FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

                For the quarterly period ended September 30, 2007

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

             For the transition period from            to
                                           ------------  -----------

                         Commission file number: 0-21494


                      WNC HOUSING TAX CREDIT FUND III, L.P.

                 California                        33-0463432
                (State or other jurisdiction of   (I.R.S. Employer
               incorporation or organization)     Identification No.)



                     17782 Sky Park Circle, Irvine, CA 92614
                   ( Address of principle executive offices )

                                 (714) 622-5565
                              ( Telephone Number )

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  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes            No     X
   ------------  ------------

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in rule 12b-2 of the Exchange Act).

Yes            No      X
   ------------  ------------

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer.  See definition of accelerated
filer and large  accelerated  filer in Rule 12b-2 of the  Exchange  Act.  (Check
one):

Large accelerated filer     Accelerated filer    Non-accelerated filer  X
                       ----                 ----                     -----

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes       No    X
   -------  --------

<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                               INDEX TO FORM 10-Q

                For the Quarterly Period Ended September 30, 2007

PART I. FINANCIAL INFORMATION

    Item 1. Financial Statements

      Balance Sheets
        As of September 30, 2007 and March 31, 2007............................3

      Statements of Operations
        For the Three Months and Six Months Ended September 30, 2007 and 2006..4

      Statement of Partners' Deficit
        For the Six Months Ended September 30, 2007 ...........................5

      Statements of Cash Flows
        For the Six Months Ended September 30, 2007 and 2006...................6

      Notes to Financial Statements............................................7

     Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations..............................14

     Item 3. Quantitative and Qualitative Disclosures about Market Risk.......15

     Item 4.  Controls and Procedures.........................................15
PART II. OTHER INFORMATION

     Item 1. Legal Proceedings................................................16

     Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.....16

     Item 3.  Defaults Upon Senior Securities.................................16

     Item 4.  Submission of Matters to a Vote of Security Holders.............16

     Item 5.  Other Information...............................................16

     Item 6. Exhibits.........................................................16

     Signatures...............................................................17

                                       2
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                 September 30, 2007              March 31, 2007
                                                                             --------------------------    -------------------------
ASSETS
<S>                                                                        <C>                            <C>
Cash and cash equivalents                                                   $                  145,769     $                149,077
Investments in Local Limited Partnerships, net (Note 2)                                         18,919                       20,384
                                                                             --------------------------    -------------------------
       Total Assets                                                         $                  164,688     $                169,461
                                                                             ==========================    =========================
LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
   Accrued fees and expenses due to
     General Partner and affiliates (Note 3)                                $                3,622,455     $              3,475,587

Partners' deficit:
  General Partner                                                                              (75,099)                     (73,583)
  Limited Partners (15,000 Partnership Units authorized; 15,000 Partnership
    Units issued and outstanding)                                                           (3,382,668)                  (3,232,543)
                                                                             --------------------------    -------------------------
      Total partners' deficit                                                               (3,457,767)                  (3,306,126)
                                                                             --------------------------    -------------------------
      Total Liabilities and  Partners' Deficit                              $                  164,688     $                169,461
                                                                             ==========================    =========================
</TABLE>
                 See accompanying notes to financial statements
                                       3
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

      For the Three Months and Six Months Ended September 30, 2007 and 2006
                                   (unaudited)
<TABLE>
<CAPTION>
                                                    2007                                                2006
                                --------------------------------------------   -------------------------------------------------
                                     Three Months           Six Months              Three Months                 Six Months
                                --------------------   ---------------------   ----------------------     ----------------------
<S>                           <C>                   <C>                        <C>                     <C>
Reporting fees                 $                -                     3,293     $                  -                           -
Distribution income                         7,053                    17,604                    6,476                      21,179
                                --------------------   ---------------------   ----------------------     -----------------------
                                            7,053                    20,897                    6,476                      21,179
                                --------------------   ---------------------   ----------------------     -----------------------
Operating expenses:
  Amortization (Note 2)                        85                       170                       85                         170
  Asset management fees (Note 3)           74,866                   149,732                   74,866                     149,732
  Legal and accounting                     19,218                    19,218                   16,687                      16,921
  Other                                       145                     2,342                    2,066                       2,696
                                --------------------   ---------------------   ----------------------     -----------------------
    Total operating expenses               94,314                   171,462                   93,704                     169,519
                                --------------------   ---------------------   ----------------------     -----------------------
Loss from operations                      (87,261)                 (150,565)                 (87,228)                   (148,340)

