REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                               Index to Form 10-K

                                December 31, 2001

                                     Part I

                                                                        Page No.
                                                                     -----------
Item 1 - Business                                                            3
Item 2 - Properties                                                          4
Item 3 - Legal Proceedings                                                   6
Item 4 - Submission of Matters to a Vote of
         Security Holders (Partners)                                         6

                                      Part II

Item 5 - Market for the Registrant's "Limited Partnership Units" and
Related
              Unitholder Matters                                             6
Item 6 - Selected Financial Data                                             6
Item 7 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           9
Item 8 - Financial Statements and Supplementary Data                        14
Item 9 - Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure                                               36

                                    Part III

Item 10 - Directors and Executive Officers of the Registrant                36
Item 11 - Executive Compensation                                            36
Item 12 - Security Ownership of Certain Beneficial Owners and management    37
Item 13 - Certain Relationships and Related Transactions                    37

                                    Part IV

Item 14 - Exhibits, Financial Statement Schedules, and Reports on
          Form 8-K.                                                         38

Signatures                                                                  39


<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K
                Annual Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

        For the year ended December 31, 2001 Commission file number 333-41410
--------------------------------------------------------------------------------

                       REDWOOD MORTGAGE INVESTORS VIII
--------------------------------------------------------------------------------
          (Exact name of registrant as specified in its charter)

         California                                       94-3158788
--------------------------------------------------------------------------------
 (State or other jurisdiction of                (I.R.S. Employer Identification)
  incorporation or organization)

650 El Camino Real Suite G, Redwood City, CA                           94063
--------------------------------------------------------------------------------
(address of principal executive offices)                            (zip code)

Registrant's telephone number including area code                (650) 365-5341
--------------------------------------------------------------------------------

Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered
--------------------------------------------------------------------------------
None                                             None
--------------------------------------------------------------------------------

Securities registered pursuant to Section 12(g)
  of the Act:                                          Limited Partnership Units

     Indicate by check mark whether the  registrant (1) has filed all reports to
be filed by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934 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    XXXX                                                     NO
--------------                                                  ----------------

     As of  December  31,  2001,  the limited  partnership  units  purchased  by
non-affiliates was 69,675,947 units computed at $1.00 a unit for $69,675,947.

Documents incorporated by reference:

     Portions of the  prospectus  effective  August 31, 2000,  supplement  No. 1
dated April 30,  2001,  and  supplement  No. 2 dated  February  12,  2002,  (the
"Prospectus"), are incorporated in Parts II, III, and IV. Exhibits filed as part
of Form S-11 Registration  Statement #333-41410 are incorporated by reference in
part IV.

<PAGE>

                                     Part I

Item 1 - Business

     Redwood  Mortgage  Investors VIII, a California  Limited  Partnership  (the
"Partnership"),  was  organized  in 1993 of  which  Michael  R.  Burwell,  Gymno
Corporation and Redwood Mortgage Corp.,  both California  Corporations,  are the
general  partners.  The  partnership  is  organized  to engage in  business as a
mortgage  lender,  for the primary purpose of making loans secured  primarily by
first and second deeds of trust on  California  real estate.  Loans are arranged
and serviced by Redwood Mortgage Corp. The partnership's  objectives are to make
loans that will: (i) yield a high rate of return from mortgage lending; and (ii)
preserve and protect the partnership's capital.  Investors should not expect the
partnership to provide tax benefits of the type commonly associated with limited
partnership tax shelter investments.  The partnership is intended to serve as an
investment  alternative for investors  seeking current income.  However,  unlike
other investments which are intended to provide current income, an investment in
the partnership will be less liquid, not readily transferable, and not provide a
guaranteed return over its investment life.

     Initially,  the partnership  offered a minimum of $250,000 and a maximum of
$15,000,000 in Units,  of which  $14,932,017  were sold.  This initial  offering
closed on October 31, 1996.  Subsequently,  the  partnership  commenced a second
offering of up to  $30,000,000  in Units  commencing  on December 4, 1996.  This
offering sold  $29,992,574 in Units and was closed on August 30, 2000. On August
31, 2000 the  partnership  commenced  an offering for another  30,000,000  Units
($30,000,000).  As of December 31, 2001,  24,751,356  Units for $24,751,356 were
sold  in  this  third  offering,   bringing  the  aggregate  sale  of  Units  to
$69,675,947.  All Units are being offered on a "best efforts" basis, which means
that no one is  guaranteeing  that any  minimum  number  of Units  will be sold,
through  broker-dealer  member firms of the National  Association  of Securities
Dealers,  Inc. (See Section of the prospectus  entitled  "TERMS OF THE OFFERING"
and "PLAN OF DISTRIBUTION").

