============== ============== $136,818 $151,414 ============== ============== Net income for $1,000 invested by Limited Partners for entire period: - where income is reinvested and compounded $12.90 $13.16 ============== ============== - where Partner receives income in monthly $12.85 $13.11 distributions ============== ============== <FN> See accompanying notes to financial statements </FN> REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996 (unaudited) March 31, 1997 March 31, 1996 (unaudited) (unaudited) Cash flows from operating activities: Net income $136,818 $151,414 Adjustments to reconcile net income to net cash provided by operating activities: Increase (decrease) in allowance for doubtful accts (850) (88,284) (Increase) decrease in assets: Accrued interest & advances (118,683) (64,105) Prepaid expenses and other assets 0 935 Increase (decrease) in liabilities: Accounts payable and accrued expenses 0 4,100 Deferred Interest on Mortgage Investments (18,522) 0 --------------- --------------- Net cash provided by operating activities (1,237) 4,060 --------------- --------------- Cash flows from investing activities: Net (increase) decrease in: real estate acquired through foreclosure 343,272 (84,956) Mortgage Investments 64,879 240,574 Decrease in formation loan 17,608 11,140 accounts receivable, unsecured 0 69,480 Investment in Partnership (44,695) 0 --------------- --------------- Net cash provided by investing activities 381,064 236,238 --------------- --------------- Cash flows from financing activities: Net increase (decrease) in note payable-bank (55,500) (126,000) Partners withdrawals (383,418) (321,645) Early withdrawal penalties, net (2,025) (752) --------------- --------------- Net cash provided by (used in) financing activities (440,943) (448,397) --------------- --------------- Net increase (decrease) in cash (61,116) (208,099) Cash - beginning of period 180,597 283,976 --------------- --------------- Cash - end of period $119,481 $75,877 =============== =============== <FN> See accompanying notes to financial statements. </FN> REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS CAPITAL FOR THE THREE YEARS ENDED DECEMBER 31, 1996 (audited) AND THE THREE MONTHS ENDED MARCH 31, 1997, (unaudited) PARTNERS CAPITAL GENERAL LIMITED PARTNERS PARTNERS TOTAL -------------- ---- --------------- ---- --------------- Balances at December 31, 1993 9,773 12,342,173 12,351,946 Net income 6,647 658,055 664,702 Early withdrawal penalties 0 (12,790) (12,790) Partners withdrawals (6,654) (1,013,019) (1,019,673) -------------- --------------- --------------- Balances at December 31, 1994 $9,766 11,974,419 11,984,185 Net income 6,183 612,165 618,348 Early withdrawal penalties 0 (4,336) (4,336) Partners withdrawals (6,183) (1,185,532) (1,191,715) -------------- --------------- --------------- Balances at December, 1995 $9,766 11,396,716 11,406,482 Net income 5,882 582,280 588,162 Early withdrawal penalties 0 (8,721) (8,721) Partners withdrawals (5,882) (1,463,174) (1,469,056) -------------- --------------- --------------- Balances at December 31, 1996 $9,766 10,507,101 10,516,867 Net income 1,368 135,450 136,818 Early withdrawal penalties 0 (2,025) (2,025) Partners withdrawals (1,368) (382,050) (383,418) -------------- --------------- --------------- Balances at March 31, 1997 $9,766 10,258,476 10,268,242 ============== =============== =============== <FN> See accompanying notes to financial statements </FN> REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (audited) and MARCH 31, 1997 (unaudited) NOTE 1 ORGANIZATION AND GENERAL Redwood Mortgage Investors VI, (the Partnership) is a California Limited partnership, of which the General Partners are D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a California corporation owned and operated by the individual General Partners. The partnership was organized to engage in business as a mortgage lender for the primary purpose of making Mortgage Investments secured by Deeds of Trust on California real estate. Mortgage Investments are being arranged and serviced by Redwood Home Loan Co. (RHL Co.), dba Redwood Mortgage, an affiliate of the General Partners. The offering was closed with contributed capital totaling $9,781,366. Each months income is distributed to partners based upon their proportionate share of partners capital. Some partners have elected to withdraw income on a monthly, quarterly or annual basis. A. Sales Commissions - Formation Loan Sales commissions ranging from 0% (units sold by General Partners) to 10% of gross proceeds were paid to Redwood Mortgage., an affiliate of the General Partners that arranges and services the Mortgage Investments. To finance the sales commissions, the Partnership loaned to Redwood Mortgage $623,255 (the Formation