Equity in losses of Local
 Limited Partnerships (Note 2)               (647)                   (1,295)                    (246)                       (491)

Interest income                                81                       219                      182                         367
                                --------------------   ---------------------   ----------------------     -----------------------
Net loss                       $          (87,827)                 (151,641)    $            (87,292)                   (148,464)
                                ====================   =====================   ======================     =======================
Net loss allocated to:
  General Partner              $             (878)                   (1,516)    $               (873)                     (1,485)
                                ====================   =====================   ======================     =======================
  Limited Partners             $          (86,949)                 (150,125)    $            (86,419)                   (146,979)
                                ====================   =====================   ======================     =======================
Net loss per Partnership Unit  $               (6)                      (10)    $                 (6)                        (10)
                                ====================   =====================   ======================     =======================
Outstanding weighted Partnership
  Units                                    15,000                    15,000                   15,000                      15,000
                                ====================   =====================   ======================     =======================
</TABLE>
                 See accompanying notes to financial statements
                                       4
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                         STATEMENT OF PARTNERS' DEFICIT

                   For the Six Months Ended September 30, 2007
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                      General                  Limited
                                                                      Partner                  Partners                Total
                                                               ---------------------    ---------------------    -------------------
<S>                                                         <C>                        <C>                     <C>
Partners' deficit at March 31, 2007                          $             (73,583)     $          (3,232,543)  $        (3,306,126)

Net loss                                                                    (1,516)                  (150,125)             (151,641)
                                                               ---------------------    ---------------------    -------------------
Partners' deficit at September 30, 2007                      $             (75,099)     $          (3,382,668)  $        (3,457,767)
                                                               =====================    =====================    ===================
</TABLE>
                 See accompanying notes to financial statements
                                       5
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS

              For the Six Months Ended September 30, 2007 and 2006
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                             2007                       2006
                                                                                     --------------------       --------------------
<S>                                                                                <C>                        <C>
Cash flows from operating activities:
  Net loss                                                                          $           (151,641)      $           (148,464)
    Adjustments to reconcile net loss to net
      cash provided by (used in) operating activities:
        Amortization                                                                                 170                        170
        Equity in losses of Local Limited Partnerships                                             1,295                        491
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                                        146,868                    150,023
                                                                                     --------------------       --------------------
Net cash provided by (used in) operating activities                                               (3,308)                      2,220
                                                                                     --------------------       --------------------
Cash flows from investing activities:
    Distributions received from Local Limited Partnerships                                             -                        200
                                                                                     --------------------       --------------------
Net increase (decrease) in cash and cash equivalents                                              (3,308)                      2,420

Cash and cash equivalents, beginning of period                                                   149,077                    156,158
                                                                                     --------------------       --------------------

Cash and cash equivalents, end of period                                            $            145,769       $            158,578
                                                                                     ====================       ====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

   Taxes paid                                                                       $                 -       $                  -
                                                                                     ====================       ====================
</TABLE>
                 See accompanying notes to financial statements
                                       6
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

General
-------

The accompanying  condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly  reports under Section 13 or 15(d) of the Securities  Exchange Act
of 1934.  Accordingly,  they do not include all of the information and footnotes
required by  accounting  principles  generally  accepted in the United States of
America for complete  financial  statements.  In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended
September  30, 2007 are not  necessarily  indicative  of the results that may be
expected  for the fiscal year ending March 31,  2008.  For further  information,
refer  to  the  financial  statements  and  footnotes  thereto  included  in the
Partnership's  annual  report on Form 10-K for the fiscal  year ended  March 31,
2007.