     The  partnership  began selling Units in February 1993, and began investing
in  mortgages  in  April  1993.  At  December  31,  2001,  the  partnership  has
investments  in loans with principal  balances  totaling  $82,789,833.  Interest
rates ranged from 8.00% to 18.00%.  Currently  First Trust Deeds comprise 51.92%
of the total amount of the loan  portfolio,  a decrease of 3.21% over 2000 level
of 55.13%. Junior loans (2nd and 3rd Trust Deeds) make up 48.08%, an increase of
3.21% over 2000 level of 44.87%. Loans secured by owner-occupied homes, combined
with  loans  secured  by  non-owner  occupied  homes,  total  45.35% of the loan
portfolio.  Loans secured by multi-family  properties make up 8.86% of the total
loans.  Commercial  loans now comprise  45.79% of the  portfolio,  a decrease of
3.63% from last year. Of the total loans,  82.49% are in six counties of the San
Francisco  Bay Area.  The  County  of  Stanislaus  makes up 6.88% of the  loans.
Stanislaus  County is an adjacent county to the San Francisco Bay Area,  located
approximately 65 miles from San Francisco. The balance of loans are primarily in
Northern  California.  Loan size  increased this past year, and is now averaging
$1,089,340  per loan,  up $80,943 from the average loan balance of $1,008,397 in
2000.  This increase is due to the ability of the  partnership  by virtue of its
increasing  size to invest in larger loans.  The average loan as of December 31,
2001,  represents  1.48% of limited  partners  capital and 1.32% of  outstanding
loans,  lower than  December 31, 2000 when average loan size of 1.89% of limited
partners capital and 1.47% of outstanding  loans.  This afforded the partnership
more  diversification.  Some of the loans are fractionalized  between affiliated
partnerships  with  objectives  similar to those of the  partnership  to further
reduce risk.  Average  equity per loan  transaction,  which is our loan plus any
senior loans, divided by the property's  appraised value,  subtracted from 100%,
stood at 40.33%,  a decrease  in equity of 4.79% from the  previous  year.  This
average equity is considered very conservative.  Generally, the more equity, the
more protection for the lender.  The general partners believe the  partnership's
loan portfolio is in good condition with only three properties in foreclosure as
of the end of  December  2001.  Loan  balances  of these  foreclosed  properties
represent 1.27% of the loan portfolios.


<PAGE>

Item 2 - Properties

A summary of the partnership's Loan Portfolio as of December 31, 2001, is set
forth below.

Loans as a Percentage of Total Loans

First Trust Deeds                                                $42,984,020
Appraised Value of Properties                                     86,535,227
                                                           ------------------
  Total Investment as a % of Appraisal                                49.67%
                                                           ------------------

First Trust Deed Loans                                            42,984,021
Second Trust Deed Loans                                           34,640,619
Third Trust Deed Loans                                             5,165,193
                                                           ------------------
  Total of Trust Deed Loans                                       82,789,833
                                                           ------------------

Priority positions:
   First Trust Deed Loans due other Lenders                       58,813,338
   Second Trust Deed Loans due other Lenders                       9,131,278

                                                           ------------------
Total Debt                                                      $150,734,449
                                                           ==================

  Appraised Property Value                                       252,604,011
  Total Debt as a % of Appraisal                                      59.67%

Number of Loans Outstanding                                               76

Average Loan                                                      $1,089,340
Average Loan as a % of Loans Outstanding                               1.32%
Largest Loan Outstanding                                           7,000,000
Largest Loan as a % of Loans Outstanding                               8.46%

Loans as a Percentage of Total Loans                                 Percent
------------------------------------                                 -------
First Trust Deed Loans                                                51.92%
Second Trust Deed Loans                                               41.84%
Third Trust Deed Loans                                                 6.24%
                                                              ---------------
   Total Trust Deed Loan Percentage                                  100.00%
                                                              ===============

Loans by
Type of Property                            Amount                  Percent
----------------                            ------                  -------
Owner Occupied Homes                      $11,018,765                 13.31%
Non-Owner Occupied Homes                   26,523,195                 32.04%
Apartments                                  7,336,898                  8.86%
Commercial                                 37,910,975                 45.79%
                                    ------------------        ---------------
   Total                                  $82,789,833                100.00%
                                    ==================        ===============

<PAGE>

     The following is a  distribution  of loans  outstanding  as of December 31,
2001 by Counties.

                                       Total
County                                 Loans              Percent
------                                 -----              -------
San Francisco                        $34,276,335           41.40%
San Mateo                             11,485,061           13.87%
Santa Clara                            9,285,168           11.22%
Alameda                                7,606,154            9.19%
Stanislaus                             5,699,983            6.88%
Los Angeles                            4,470,942            5.40%
Napa                                   3,336,083            4.03%
Marin                                  3,139,091            3.79%
Contra Costa                           2,498,844            3.02%
Placer                                   760,934            0.92%
Merced                                   181,238            0.22%
Riverside                                 50,000            0.06%
                              -------------------      -----------
Total                                $82,789,833          100.00%
                              ===================      ===========

Statement of Condition of Loans
         Number of Loans in Foreclosure     3

Scheduled maturity dates of loans as of December 31, 2001 are as follows:

                         Year Ending
                         December 31,             Amount
                      -------------------     ---------------
                             2002                $57,822,416
                             2003                 16,382,004
                             2004                  3,690,525
                             2005                    396,260
                             2006                  2,784,413
                          Thereafter               1,714,215
                                              ---------------
                                                 $82,789,833
                                              ===============

     The  scheduled  maturities  for 2002  include  twenty-five  loans  totaling
$23,610,528,  and  representing  28.52% of the portfolio,  were past maturity at
December  31, 2001.  Five of these  totaling  $1,334,162  were paid off in March
2002. Several other borrowers were in process of refinancing their loans through
other  institutions  as this  was an  opportune  time for them to do so and take
advantage of the lower  interest  rate.  Additionally,  the  partnership  allows
borrowers to  occasionally  continue to make the payments on debt past  maturity
for periods of time. The partnership, in most instances, receives the benefit of
a higher  interest  rate than would  otherwise  be  available  in the  currently
existing  loan  marketplace.  Interest  payments  on nine of  these  loans  were
delinquent,  however these  delinquencies  were not considered serious enough to
warrant the commencement of foreclosure action.