Loan) relating to contributed capital of $9,781,366. The Formation Loan is unsecured, and is being repaid, without interest, in ten annual installments of principal, commencing December 31, 1989. The following reflects transactions in the Formation Loan account through March 31, 1997: Amount loaned during 1987,1988 and 1989 $623,255 Less: Cash repayments $475,044 Allocation of early withdrawal penalties 43,970 519,014 =========== ----------- Balance December 31, 1996 $104,241 =========== B. Other Organizational and Offering Expenses Organizational and offering expenses, other than sales commissions, (including printing costs, attorney and accountant fees, and other costs), paid by the Partnership from the offering proceeds totaled $360,885 or 3.69% of the gross proceeds contributed by the Partners. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues and expenses are accounted for on the accrual basis of accounting. The Partnership bears its own organization and syndication costs (other than certain sales commissions and fees described above) including legal and accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage fee and filing fees. Organizational costs of $14,750 were capitalized and were amortized over a five year period. Syndication costs of $346,135 were charged against partners capital and were allocated to individual partners consistent with the partnership agreement over a five year period. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (audited) and MARCH 31, 1997 (unaudited) Property acquired through foreclosure will be held for prompt sale to return the funds to the Mortgage Investment portfolio. Such property is recorded at cost which includes the principal balance of the former Mortgage Investment made by the Partnership plus accrued interest, payments made to keep the senior loans current, costs of obtaining title and possession, less rental income or at estimated net realizable value, if less. The difference between such costs and estimated net realizable value is deducted from cost in the Balance Sheet to arrive at the carrying value of such property. In preparing the financial statements, management is required to make estimates based on the information available that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the related periods. Such estimates relate principally to the determination of the allowance for doubtful accounts and the valuation of real estate acquired through foreclosure. Actual results could differ significantly from these estimates. Mortgage Investments and the related accrued interest, fees and advances are analyzed on a continuous basis for recoverability. Delinquencies are identified and followed as part of the Mortgage Investment system. A provision is made for doubtful accounts to adjust the allowance for doubtful accounts to an amount considered by management to be adequate to provide for unrecoverable accounts receivable. Amounts reflected in the statements of income as net income per $1,000 invested by Limited Partners for the entire period are actual amounts allocated to Limited Partners who have their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive monthly distributions of their net income. Individual limited partner income is allocated each month based on the limited partners pro rata share of partnership capital. Because the net income percentage varies from month to month, amounts per $1,000 will vary for those individuals who make or withdraw investments during the period, or select other options. However, the net income per $1,000 average invested has approximated those reflected for those whose investments and options have remained constant. No provision for Federal and State income taxes is made in the financial statements since income taxes are the obligation of the partners if and when income taxes apply. The interim financial statements, dated March 31, 1997, are unaudited, but in the opinion of the General Partners all adjustments (consisting solely of normal adjustments) necessary to a fair presentation of the financial statements at March 31, 1997 have been made. NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES The following are commissions and/or fees which are paid to the General Partners and/or related parties. A. Mortgage Brokerage Commissions Mortgage brokerage commissions for services in connection with the review, selection, evaluation, negotiation and extension of the Mortgage Investments were limited up to 12% of the principal amount of the Mortgage Investments through the period ending 6 months after the termination date of the offering. Thereafter, commissions are limited to an amount not to exceed 4% of the total Partnership assets per year. Such commissions are paid by the borrowers, thus, not an expense of the Partnership. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (audited) and MARCH 31, 1997 (unaudited) B. Mortgage Servicing Fees Monthly mortgage servicing fees are paid to Redwood Mortgage up to 1/8 of 1% (1.5% annual) of the unpaid principal, or such lesser amount as is reasonable and customary in the geographic area where the property securing the Mortgage Investment is located (currently at 1/12 of 1% or 1% annual). The amount remitted to the partnership and recorded as interest on Mortgage Investments is net of such fees. In 1994 $123,758 of the total mortgage servicing fees of $123,758, in 1995 $50,741 of the total mortgage servicing fees of $92,797, in 1996, $41,779 of the total mortgage servicing fees of $86,344 and for the three months through March 31, 1997, $3,577 of the total mortgage servicing fee of $12,824 were waived by Redwood Mortgage. C. Asset Management Fee Pursuant to the partnership agreement, the General Partners receive a monthly fee for managing the Partnerships Mortgage Investment portfolio and operations equal to 1/32 of 1% (3/8 of 1% annual) of the net asset value. Such fees were reduced from $45,974 to $8,942 in 1994, $44,336 to $0 in 1995, $41,802 to $0 in 1996, and $9,893 to $0 for the three months through March 31, 1997, with the difference being waived by the General Partners. D. Other Fees The Partnership Agreement provides for other fees such as reconveyance, mortgage assumption and mortgage extension fees. These fees are paid by the borrowers to parties related to the General Partners. E. Income and Losses All income is credited or charged to partners in relation to their respective partnership interests. The partnership interest of the General Partners (combined) is a total of 1%. F. Operating Expenses The General Partners or their affiliate (Redwood Mortgage) are reimbursed by the Partnership for all operating expenses actually incurred by them on behalf of the Partnership, including without limitation, out-of-pocket general and administration expenses of the Partnership, accounting and audit fees, legal fees and expenses, postage and preparation of reports to Limited Partners. In 1994, 1995, 1996, and for the current quarter, clerical costs totaling $0.00, $23,341, $31,838 and $7,341 respectively, were reimbursed to Redwood Mortgage and are included in expenses in the Statements of Income. The 1994 expenses were absorbed by the Redwood Mortgage. NOTE 4 OTHER PARTNERSHIP PROVISIONS A. Term of the Partnership The term of the Partnership is approximately 40 years, unless sooner terminated as provided. The provisions provided for no capital withdrawal for the first five years, subject to the penalty provision set forth in (D) below. Thereafter, investors have the right to withdraw over a five-year period, or longer. B. Election to Receive Monthly, Quarterly or Annual Distributions Upon subscriptions, investors elected either to receive monthly, quarterly or annual distributions of earnings allocations, or to allow earnings to compound for at least a period of 5 years. C. Profits and Losses Profits and losses are allocated monthly among the Limited Partners according to their respective capital accounts after 1% is allocated to the General Partners. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (audited) and MARCH 31, 1997 (unaudited) D. Withdrawal From Partnership A Limited Partner had no right to withdraw from the Partnership or to obtain the return of his capital account for at least five years after such units are purchased which in all instances had occurred by March 31, 1997. After that time, at the election of the Partner, capital accounts can be returned over a five year period in 20 equal quarterly installments or such longer period as is requested. Notwithstanding the above, in order to provide a certain degree of liquidity to the Limited Partners, the General Partners will liquidate a Limited Partners entire 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. Such liquidations shall, however, be subject to a 10% early withdrawal penalty applicable to any sums withdrawn prior to the time when such sums otherwise could have been withdrawn pursuant to the liquidation procedure set forth above. The 10% early withdrawal penalty will be received by the Partnership, and a portion of the sums collected as such penalty will be applied toward the next installment(s) of principal under the Formation Loan owed to the Partnership by Redwood Mortgage. Such portion shall be determined by the ratio between the initial amount of Formation Loan and the total amount of other organization and syndication costs incurred by the Partnership in this offering. The balance of any such early withdrawal penalties shall be retained by the Partnership for its own account and applied against