Organization
------------

WNC Housing Tax Credit Fund III, L.P. (the "Partnership"),  a California Limited
Partnership,  was  formed  on May  10,  1991  under  the  laws of the  State  of
California.  The  Partnership  was formed to invest  primarily in other  limited
partnerships or limited liability companies ("Local Limited Partnerships") which
own and operate  multi-family  housing complexes (the "Housing  Complexes") that
are eligible for Federal low-income housing tax credits ("Low Income Housing Tax
Credits").  The local general  partners (the "Local  General  Partners") of each
Local Limited Partnership retain  responsibility for maintaining,  operating and
managing the Housing Complexes.

The general  partner of the  Partnership is WNC Tax Credit  Partners,  L.P. (the
"General Partner"). WNC & Associates,  Inc. ("Associates") and Wilfred N. Cooper
Sr. are the general partners of the WNC Tax Credit  Partners,  L.P. The chairman
and president of Associates own  substantially  all of the outstanding  stock of
Associates.  The  business of the  Partnership  is conducted  primarily  through
Associates as the General Partner and the Partnership have no employees of their
own.

The Partnership  shall continue in full force and effect until December 31, 2050
unless  terminated  prior to that date pursuant to the partnership  agreement or
law.

The  Partnership  Agreement  authorized  the  sale of up to  15,000  of  Limited
Partnership interest  ("Partnership  Units") at $1,000 per Partnership Unit. The
offering of  Partnership  Units  concluded on September  30, 1993, at which time
15,000 Partnership Units representing subscriptions in the amount of $15,000,000
had been accepted.  The General Partner has 1% interest in operating profits and
losses,  taxable income and losses,  in cash available for distribution from the
Partnership and Low Income Housing Tax Credits of the Partnership. The investors
(the "Limited  Partners")  will be allocated the remaining 99% of these items in
proportion to their respective investments.

The  proceeds  from the  disposition  of any of the  Local  Limited  Partnership
properties  will be used  first  to pay  debts  and  other  obligations  per the
respective Local Limited Partnership Agreement. Any remaining proceeds will then
be paid to the  Partnership.  The sale of a Housing  Complex  may be  subject to
other restrictions and obligations.  Accordingly, there can be no assurance that
a Local Limited Partnership will be able to sell its Housing Complex. Even if it
does so, there can be no assurance that any significant  amounts of cash will be
distributed to the  Partnership.  Should such  distributions  occur, the Limited
Partners  will be  entitled  to  receive  distributions  equal to their  capital
contributions  and their  return on  investment  (as defined in the  Partnership
Agreement) and the General  Partners would then be entitled to receive  proceeds
equal to their capital contributions from the remainder.  Any additional sale or
refinancing  proceeds  will  be  distributed  90% to the  Limited  Partners  (in
proportion to their respective investments) and 10% to the General Partners.

                                       7
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Risks and Uncertainties
-----------------------

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The  Low  Income   Housing  Tax  Credits   rules  are   extremely   complicated.
Noncompliance  with these rules results in the loss of future Low Income Housing
Tax  Credits  and the  fractional  recapture  of Low Income  Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax Credits
that an  individual  can use is limited to the tax liability due on the person's
last $25,000 of taxable income. The Local Limited  Partnerships may be unable to
sell the Housing  Complexes  at a price which  would  result in the  Partnership
realizing cash distributions or proceeds from the transaction.  Accordingly, the
Partnership  may be unable to distribute any cash to its Limited  Partners.  Low
Income  Housing Tax Credits may be the only  benefit from an  investment  in the
Partnership.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income  Housing Tax  Credits,  a  fractional  recapture  of prior Low
Income Housing Tax Credits,  and a loss of the  Partnership's  investment in the
Housing  Complex  would  occur.  The  Partnership  is  a  limited  partner  or a
non-managing  member  of  each  Local  Limited  Partnership.   Accordingly,  the
Partnership  will have very  limited  rights with respect to  management  of the
Local  Limited  Partnerships.  The  Partnership  will rely  totally on the Local
General  Partners.  Neither  the  Partnership's  investments  in  Local  Limited
Partnerships,  nor  the  Local  Limited  Partnerships'  investments  in  Housing
Complexes,  are readily marketable.  To the extent the Housing Complexes receive
government financing or operating subsidies,  they may be subject to one or more
of the  following  risks:  difficulties  in  obtaining  tenants  for the Housing
Complexes;  difficulties  in  obtaining  rent  increases;  limitations  on  cash
distributions;  limitations  on  sales  or  refinancing  of  Housing  Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations
on removal of Local  General  Partners;  limitations  on subsidy  programs;  and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low Income  Housing Tax Credits and recapture of Low Income
Housing Tax  Credits  previously  taken.  The value of real estate is subject to
risks  from  fluctuating  economic   conditions,   including  employment  rates,
inflation,  tax, environmental,  land use and zoning policies, supply and demand
of similar properties, and neighborhood conditions, among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge the tax treatment of tax items.  The amount of Low Income  Housing Tax
Credits and tax losses  allocable to the  investors  could be reduced if the IRS
were successful in such a challenge.  The  alternative  minimum tax could reduce
tax benefits from an investment  in the  Partnership.  Changes in tax laws could
also impact the tax benefits from an investment  in the  Partnership  and/or the
value of the Housing Complexes.