     In 1995,  the senior  lender  foreclosed on its deed of trust in connection
with a loan in  which  the  partnership  held  the  second  deed of  trust.  The
partnership  commenced a legal  action to collect the full amount of $84,386 due
to the partnership. A settlement was reached with the borrower in December, 1997
regarding  the repayment of the amounts due to the  partnership.  As of December
31,  2001,  $30,000  of the  full  amount  owing  to the  partnership  had  been
collected.  At that  time,  the  remaining  $54,386  was  written  off as it was
considered uncollectible.

     As of January 1, 1999, the partnership  owned a vacant lot acquired through
the foreclosure of loans. The vacant lot was valued $66,000 and was subsequently
sold in April, 1999 for $85,000.  Additionally,  the partnership owned a limited
liability company (LLC) whose sole asset was a partially completed single-family
residence.  This  partially  completed  single-family  residence was  originally
foreclosed  upon by the  partnership  and  subsequently  contributed to a wholly
owned LLC at a value of $181,139.  Additional  expenditures of $192,219 over the
$181,139  basis  were  primarily  for  completion  of  the   construction.   The
construction  was fully completed in February 2000, and the property was sold in
April 2000, at a profit of $135,000. The LLC is now dissolved.

Item 3 - Legal Proceedings

     In the normal course of business,  the  partnership  may become involved in
various  types of legal  proceedings  such as  assignment  of rents,  bankruptcy
proceedings, appointment of receivers, unlawful detainers, judicial foreclosure,
etc.,  to enforce the  provisions  of the deeds of trust,  collect the debt owed
under the promissory  notes, or to protect,  recoup its investment from the real
property secured by the deeds of trust. None of these actions would typically be
of any  material  importance.  As of the date  hereof,  the  partnership  is not
involved in any legal proceedings other than those that would be considered part
of the normal course of business.

Item 4 - Submission of Matters to Vote of Security Holders (Partners).

No matters have been submitted to a vote of the partnership.

                                     Part II

Item 5 -  Market  for the  Registrant's  "Limited  Partnership  Units"  and
               Related Unitholder Partnership Matters.

     30,000,000  Units at $1 each  (minimum  purchase of 2,000  Units) are being
offered  ($45,000,000  in  Units  were  previously  offered  and  sold)  through
broker-dealer  member firms of the National Association of Securities Dealers on
a "best  efforts"  basis (as  indicated  in Part I item 1).  Investors  have the
option of  withdrawing  earnings  on a monthly,  quarterly,  or annual  basis or
reinvesting and compounding the earnings. limited partners may withdraw from the
partnership in accordance with the terms of the partnership agreement subject to
possible early  withdrawal  penalties.  There is no  established  public trading
market.

     A  description  of  the  partnership  units,   transfer   restrictions  and
withdrawal  provisions  is  more  fully  described  under  the  section  of  the
prospectus  entitled  "Description of Units" and "Summary of Limited Partnership
Agreement",  pages 65 through  68 of the  prospectus,  a part of the  referenced
registration statement, which is incorporated by reference.

Item 6 - Selected Financial Data

     Redwood Mortgage  Investors VIII began operations in April 1993.  Financial
results for years 1998 through December 31, 1999, for prior public  partnerships
sponsored by the general  partners and their  affiliates,  are  incorporated  by
reference to the prospectus (S-11).

<PAGE>

     Financial  condition and results of operation for the partnership as of and
for the five years ended December 31, 2001 were:

<TABLE>
                                                                       Balance Sheets
                                                                            Assets

                                                                               December 31,
                                        -------------------------------------------------------------------------------------------

<S>                                              <C>                <C>                 <C>               <C>                 <C>
                                                 2001               2000                1999              1998                1997
                                        --------------     --------------     ---------------    --------------     ---------------
Cash                                       $1,916,578         $1,459,725          $1,602,568         $ 528,688          $  663,159

Loans
   Loans secured by deeds of trust         82,789,833         68,570,992          35,693,148        31,905,958          25,304,989
   Loans, unsecured                             3,967             53,838              49,090            48,849              62,844
   Accrued interest and late fees           3,236,721          1,039,469             711,521           459,418             341,976
   Advances on loans                          194,655            172,004              33,251           211,145             205,804
   Less allowance for losses              (2,247,191)        (1,344,938)           (834,359)         (414,073)           (257,500)

Investment in LLC                                   -                  -             373,358           304,139             251,139
Real estate owned  (REO), net                       -                  -                   -            66,000              70,138
Prepaid expenses and other assets               6,123             13,416               6,332            11,835              15,025
                                        --------------     --------------     ---------------    --------------     ---------------
                                          $85,900,686        $69,964,506         $37,634,909       $33,121,959         $26,657,574
                                        ==============     ==============     ===============    ==============     ===============


                                                              Liabilities and Partners Capital

                                                                            December 31,
                                      ------------------------------------------------------------------------------------------

                                                 2001               2000                1999              1998                1997
                                        --------------     --------------     ---------------    --------------     ---------------
Liabilities

Accounts payable                            $  73,889          $  30,000           $  29,413         $   2,500           $   3,355
Note payable - bank                        11,400,000         16,400,000                   -         5,947,000           5,640,000
Deferred interest                                   -             82,253             213,529           124,805              83,066
Subscriptions to partnership in
  applicant status                            672,617            224,900             330,000                 -                   -
                                        --------------     --------------     ---------------    --------------     ---------------
                                           12,146,506         16,737,153             572,942         6,074,305        5,726,421
                                        --------------     --------------     ---------------    --------------     ---------------