syndication costs. Since the syndication costs have been fully amortized as of December 31, 1993, the early withdrawal penalties gained in the future will be applied on the same basis as before with the amount otherwise being credited to the syndication costs being credited to income for the period. The Partnership will not establish a reserve from which to fund withdrawals and, accordingly, the Partnership's capacity to return a Limited Partners capital account is restricted to the availability of Partnership cash flow. Furthermore, no more than 20% of the total Limited Partners capital accounts outstanding at the beginning of any year shall be liquidated during any calendar year. NOTE 5 - INVESTMENT IN PARTNERSHIP. The Partnerships interest in land acquired through foreclosure, located in East Palo Alto with costs totalling $540,735 has been invested with that of two other Partnerships (total cost to date, primarily land, of $1,113,870) in a partnership which is in the process of constructing approximately 72 single family homes for sale. Redwood Mortgage Investors V, VI, and VII have first priority on return of investment plus interest thereon, in addition to a share of profits realized. NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership has a bank line of credit secured by its Mortgage Investment portfolio up to $2,500,000 at 1% over prime. The balances were $1,530,511 and $1,475,011 at December 31, 1996 and March 31, 1997, respectively, and the interest rate at March 31, 1997 was 9.50% (8.50% prime + 1%). NOTE 7 - LEGAL PROCEEDINGS The Partnership is not a defendant in any legal actions. However, legal actions against borrowers and other involved parties have been initiated by the Partnership to help assure payments against unsecured accounts receivable totaling $251,531. Management anticipates that the ultimate outcome of the legal matters will not have a material adverse effect on the net assets of the Partnership, with due consideration having been given in arriving at the allowance for doubtful accounts. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (audited) and MARCH 31, 1997 (unaudited) NOTE 8 - ASSET CONCENTRATIONS AND CHARACTERISTICS The Mortgage Investments are secured by recorded deeds of trust. At March 31, 1997, there were 64 Mortgage Investments outstanding with the following characteristics: Number of Mortgage Investments outstanding 64 Total Mortgage Investments outstanding $9,249,045 Average Mortgage Investment outstanding 144,516 Average Mortgage Investment as percent of total 1.56% Average Mortgage Investment as percent of Partners Capital 1.41% Largest Mortgage Investment outstanding $1,376,117 Largest Mortgage Investment as percent of total 14.88% Largest Mortgage Investment as percent of Partners Capital 13.40% Number of counties where security is located (all California) 14 Largest percentage of Mortgage Investments in one county 30.71% Average Mortgage Investment to appraised value of security at time 66.22% Mortgage Investment was consummated Number of Mortgage Investments in foreclosure 3 The cash balance at March 31, 1997 of $119,481 was in two banks with interest bearing balances totalling $94,288. The balances exceeded FDIC insurance limits (up to $100,000 per bank) by $15,460. Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations On March 31, 1997, the Partnerships net capital totalled $10,268,242. The Partnership began funding Mortgage Investments in October 1987, and as of March 31, 1997 had distributed income at an average annualized (compounded) yield of 7.89%. Current earnings are lower than those prevalent at the outset, primarily because interest rates generally have dropped dramatically since 1988. The Partnership does not anticipate a significant increase or decrease in mortgage rates in the foreseeable future and expects the prevailing interest rates to fluctuate in a narrow range in the near future. Management expects the yield, net of provision for losses, to increase slightly in 1997. Currently, mortgage interest rates are lower than those prevalent at the inception of the Partnership. New Mortgage Investments are being originated at these lower interest rates. The result is a reduction of the average return across the entire Mortgage Investment portfolio held by the Partnership. In the future, interest rates likely will change from their current levels. The General Partners cannot at this time predict at what levels interest rates will be in the future. The General Partners believe the rates charged by the Partnership to its borrowers will not change significantly in the immediate future. Based upon the rates payable in connection with the existing Mortgage Investments, the current and anticipated interest rates to be charged by the Partnerships, and