All of the Low Income  Housing Tax Credits  anticipated  to be realized from the
Local  Limited  Partnerships  have  been  realized.  The  Partnership  does  not
anticipate  being  allocated  a  significant  amount of Low Income  Housing  Tax
Credits  from the Local  Limited  Partnerships  in the  future.  Until the Local
Limited  Partnerships  have  completed the 15 year Low Income Housing Tax Credit
compliance  period,  risks  exist for  potential  recapture  of prior Low Income
Housing Tax Credits.
                                       8
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Associates has agreed to continue providing  advances  sufficient enough to fund
the operations  and working  capital  requirements  of the  Partnership  through
October 31,  2008,  if the  Partnership  were to  experience  a working  capital
deficiency.

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

No trading  market  for the Units  exists or is  expected  to  develop.  Limited
Partners  may be unable to sell  their  Units  except at a  discount  and should
consider their Units to be a long-term  investment.  Individual Limited Partners
will have no recourse if they disagree with actions  authorized by a vote of the
majority of Limited Partners.

Exit Strategy
-------------

The IRS  Compliance  Period for Low Income  Housing  Tax  Credit  properties  is
generally  15 years from  occupancy  following  construction  or  rehabilitation
completion.  WNC  was one of the  first  in the  industry  to  offer  syndicated
investments  using the Low Income Housing Tax Credits.  The initial programs are
completing their compliance periods.

With  that in  mind,  the  Partnership  is  continuing  to  review  the  Housing
Complexes,  with special emphasis on the more mature properties such as any that
have  satisfied  the IRS  compliance  requirements.  The review  considers  many
factors,  including  extended  use  requirements  (such as those due to mortgage
restrictions  or state  compliance  agreements),  the  condition  of the Housing
Complex,  and the tax  consequences to the Limited Partners from the sale of the
Housing Complex.

Upon  identifying  those  Housing  Complexes  with the highest  potential  for a
successful sale, refinancing or syndication,  the Partnership expects to proceed
with  efforts to  liquidate  them.  The  objective  is to  maximize  the Limited
Partners'  return  wherever   possible  and,   ultimately,   to  wind  down  the
Partnership.  Local Limited Partnership interests may be disposed of any time by
the General  Partner in its  discretion.  As of September  30, 2007,  no Housing
Complexes had completed the 15 year compliance period. As of September 30, 2007,
no Housing  Complexes have been selected for disposition.  While  liquidation of
the  Housing  Complexes  continues  to be  evaluated,  the  dissolution  of  the
Partnership was not imminent as of September 30, 2007.

                                       9
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting,  whereby the Partnership adjusts its investment
balance for its share of the Local Limited  Partnerships'  results of operations
and for any  contributions  made and  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting of the sum of the remaining future Low Income
Housing  Tax  Credits  estimated  to be  allocable  to the  Partnership  and the
estimated  residual value to the Partnership.  If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  consistent  with  those  of the
Partnership.  Costs incurred by the Partnership in acquiring the investments are
capitalized  as part of the investment  account and are being  amortized over 30
years (see Note 2).