Partners' capital
  Limited partners subject to
       Redemption                          73,688,241         53,180,209          37,030,017        27,025,331          20,914,721
  General partners subject to
       Redemption                              65,939             47,144              31,950            22,323              16,432
                                        --------------     --------------     ---------------    --------------     ---------------
Total partners' capital                    73,754,180         53,227,353          37,061,967        27,047,654          20,931,153
                                        --------------     --------------     ---------------    --------------     ---------------

                                          $85,900,686        $69,964,506         $37,634,909       $33,121,959         $26,657,574
                                        ==============     ==============     ===============    ==============     ===============

</TABLE>
<PAGE>
<TABLE>
                                                                       Statements of Income

                                                                               December 31,
                                           --------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>                 <C>
                                                    2001             2000              1999             1998                1997
                                           --------------    -------------    --------------    -------------     ---------------

Gross revenue                                 $9,035,200       $6,348,819        $4,426,245       $3,406,021          $2,629,457
Expenses                                       2,941,067        2,056,601         1,482,051        1,127,439             820,937
                                           --------------    -------------    --------------    -------------     ---------------
Income before interest credited to
     partners in applicant status              6,094,133        4,292,218         2,944,194        2,278,582           1,808,520
Interest credited to partners in
     applicant status                                800            4,757             1,914            4,454               9,562
                                           --------------
                                                             -------------    --------------    -------------     ---------------

Net income                                    $6,093,333       $4,287,461        $2,942,280       $2,274,128          $1,798,958
                                           ==============    =============    ==============    =============     ===============

Net income to general partners (1%)               60,933           42,875            29,423           22,741              17,990
Net income to limited partners (99%)           6,032,400        4,244,586         2,912,857        2,251,387           1,780,968
                                           --------------    -------------    --------------    -------------     ---------------

Total net income                              $6,093,333       $4,287,461        $2,942,280       $2,274,128          $1,798,958
                                           ==============    =============    ==============    =============     ===============


Net income per $1,000 invested by
   limited partners for entire period
   (annualized)

      - where income is compounded
               and retained                          $90              $86               $84              $84                 $84
                                           ==============    =============    ==============    =============     ===============
      - where partner receives income in
               monthly distributions                 $86              $83               $81              $81                 $81
                                           ==============    =============    ==============    =============     ===============
</TABLE>

     The annualized  yield,  when income is compounded and retained for 1999 was
8.42%,  for 2000 was 8.58% and for 2001 it was  8.98%.  Our  average  annualized
yield,  when income is compounded and retained,  from inception through December
31, 2001, was 8.44%.

<PAGE>


Item 7 - Management's  Discussion  and Analysis of Financial  Condition and
         Results of Operations

Forward Looking Statements.

     Some of the  information  in the Form  10-K  may  contain  forward  looking
statements.  Uses of words  such as  "will",  "may",  "anticipate",  "estimate",
"continue"  or other forward  looking  words,  discuss  future  expectations  or
predictions.  The foregoing analysis of 2001 includes forward looking statements
and  predictions  about  possible of future  events,  results of operations  and
financial  condition.  As such, this analysis may prove to be inaccurate because
of  assumptions  made by the general  partners or the actual  development of the
future  events.  No  assurance  can be given  that any of  these  statements  or
predictions will ultimately prove to be correct or substantially correct.

     Management's Discussion and Analysis of Financial Condition and
                           Results of Operations

     On December  31, 2001,  the  partnership  was in the offering  stage of its
third offering,  ($30,000,000).  Contributed capital totaled $14,932,017 for the
first  offering,  $29,992,574 for the second  offering,  and $24,751,356 for the
third  offering,  an aggregate of  $69,675,947  as of December 31, 2001. Of this
amount, $672,617 remained in applicant status.

Results of Operations.

     The net income  increase of $668,152  (29%) for the year ended December 31,
1999, $1,345,181 (46%) for the year ended December 31, 2000, $1,805,872(42%) for
the year ended December 31, 2001, was primarily  attributable to the increase in
loans held by the partnership:

                   December 31, 1999     December 31, 2000     December 31, 2001
                  ------------------    ------------------    ------------------

Loans outstanding       $35,693,148         $68,570,992           $82,789,833

     The  partnership's  ability to increase its loans was due to an increase in
the capital raised,  the  compounding of earnings by those limited  partners who
have chosen to retain their  earnings in the  partnership  and by leveraging the
loans through the use of a credit line from a commercial bank.  During the years
ended  December 31, 1999,  2000 and 2001, the  partnership  received new capital
contributions and reinvested compounding limited partner earnings of:


                   December 31, 1999     December 31, 2000     December 31, 2001
                  ------------------    ------------------    ------------------

Capital contribution      $9,530,318         $14,887,081           $19,712,488
Compounding or retainment
   of earnings            $1,911,554          $2,751,266            $3,892,420

     To a lesser  extent,  loans  outstanding  have also  increased  through the
utilization of the partnership's  line of credit. The effect of more outstanding
loans raised the interest earned on loans for the years ended:


                   December 31, 1999     December 31, 2000     December 31, 2001
                  ------------------    ------------------    ------------------

Interest
  earned on loans        $4,337,427           $6,261,470            $8,920,082


     The  partnership  began  funding loans on April 14, 1993 and as of December
31, 2001,  distributed  earnings to limited partners who have chosen to compound
and retain earnings at an average annualized yield of 8.44%.