current reserve requirements, the General Partners anticipate that the annualized yield this year will range only slightly higher from its current rate. Each year, the Partnership negotiates a line of credit with a commercial bank which is secured by its Mortgage Investment portfolio. Currently, it has the capacity to borrow up to $2,500,000 at Prime plus 1%, (9.50%). Current borrowings of $1,475,011 have the effect of leveraging the portfolio about 15%. This added source of funds will help in maximizing the Partnership yield by allowing the Partnership to minimize the amount of funds in lower yield investment accounts when appropriate Mortgage Investments are not currently available and because the Mortgage Investments made by the Partnership bear interest at a rate in excess of the rate payable to the bank which extended the line of credit, allows the Partnership to make the spread between the Mortgage Investment interest rate and the line of credit interest rate. The Partnership's operating results and delinquencies are within the normal range of the General Partners expectations, based upon their experience in managing similar Partnerships over the last twenty years. Foreclosures are a normal aspect of partnership operations and the General Partners anticipate that they will not have a material effect on liquidity. As of March 31, 1997, there were three properties in foreclosure. Cash is continually being generated from interest earnings, late charges, prepayment penalties, amortization of notes and pay-off of notes. Currently, this amount exceeds Partnership expenses and earnings and principal payout requirements. As Mortgage Investment opportunities become available, excess cash and available funds are invested in new Mortgage Investments. The General Partners regularly review the Mortgage Investment portfolio, examining the status of delinquencies, the underlying collateral securing these Mortgage Investments, REO expenses, sales activities, and borrowers payment records and other data relating to the Mortgage Investment portfolio. Data on the local real estate market, and on the national and local economy are studied. Based upon this information and more, Mortgage Investment loss reserves and allowance for doubtful accounts are increased or decreased. Because of the number of variables involved, the magnitude of possible swings and the General Partners inability to control many of these factors, actual results may and do sometimes differ significantly from estimates made by the General Partners. The Northern California recession reached bottom in 1993. Since then, the California economy has been improving, slowly at first, but now, more vigorously. A wide variety of indicators suggest that the economy in California was strong in 1996, and the State is well - positioned for fast growth. This improvement is reflective in increasing property values, in job growth, personal income growth, etc., which should translate into more loan activity. Which of course, is healthy for our lending activity. I. COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP The following compensation has been paid to the General Partners and Affiliates for services rendered during the three months ending March 31, 1997. All such compensation is in compliance with the guidelines and limitations set forth in the Prospectus and Partnership Agreement. In addition, the General Partners and/or related companies pay certain expenses on behalf of the Partnership for which it is reimbursed as noted in the Statement of Income. Entity Receiving Description of Compensation Amount Compensation and Services Rendered ========================= ====================================================== Redwood Mortgage Mortgage Servicing Fee for $9,247 servicing Mortgage Investments ($3,577 waived by RHL Co.) - ------------------------- ------------------------------------------------------ General Partners Asset Management Fee for managing &/or Affiliates assets ($9,893 waived by the General Partners) $ 0.00 - ------------------------- ------------------------------------------------------ General Partners 1% interest in profits, losses and distributions of cash available for distribution $ 1,368 - ------------------------- ------------------------------------------------------ II. FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED BY COMPANIES RELATED TO THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE PARTNERSHIP) Redwood Mortgage Mortgage Brokerage Commissions for services in connection with the review, selection, evaluation, negotiation, and extension of the Mortgage Investments paid by the borrowers and not by the Partnership $ 0.00 - ------------------------- ------------------------------------------------------ Redwood Mortgage Processing