"Equity in losses of Local Limited Partnerships" for each period ended September
30, 2007 and 2006 have been recorded by the  Partnership  based on six months of
results  estimated by management of the Partnership.  Management's  estimate for
the three-month  period is based on either actual unaudited  results reported by
the Local Limited  Partnerships  or historical  trends in the  operations of the
Local Limited  Partnerships.  In subsequent  annual financial  statements,  upon
receiving the actual annual results reported by the Local Limited  Partnerships,
management  reverses its prior estimate and records the actual results  reported
by the Local  Limited  Partnerships.  Equity in  losses  from the Local  Limited
Partnerships  allocated to the Partnership are not recognized to the extent that
the  investment  balance would be adjusted below zero. As soon as the investment
balance reaches zero, the related costs of acquiring the investment are impaired
(see Note 2). If the Local  Limited  Partnerships  report  net  income in future
years,  the  Partnership  will resume  applying the equity method only after its
share of such net income  equals the share of net losses not  recognized  during
the period(s) the equity method was suspended.

The  Partnership  does not  consolidate the accounts and activities of the Local
Limited  Partnerships,  which are considered  Variable  Interest  Entities under
Financial    Accounting   Standards   Board   Interpretation   No.   46-Revised,
"Consolidation  of Variable Interest  Entities",  because the Partnership is not
considered the primary beneficiary.  The Partnership's balance in investments in
Local Limited Partnerships, plus the risk of recapture of Low Income Housing Tax
Credits  previously  recognized  on such  investments,  represents  the  maximum
exposure to loss in connection with such investments. The Partnership's exposure
to loss on the Local  Limited  Partnerships  is mitigated by the  condition  and
financial  performance  of the  underlying  Housing  Complexes  as  well  as the
strength of the local General Partners and their  guarantees  against Low Income
Housing Tax Credits recapture.

Distributions  received by limited  partners are accounted for as a reduction of
the investment  balance.  Distributions  received after the investment  that has
reached zero is recognized as distribution income.

Use of 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  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reporting  period.  Actual results could materially differ from those
estimates.

Cash and Cash Equivalents
-------------------------

The Partnership considers all highly liquid investments with original maturities
of three months or less when purchased to be cash  equivalents.  As of September
30, 2007 and March 31, 2007, the Partnership had no cash equivalents.

                                       10
<PAGE>
                      WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Concentration of Credit Risk
----------------------------

At September 30, 2007,  the  Partnership  maintained  cash balances at a certain
financial   institution  in  excess  of  the  federally  insured  maximum.   The
Partnership  believes it is not  exposed to any  significant  financial  risk on
cash.

Income Taxes
------------

No provision for income taxes has been  recorded in the financial  statements as
any  liability  and or benefits  for income  taxes flows to the  partners of the
Partnership and is their obligation and/or benefit.  For income tax purposes the
Partnership reports on a calendar year basis.

Net Loss Per Partnership Unit
-----------------------------

Net loss per Partnership  Unit is calculated  pursuant to Statement of Financial
Accounting  Standards No. 128, Earnings per Share. Net loss per Partnership Unit
includes no dilution  and is computed  by  dividing  loss  allocated  to Limited
Partners by the weighted average number of Partnership Units outstanding  during
the  period.  Calculation  of  diluted  net  loss  per  Partnership  Unit is not
required.

Revenue Recognition
-------------------

The  Partnership  is entitled to receive  reporting  fees from the Local Limited
Partnerships.  The  intent  of  the  reporting  fees  is  to  offset  (in  part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited  Partnerships.  Due to the  uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

Amortization
------------

Acquisition  fees  and  costs  are  being  amortized  over 30  years  using  the
straight-line  method.  Amortization  expense for the three and six months ended
September 30, 2007 and 2006 was $85, $170, $85 and $170, respectively.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the periods  presented,  the Partnership has acquired limited  partnership
interests  in 48 Local  Limited  Partnerships,  each of which  owns one  Housing
Complex except one Local Limited  Partnership that owns three Housing Complexes,
consisting of an aggregate of 1,685  apartment  units.  The  respective  General
Partners of the Local Limited  Partnerships manage the day-to-day  operations of
the entities.  Significant Local Limited Partnership  business decisions require
approval  from the  Partnership.  The  Partnership,  as a  limited  partner,  is
generally  entitled  to 99%,  as  specified  in the  Local  Limited  Partnership
agreements,  of the operating profits and losses,  taxable income and losses and
tax credits of the Local Limited Partnerships.