     Beginning in the fall of 1999,  mortgage interest rates had been rising due
primarily  to  economic  forces  and by the  Federal  Reserve  raising  its core
interest  rates.  However,  beginning  January  2001,  the  Federal  Reserve has
dramatically  cut its core interest rates with 11 consecutive  cuts ranging from
..25% to .50%.  The latest cut made was  December  11,  2001,  which  reduced the
Federal Funds Rate to 1.75%.  In late January 2002, the Federal  Reserve met and
did not change  interest rates  signaling that it may take a wait and see course
before  making any further  interest  rate  changes.  The effect of the cuts has
greatly  reduced  short-term  interest  rates  and to a  lesser  extent  reduced
long-term interest rates. New loans will be originated at then existing interest
rates.  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 anticipate that new loans will
be placed at rates  approximately  1% lower than similar  loans during the first
half of 2001. The lowering of interest rates has encouraged those borrowers that
have mortgages with higher interest rates than those currently available to seek
refinancing of their  obligations.  The partnership may face  prepayments in the
existing  portfolio  from  borrowers  taking  advantage  of these  lower  rates.
However, demand for loans from qualified borrowers continues to be strong and as
prepayments and funds generated from  partnership unit sales occur, we expect to
replace  paid off loans with loans at somewhat  lower  interest  rates.  At this
time,  we believe that the average  loan  portfolio  interest  rate will decline
approximately  .25% to .50% over the year  2002.  Nevertheless,  based  upon the
rates payable in connection  with the existing loans,  and anticipated  interest
rates to be charged by the partnership and the general partners' experience, the
general  partners  anticipate that the annualized yield will range between eight
and nine percent in 2002.

     In 1995,  the  partnership  established  a line of credit with a commercial
bank secured by its loan  portfolio  and since its  inception  has increased the
credit limit from  $3,000,000 to  $20,000,000.  For the years ended December 31,
1999,  2000 and 2001 interest on note  payable-bank  was $526,697,  $887,546 and
$971,901,  respectively.  From 1999 through  December 31, 2001,  the increase in
interest on notes  payable-bank  has been  attributed to a higher overall credit
facility  utilization.  As of December 31, 2001,  the  partnership  had borrowed
$11,400,000 at an interest rate of prime +.25% (5.0%). This facility could again
increase as the partnership's capital increases. This added source of funds will
help in  maximizing  the  partnership's  yield by allowing  the  partnership  to
minimize the amount of funds in lower yield investment accounts when appropriate
loans are not available.  Additionally,  the loans made by the partnership  bear
interest at a rate in excess of the rate payable to the bank which  extended the
line of credit.  The amount to be retained by the partnership,  after payment of
the line of credit  cost,  will be greater  than  without the use of the line of
credit.  As of December 31, 1999, 2000 and 2001, the outstanding  balance on the
line of credit was $0, $16,400,000 and $11,400,000 respectively.

     The  partnership's  income and  expenses,  accruals and  delinquencies  are
within the normal range of the general partners' expectations,  based upon their
experience in managing similar  partnerships  over the last  twenty-four  years.
Mortgage  servicing fees increased from $359,464,  $505,823 and $552,323 for the
years  ended  December  31,  1999,  2000 and 2001,  respectively.  The  mortgage
servicing  fees  increased  primarily  due to increase in the  outstanding  loan
portfolio.  Asset  management  fees  increased  from $42,215,  to $60,595 and to
$157,999 for the years ended December 31, 1999, 2000 and 2001, respectively. The
asset  management  fee increase  was due  primarily to the increase in partners'
capital which the general partners are managing and the general partners raising
the amount of the management fee collected from .125% to .25% of net partnership
assets in 2001.  This  increase in fee for 2001 was less than the  allowable fee
payable to the general  partners of .375% of net  partnership  assets.  Clerical
costs through  Redwood  Mortgage Corp.  increased from $85,171,  to $113,580 and
$241,195 for the years December 31, 1999,  2000 and 2001. This increase in costs
was due to the increased costs  attributable to managing the larger  partnership
and  increased  number of limited  partners  and by the  addition of  additional
computer and software  systems.  Increases in the provision for doubtful account
and losses on real estate acquired through  foreclosure will be discussed in the
paragraph below entitled  Allowance for Losses.  All other partnership  expenses
fluctuated within a narrow range commonly expected to occur, except for interest
on note payable - bank which was discussed earlier in the Management  Discussion
and  Analysis  of  Financial  Condition  and  Results  of  Operations.  Cash  is
constantly  being generated from interest  earnings,  late charges,  pre-payment
penalties,  amortization  of principal and loan pay-offs.  Currently,  cash flow
exceeds partnership expenses and earnings requirements. Excess cash flow will be
invested in new loan opportunities,  when available,  and will be used to reduce
the partnership credit line or for other partnership business.