and Escrow Fees for services in connection with notary, document preparation, credit investigation, and escrow fees payable by the borrower and not by the Partnership $ 0.00 - ------------------------- ------------------------------------------------------ MORTGAGE INVESTMENT SUMMARY AS OF MARCH 31, 1997 Partnership Highlights Mortgage Investment to Value ratio First Trust Deed Mortgage Investments $4,901,029.03 Appraised Value of Properties * 7,524,496.00 Total Investment as a % of Appraisal 65.13% First Trust Deed Mortgage Investments $4,901,029.03 Second Trust Deed Mortgage Investments 3,692,847.64 Third Trust Deed Mortgage Investments 405,186.08 Fourth Trust Deed Mortgage Investments ** 249,982.09 ------------------- $9,249,044.84 First Trust Deeds due other Lenders $15,738,399.00 Second Trust Deeds due other Lenders 1,174,343.00 Third Trust Deeds due other Lenders 178,571.00 ------------------- Total Debt $26,340,357.84 Appraised Property Value $39,779,892.00 Total Investment as a % of Appraisal 66.22% Number of Mortgage Investments Outstanding 64 Average Investment $144,516.33 Average Investment as a % of Net Partners Capital 1.41% Largest Investment Outstanding $1,376,117.03 Largest Investment as a % of Net Partners Capital 13.40% * Amounts shown reflect the aggregate appraisal values utilized at the time the mortgage investments were consummated. ** This consists of a mortgage investment in which Redwood Mortgage Investors VI, together with other Redwood partnerships, holds a second and a fourth trust deed against the secured property. In addition, the principals behind the borrower corporation have given personal guarantees as collateral. The overall loan to value ratio on this loan is 76.52%. Besides the borrower paying an interest rate of 12.25%, the partnership and other lenders will participate in profits. The General Partners and its affiliates have previously entered into loan transactions with this borrower, all of which have been concluded successfully, with extra earnings earned for the other lenders. Mortgage Investments as a Percentage of Total Mortgage Investments First Trust Deed Mortgage Investments 52.99% Second Trust Deed Mortgage Investments 39.93% Third Trust Deed Mortgage Investments 4.38% Fourth Trust Deed Mortgage Investments 2.70% ----------- Total 100.00% Mortgage Investments by Type of Property Owner Occupied Homes $1,395,177.34 15.09% Non Owner Occupied Homes 972,339.18 10.51% Apartments 760,657.64 8.22% Commercial 6,120,870.68 66.18% ----------------- ----------- Total $9,249,044.84 100.00% Statement of Conditions of Mortgage Investments Number of Mortgage Investments in Foreclosure 3 Diversification by County County Santa Clara $2,840,426.80 30.71% Alameda 1,702,697.68 18.41% San Mateo 1,395,336.19 15.09% Contra Costa 769,837.13 8.32% Stanislaus 679,802.62 7.35% Sacramento 442,696.90 4.79% San Francisco 417,483.72 4.51% Sonoma 375,752.00 4.06% El Dorado 214,773.21 2.32% Ventura 195,000.00 2.11% Shasta 82,248.87 0.89% Monterey 72,380.95 0.78% Santa Cruz 37,681.30 0.41% Solano 22,927.47 0.25% ----------------- ----------- Total $9,249,044.84 100.00% PART 2 OTHER INFORMATION Item 1. Legal Proceedings No legal action has been initiated against the Partnership. The Partnership had filed a legal action for collection against borrowers, which is routine litigation incidental to its business. Please refer to note (7) of financial statements. Item 2. Changes in the Securities Not Applicable Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Not Applicable (b) Form 8-K The registrant has not filed any reports on Form 8-K during the nine month period ending March 31, 1997. Signatures Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized on the 7th day of May, 1997. REDWOOD MORTGAGE INVESTORS VI By: /s/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, General Partner By: /s/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, General Partner By: Gymno Corporation, General Partner By: /s/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, President By: /s/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, Secretary/Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity indicated on the 7th day of May, 1997. Signature Title Date /s/ D. Russell Burwell - ---------------------- D. Russell Burwell General Partner May 7, 1997 /s/ Michael R. Burwell - ----------------------- Michael R. Burwell General Partner May 7, 1997 /s/ D. Russell Burwell - ---------------------- D. Russell Burwell President of Gymno Corporation, May 7, 1997 (Principal Executive Officer); Director of Gymno Corporation /s/ Michael R. Burwell - ---------------------- Michael R. Burwell Secretary/Treasurer of Gymno May 7, 1997 Corporation (Principal Financial and Accounting Officer); Director of Gymno Corporation