The following is a summary of the equity method  activity of the  investments in
Local Limited Partnerships for the periods presented below:
<TABLE>
<CAPTION>
                                                                                  For the Six                      For the
                                                                                  Months Ended                     Year Ended
                                                                               September 30, 2007                March 31, 2007
                                                                         ----------------------------        -----------------------
<S>                                                                     <C>                                <C>
      Investments per balance sheet, beginning of period                 $                    20,384        $                23,717
      Equity in losses of Local Limited Partnerships                                          (1,295)                        (2,993)
      Amortization of capitalized acquisition fees and costs                                    (170)                          (340)
                                                                         -----------------------------       -----------------------
      Investments per balance sheet, end of period                       $                    18,919        $                20,384
                                                                         =============================       =======================
</TABLE>
                                       11
<PAGE>
                     WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                      For the Six Months Ended   For the Year Ended
                                                                                         September 30, 2007        March 31, 2007
                                                                                     ------------------------   --------------------
<S>                                                                               <C>                         <C>
Investments in Local Limited Partnerships, net                                      $                13,605    $             14,900
Acquisition fees and costs, net of accumulated amortization of $1,412,108 and
$1,411,938                                                                                            5,314                   5,484
                                                                                     ------------------------   --------------------
Investments per balance sheet, end of period                                        $                18,919    $             20,384
                                                                                     ========================   ====================
</TABLE>
Selected  financial  information for the six months ended September 30, 2007 and
2006 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested as follows:

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                       2007                          2006
                                                                            --------------------------     ------------------------
<S>                                                                        <C>                           <C>
           Revenues                                                         $               4,094,000     $               3,912,000
                                                                            --------------------------     ------------------------
           Expenses:
             Operating expenses                                                             2,824,000                     2,668,000
             Interest expense                                                                 846,000                       822,000
             Depreciation and amortization                                                    934,000                       927,000
                                                                            --------------------------     ------------------------
           Total expenses                                                                   4,604,000                     4,417,000
                                                                            --------------------------     ------------------------
           Net loss                                                         $                (510,000)                     (505,000)
                                                                            ==========================     ========================
           Net loss allocable to the Partnership                            $                (504,000)    $                (500,000)
                                                                            ==========================     ========================
           Net loss recorded by the Partnership                             $                  (1,000)    $                       -
                                                                            ==========================     ========================
</TABLE>
Certain Local Limited  Partnerships have incurred  significant  operating losses
and/or have  working  capital  deficiencies.  In the event  these Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  may be required to sustain the operations of
such Local Limited  Partnerships.  If additional  capital  contributions are not
made when they are  required,  the  Partnership's  investment in certain of such
Local Limited Partnerships could be impaired,  and the loss and recapture of the
related Low Income Housing Tax Credits could occur.

                                       12
<PAGE>
                     WNC HOUSING TAX CREDIT FUND III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                For the Quarterly Period Ended September 30, 2007
                                   (unaudited)

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

Under the terms of the  Partnership  Agreement  the  Partnership  has paid or is
obligated to the General Partner or its affiliates for the following items:

     (a)  Acquisition  fees of up to 9% of the gross  proceeds  from the sale of
          Partnership  Units as compensation for services rendered in connection
          with the acquisition of Local Limited Partnerships.  At the end of all
          periods  presented,  the  Partnership  incurred  acquisition  fees  of
          $1,350,000.  Accumulated  amortization of these  capitalized costs was
          $1,344,685 and $1,344,515 as of September 30, 2007 and March 31, 2007,
          respectively.

     (b)  Reimbursement of costs incurred by the General Partner or an affiliate
          in connection  with the  acquisition  of Local  Limited  Partnerships.
          These reimbursements have not exceeded 1.5% of the gross proceeds.  As
          of  the  end  of  all  periods  presented,  the  Partnership  incurred
          acquisition costs of $67,423,  which have been included in investments
          in Local Limited Partnerships. Accumulated amortization was $67,423 as
          of September 30, 2007 and March 31, 2007.