     Allowance  for  Losses.  Borrower  foreclosures  are  a  normal  aspect  of
partnership  operations.  The partnership is not a credit based lender and hence
while it reviews the credit  history and income of borrowers  and if  applicable
the income from income producing  properties the general partners expect that we
will on  occasion  take back real  estate  security.  The  partnership  has been
fortunate in not taking back any real estate security over the last three years.
This is  attributable  to many  factors  among  these  are the  strength  of the
Northern California real estate markets, a good general economy and careful loan
selection.  During 2001, the Northern  California  real estate market slowed and
the  national and local  economies  have  slipped  into  recession.  The general
partners   regularly  review  the  loan  portfolio,   examining  the  status  of
delinquencies,  the  underlying  collateral  securing  these  loans,  borrowers'
payment records,  etc. Based upon this information and other data, loss reserves
are  increased  or  decreased.  Although  as of  December  31,  2001 we have not
acquired any real estate through foreclose, there is an increased chance that in
2002 we may acquire some real estate through the foreclosure process. Borrower's
foreclosures  are a normal  aspect of  partnership  operations  and the  general
partners  anticipate  that they will not have a  material  effect on  liquidity.
During 1999, 2000 and 2001 we have had to file some  foreclosure  proceedings to
enforce the terms of our loans.  In these instances the borrowers have been able
to remedy the  foreclosures  we have filed.  As of December  31,  2001,  we have
commenced  foreclosure  proceedings  against three loans, two of these borrowers
have been able to reinstate  their loans.  We may file  additional  foreclosures
during  the year 2002 to  enforce  the terms of our  loans.  As a prudent  guard
against  potential  losses,  the general  partners have  increased the amount of
provisions for doubtful accounts from $408,890, to $375,579 to $956,639 in 1999,
2000 and 2001. These provisions for doubtful accounts were made to guard against
collection  losses.  Total  cumulative  provision  for  doubtful  accounts as of
December 31, 2001, is $2,247,191 and is considered by the general partners to be
adequate.  Because of the number of  variables  involved,  the  magnitude of the
swings  possible  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.

     At the time of subscription to the partnership, limited partners must elect
whether to receive  monthly,  quarterly  or annual cash  distributions  from the
partnership,  or to compound earnings in their capital account. If you initially
elect to receive monthly, quarterly or annual distributions, such election, once
made,  is  irrevocable.  However  limited  partners  may change  their  election
regarding  whether  they  want  to  receive  such  distributions  on a  monthly,
quarterly or annual basis. If they initially elect to compound earnings in their
capital account, in lieu of cash distributions, they may, after three (3) years,
change the election and receive monthly, quarterly or annual cash distributions.
Earnings  allocable to limited partners who elect to compound  earnings in their
capital account, will be retained by the partnership for making further loans or
for other proper  partnership  purposes,  and such amounts will be added to such
limited partners' capital accounts.

     During the periods  stated  below,  the  partnership,  after  allocation of
syndication costs, made the following allocation of earnings both to the limited
partners  who  elected  to  compound  their  earnings,  and those  that chose to
distribute:

The Year ended December 31,

                            1999             2000              2001
                       -------------    ------------    --------------
Compounding               $1,911,554      $2,751,266        $3,892,420
Distributing                $826,291      $1,244,959        $1,961,780

     As of December 31, 1999,  December  31,  2000,  December 31, 2001,  limited
partners electing to withdraw earnings represented 30%, 31% and 34% respectively
of the limited partners'  outstanding  capital accounts.  These percentages have
remained  relatively  stable.  The general  partners  anticipate  that after all
capital has been raised, the percentage of limited partners electing to withdraw
earnings will decrease due to the dilution effect which occurs when  compounding
limited partners' capital accounts grow through earnings retainment.

     The partnership  also allows the limited partners to withdraw their capital
account subject to certain  limitations  (see Withdrawal From partnership in the
limited partnership Agreement).  Once a limited partner's initial five-year hold
period  has  passed,   the  general  partners  expect  to  see  an  increase  in
liquidations due to the ability of limited partners to withdraw without penalty.
This ability to withdraw five years after a limited partner's investment has the
effect of providing  limited partner  liquidity which the general  partners then
expect a portion of the limited  partners to avail  themselves  of. This has the
anticipated effect of the partnership growing, primarily through reinvestment of
earnings  during  the  offering  period.  The  general  partners  expect  to see
increasing numbers of limited partner withdrawals during a limited partner's 5th
through 10th  anniversary,  at which time the bulk of those limited partners who
have sought withdrawal have been liquidated. Since the five-year hold period for
most limited  partners has yet to expire,  as of December 31, 2001, many limited
partners may not as yet avail  themselves  of this  provision  for  liquidation.
Earnings and capital  liquidations  including early withdrawals during the three
years ended December 31, 2001 were:

                                     1999          2000            2001
                                 ----------    -----------     ------------

Earnings liquidation             $ 826,291    $ 1,244,959      $ 1,961,780
Capital liquidation*               592,357        762,060        1,425,488
                                 ----------    -----------     ------------

Total                          $ 1,418,648    $ 2,007,019      $ 3,387,268
                                 ==========    ===========     ============

* These amounts are gross of early withdrawal penalties.

     Additionally,  limited  partners may liquidate their  investment over a one
year period subject to certain limitations and penalties. During the three years
ended December 31, 2001, capital liquidated subject to the 10% penalty for early
withdrawal was:
                                 1999               2000              2001
                           --------------     --------------     --------------
                               $411,838           $309,643         $729,676


     This  represents  1.11%,  0.58% and 0.99% of the limited  partners'  ending
capital as of December 31, 1999, 2000 and 2001  respectively.  These withdrawals
are within the normally  anticipated  range and represent a small  percentage of
limited partner capital.

     Current  Economic  Conditions.  The  partnership  makes loans  primarily in
Northern California.  As of December 31, 2001,  approximately 82.5% of the loans
held were in the six San Francisco Bay Area Counties. The remainder of the loans
held were secured  primarily by Northern  California real estate outside the San
Francisco Bay Area. Like the rest of the nation,  the San Francisco Bay Area has
also felt the  recession  and  accompanying  slow down in  economic  growth  and
increasing unemployment. The technology companies of Silicon Valley, the airline
industry,  the tourism  industry and other industries are feeling the effects of
the overall United States recession,  which includes lower earnings,  losses and
layoffs.