     (c)  Annual asset  management fee. An annual asset  management fee equal to
          0.5%  of the  invested  assets  of  the  Local  Limited  Partnerships.
          Invested Assets means the sum of the Partnership's Investment in Local
          Limited Partnership Interests and the Partnership's allocable share of
          the amount of the  mortgage  loans on and other debts  related to, the
          Apartment Complexes owned by such Local Limited Partnerships.  Fees of
          $149,732 were incurred  during each of six months ended  September 30,
          2007 and  2006.  The  Partnership  paid  the  General  Partner  or its
          affiliates  $17,500  and  $13,750 of those fees  during the six months
          ended September 30, 2007 and 2006, respectively.

     (d)  Subordinated disposition fee. A subordinated disposition fee is earned
          in an  amount  equal to 1% of the  sales  price of real  estate  sold.
          Payment of this fee is subordinated to the Limited Partners  receiving
          a preferred  return of 16% through December 31, 2002 and 6% thereafter
          (as defined in the  Partnership  Agreement) and is payable only if the
          General Partner or its affiliates render services in the sales effort.
          No such fees were earned for the periods presented.

     (e)  The  Partnership  reimburses the General Partner or its affiliates for
          operating  expenses  incurred in behalf of the Partnership.  Operating
          expense reimbursements were approximately $6,924 and $5,575 during the
          six months ended September 30, 2007 and 2006, respectively.

The accrued fees and expenses due to General Partner and affiliates consisted of
the following at:
<TABLE>
<CAPTION>
                                                                          September 30, 2007                     March 31, 2007
                                                                    -----------------------------           ------------------------
<S>                                                             <C>                                      <C>
   Expenses  paid  by  the  General   Partner   and/or  its
   affiliates on behalf of the Partnership                       $                         19,363         $                   4,727
   Accrued asset management fee payable                                                 3,603,092                         3,470,860
                                                                    ------------------------------           -----------------------
                                                                 $                      3,622,455         $               3,475,587
                                                                    ==============================           =======================
</TABLE>
The General  Partners  and/or its affiliates do not anticipate  that the accrued
fees will be paid until such time as  capital  reserves  are in excess of future
foreseeable working capital requirements of the Partnership.

                                       13
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Forward-Looking Statements

With the exception of the  discussion  regarding  historical  information,  this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-Q contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  our  future  cash  flows and  ability  to  obtain  sufficient
financing, level of operating expenses, conditions in the Low Income Housing Tax
Credit property market and the economy in general, as well as legal proceedings.
Historical  results are not necessarily  indicative of the operating results for
any future period.

Subsequent  written and oral  forward  looking  statements  attributable  to the
Partnership  or persons  acting on its behalf are  expressly  qualified in their
entirety by  cautionary  statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission.  The following discussion should be
read in conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
six months ended  September 30, 2007 and 2006, and should be read in conjunction
with the condensed  consolidated  financial  statements and  accompanying  notes
included within this report.

Financial Condition

The Partnership's  assets at September 30, 2007 consisted  primarily of $146,000
in  cash  and  $19,000  in   investments  in  the   forty-eight   Local  Limited
Partnerships.   Liabilities  at  September  30,  2007  consisted   primarily  of
$3,622,000 of accrued  annual  management  fees and advances paid by the General
Partner and/or its affiliates.

Results of Operations

Three Months Ended  September 30, 2007 Compared to Three Months Ended  September
30, 2006. The  Partnership's  net loss for the three months ended  September 30,
2007 was $(88,000), reflecting an increase of $(1,000) from the net loss for the
three months ended September 30, 2007 of $(87,000).  This increase was primarily
due to an increase of $(1000) in total  operating  expenses for the three months
ended September 30, 2007

Six Months Ended  September 30, 2007 Compared to Six Months Ended  September 30,
2006. The Partnership's net loss for the six months ended September 30, 2007 was
$(152,000),  reflecting  an increase  of $(3,000)  from the net loss for the six
months ended  September 30, 2006 of $(149,000).  This increase was primarily due
to an  increase  of  $(2,000)  in total  operating  expenses  and an increase of
$(1,000) in equity in losses of Local  Limited  Partnerships  for the six months
ended  September 30, 2007. The increase in operating  expenses was primarily due
to a $2,000 increase in legal and accounting expenses.