     The Northern California residential real estate market and particularly the
San Francisco Bay Area residential real estate market  experienced  increases in
values of over 10% in 1999 and 2000, respectively. In 2001, the residential real
estate marketplace  slowed,  this has resulted in longer listing and transaction
times and lower market prices in some segements.  The California  Association of
Realtors  reported in  November  2001 that the  statewide  median home price had
reached  its  highest  point ever with a median  home price of $278,740 up 11.2%
from a year  earlier and 2.4% higher than in October of 2001.  It also  reported
that overall volume of home sales slipped 12.4% from the year earlier.  In spite
of  these  California  wide  higher  home  prices,  the San  Francisco  Bay Area
experienced median sales prices through October of 2001 of between minus 4.2% to
a  positive  16.7% for  resale  homes.  In spite of these  numbers  the  general
partners  believe that lower-end and mid-priced homes have continued to increase
in value,  although at a reduced rate from 2000, while high end homes have begun
to decrease in value.  This  situation  is showing  some signs of a  turnaround.
Inventories of homes available for sale have decreased  sharply from their highs
in the spring of 2001. For example, the supply of "for sale" homes, condominiums
and  townhomes  in Santa Clara County  peaked the week of May 25, 2001,  at more
than 5,700, according to Coldwell Banker Northern California  statistics.  As of
January  18,  2002,  fewer than 2,500  homes were "for sale"  countywide.  Other
counties in the San Francisco Bay Area offer similar  statistics.  The number of
single-family  home sales in Santa Clara County was 962 for December  2001 which
is the greatest  number of homes sold since records  became public in 1984.  The
reduction in  inventories  and the strong  sales may  indicate  that the buyer's
market that  prevailed  throughout  most of 2001 may be coming to an end and may
indicate that a recovery is underway. A stabilization of residential home prices
or a recovery in home prices is good for the  partnership  since it depends more
heavily  than  banks and other  similar  credit  type  lenders on the value of a
property.

     Commercial  property  vacancy  rates have  continued  to climb with the San
Francisco  Bay Area office  market  surpassing  15% as a whole  according  to BT
Commercial  Real Estate and Grubb and Ellis Co. As a result,  rents have dropped
about 40% from last year's highs, giving up nearly all the gains made during the
past three years.  Though  vacancy rates have leaped from 2 percent in the third
quarter of 2000 to 15% at the end of 2001, landlords are bearing only about half
the pain,  since  nearly half the office  space being  offered is for  sublease,
meaning  landlords  generally  are  still  collecting  money  from the  original
tenants.  To the partnership,  the higher overall vacancy rates may mean that it
experiences greater  delinquencies in its commercial portion of the portfolio if
landlord's  existing leases expire or space becomes  available  through business
failures.

     As of December 31, 2001, the partnership had an average loan to value ratio
computed as of the date the loan was made of 59.67%.  This  percentage  does not
account for any  increases or  decreases  in property  values since the date the
loan  was  made,  nor  does it  include  any  reductions  in  principal  through
amortization  of payments after the loan was made.  This low loan to value ratio
will assist the partnership in weathering loan  delinquencies  and  foreclosures
should they eventuate.

     The partnership  also allows the limited partners to withdraw their capital
account  subject  to  certain   limitations  (see   liquidation   provisions  of
Partnership  Agreement).  Once a limited partner's initial five-year hold period
has passed the general partners expect to see an increase in liquidations due to
the ability of limited  partners to withdraw  without  penalty.  This ability to
withdraw  five  years  after a limited  partners'  investment  has the effect of
providing  limited  partner  liquidity.  The general  partners  expect a certain
percentage  of the  limited  partners  to choose  this  provision.  This has the
anticipated effect of the partnership growing, primarily through reinvestment of
earnings  during  the  offering  period.  The  general  partners  expect  to see
increasing numbers of limited partner withdrawals during a limited partner's 5th
through 10th  anniversary,  at which time the bulk of those limited partners who
have sought withdrawal have been liquidated. Since the five-year hold period for
most of the investors has yet to expire,  as of December 31, 2001,  many limited
partners may not as yet avail themselves of this provision for liquidation.

Earnings and capital liquidations excluding early withdrawal penalties since
inception, 1993 through December 31, 2001 were:

                                                 Capital
                                               liquidation
                                               net of early
                           Earnings             withdrawal
                          liquidation            penalties              Total
                    -------------------    -----------------    ----------------

  1993                         $46,855                    0              $46,855
  1994                        $165,814                    0             $165,814
  1995                        $303,477               $5,077             $308,554
  1996                        $418,380             $134,647             $553,027
  1997                        $495,480             $119,357             $614,837
  1998                        $614,383             $233,278             $847,661
  1999                        $826,291             $552,633           $1,378,924
  2000                      $1,244,959             $731,635           $1,976,594
  2001                      $1,961,780           $1,355,122           $3,316,902

     Additionally,  limited  partners  may  withdraw  over a period  of one year
subject to certain  limitations and penalties.  For the years ended December 31,
1997, 1998, 1999, 2000, and 2001, $132,619,  $244,213,  $411,838,  $309,643, and
$729,676  respectively  were  liquidated  subject to the 10%  penalty  for early
withdrawal.   This  represents  0.63%,  0.90%,  1.11%,  .58%,  and  .99%  (1.23%
annualized) of the limited  partners ending capital for the years ended December
31, 1997, 1998, 1999, 2000, and 2001, respectively. These withdrawals are within
the normally  anticipated  range that the general partners would expect in their
experience in this and other  partnerships.  The general  partners expect that a
small  percentage  of limited  partners  will elect to liquidate  their  capital
accounts  over one year  with a 10%  early  withdrawal  penalty.  In  originally
conceiving  the  partnership,  the general  partners  wanted to provide  limited
partners  needing  their  capital  returned  a degree of  liquidity.  Generally,
limited  partners  electing to withdraw  over one year need to  liquidate  their
investment  to  raise  cash.  The  trend  the  partnership  is  experiencing  in
withdrawals  by  limited  partners  electing  a  one  year  liquidation  program
represents  a small  percentage  of limited  partner  capital as of December 31,
1997,  1998, 1999, 2000 and 2001,  respectively,  and is expected by the general
partners to commonly occur at these levels.