Liquidity and Capital Resources

Six Months Ended  September 30, 2007 Compared to Six Months Ended  September 30,
2006. Net cash used during the six months ended September 30, 2007 was $(3,000),
compared to net cash provided  during the six months ended September 30, 2006 of
$2,000,  reflecting a change of $(5,000).  This change was  primarily  due to an
increase  of $(1,000) in equity in losses of Local  Limited  Partnerships  and a
decrease  of $4,000 in accrued  asset  management  fee for the six months  ended
September 30, 2007 as compared to the six months ended September 30, 2006.

                                       14
<PAGE>
During the six months ended  September 30, 2007,  accrued asset  management fees
payable and advances  due to the General  Partner  increased  by  $147,000.  The
General  Partner does not anticipate  that the accrued fees and advances will be
paid until such time as capital  reserves are in excess of  foreseeable  working
capital requirements of the partnership.

The Partnership  expects its future cash flows,  together with its net available
assets at September 30, 2007, to be sufficient to meet all currently foreseeable
future cash  requirements.  This  excludes  amounts  owed to  Associates  by the
Partnership.  Associates has agreed to continue  providing  advances  sufficient
enough  to  fund  the  operations  and  working  capital   requirements  of  the
Partnership  through October 31, 2008, if the  Partnership  were to experience a
working capital deficiency.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

          NOT APPLICABLE

Item 4.   Controls and Procedures

          As of the end of the period covered by this report,  the Partnership's
          General Partner,  under the supervision and with the  participation of
          the Chief Executive  Officer and Chief Financial Officer of Associates
          carried  out  an  evaluation  of  the   effectiveness  of  the  Fund's
          "disclosure controls and procedures" as defined in Securities Exchange
          Act of 1934 Rule  13a-15 and  15d-15.  Based on that  evaluation,  the
          Chief  Executive  Officer and Chief  Financial  Officer have concluded
          that  as of  the  end  of the  period  covered  by  this  report,  the
          Partnership's  disclosure  controls and  procedures  were adequate and
          effective in timely alerting them to material  information relating to
          the Partnership required to be included in the Partnership's  periodic
          SEC filings.

          Changes  in   internal   controls.   There  were  no  changes  in  the
          Partnership's  internal control over financial reporting that occurred
          during the quarter ended September 30, 2007 that materially  affected,
          or are  reasonably  likely to  materially  affect,  the  Partnership's
          internal control over financial reporting.

                                       15
<PAGE>
PART II. Other  Information

Item 1.  Legal Proceedings

         NONE

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         NONE

Item 3.  Defaults Upon Senior Securities

         NONE

Item 4.  Submission of Matters to a Vote of Security Holders

         NONE

Item 5.  Other Information

         NONE

Item 6.  Exhibits

31.1     Certification of the Principal Executive  Officer pursuant to Rule 13a-
         15(e) and 15d-15(e), as adopted pursuant to section 302 of the Sarbanes
         -Oxley Act of 2002.  (filed herewith)

31.2     Certification of the Principal  Financial Officer pursuant to Rule 13a-
         15(e) and 15d-15(e), as adopted pursuant to section 302 of the Sarbanes
         -Oxley Act of 2002.  (filed herewith)

32.1     Section 1350 Certification of the Chief Executive Officer. (filed
         herewith)

32.2     Section 1350 Certification of the Chief Financial Officer.  (filed
         herewith)

                                       16
<PAGE>
Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

WNC HOUSING TAX CREDITS III, L.P.

By:  WNC Tax Credit Partners, L.P.  General Partner


By:  WNC & ASSOCIATES, INC.         General Partner





By: /s/ Wilfred N. Cooper, Jr.
    --------------------------
    Wilfred N. Cooper, Jr.
    President and Chief Executive Officer of WNC & Associates, Inc.

Date:January 28, 2008





By:  /s/ Thomas J. Riha
     ------------------
    Thomas J. Riha
    Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: January 28, 2008

                                       17