     In some  cases in order to  satisfy  Broker  Dealers  and  other  reporting
requirements, the general partners have valued the limited partners' interest in
the  partnership  on a basis which  utilizes a per unit  system of  calculation,
rather than based upon the investors' capital account. This information has been
reported  in this manner in order to allow the  partnership  to  integrate  with
certain  software used by the Broker Dealers and other  reporting  entities.  In
those cases, the partnership will report to Broker Dealers,  Trust Companies and
others a  "reporting"  number of units based upon a $1.00 per unit  calculation.
The number of reporting units provided will be calculated based upon the limited
partner's  capital  account  value  divided by $1.00.  Each  investor's  capital
account balance is set forth  periodically on the partnership  account statement
provided  to  investors.  The  reporting  units are solely  for  Broker  Dealers
requiring such information for their software programs and do not reflect actual
units owned by a limited  partner or the limited  partners' right or interest in
cash flow or any other  economic  benefit in the  partnership.  Each  investor's
capital  account balance is set forth  periodically  on the partnership  account
statement  provided  to  investors.  The  amount of  partnership  earnings  each
investor is entitled to receive is determined by the ratio that each  investor's
capital account bears to the total amount of all investor  capital accounts then
outstanding.  The capital account balance of each investor should be included on
any NASD member client account statement in providing a per unit estimated value
of the client's investment in the partnership in accordance with NASD Rule 2340.

     While the general  partners have set an estimated value for the partnership
units,  such  determination  may not be  representative  of the  ultimate  price
realized  by an  investor  for such units upon sale.  No public  trading  market
exists for the partnership's units and none is likely to develop. Thus, there is
no certainty  that the units can be sold at a price equal to the stated value of
the capital account. Furthermore, the ability of an investor to liquidate his or
her investment is limited subject to certain  liquidation rights provided by the
partnership,  which may include early  withdrawal  penalties (See the section of
the  prospectus  entitled  "Risk  Factors  -  Purchase  of Units is a long  term
investment").


Item 8 - Financial Statements and Supplementary Data


A-Financial Statements

     The following  financial  statements of Redwood Mortgage Investors VIII are
included in Item 8:

 -  Independent Auditors' Report
 -  Balance Sheets - December 31, 2001, and December 31, 2000
 -  Statements of Income for the three years ended December 31, 2001
 -  Statements of Partners' Capital for the three years ended December 31, 2001
 -  Statements of Cash Flows for the three years ended December 31, 2001
 -  Notes to Financial Statements


B-Financial Statement Schedules

     The following  financial  statement schedules of Redwood Mortgage Inventors
VIII are included in Item 8.


             -  Schedule II    - Valuation and Qualifying Accounts

             -  Schedule IV    - Loans on Real Estate


     All  other  schedules  for  which  provision  is  made  in  the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required under the related instructions or are inapplicable,  and therefore have
been omitted.

<PAGE>




                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2001





<PAGE>


                              ARMANINO McKENNA LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                        1855 Olympic Boulevard, Suite 225
                             Walnut Creek, CA 94596
                                 (925) 939-8500



                          INDEPENDENT AUDITORS' REPORT


THE PARTNERS
REDWOOD MORTGAGE INVESTORS VIII
REDWOOD CITY, CALIFORNIA

     We have  audited  the  accompanying  balance  sheets  of  REDWOOD  MORTGAGE
INVESTORS VIII (A California  Limited  Partnership)  as of December 31, 2001 and
2000 and the related statements of income, changes in partners' capital and cash
flows  for  the  two  years  then  ended.  These  financial  statements  are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the financial position of REDWOOD MORTGAGE INVESTORS
VIII as of December  31, 2001 and 2000,  and the results of its  operations  and
cash flows for the two years then ended in conformity with accounting principles
generally accepted in the United States of America.





                            /s/ ARMANINO McKENNA LLP






Walnut Creek, California
February 16, 2002


<PAGE>



                        Caporicci, Cropper & Larson, LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                           1575 Treat Blvd, Suite 208
                             Walnut Creek, CA 94598
                                 (925) 932-3860



                          INDEPENDENT AUDITOR'S REPORT


THE PARTNERS
REDWOOD MORTGAGE INVESTORS VIII

     We have audited the financial statements of REDWOOD MORTGAGE INVESTORS VIII
(A California  Limited  Partnership)  including the  accompanying  statements of
income,  changes in partners' capital and cash flows for the year ended December
31, 1999. These financial statements are the responsibility of the partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
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 financial statements referred to above present fairly,
in all  material  respects,  the  results of  REDWOOD  MORTGAGE  INVESTORS  VIII
operations  and cash flows for the year ended  December 31, 1999,  in conformity
with generally accepted accounting principles.





/s/  A.  Bruce Cropper
Caporicci, Cropper & Larson, LLP
(Other Auditors prior to Armanino McKenna, LLP)




Walnut Creek, California
March 15, 2000


<PAGE>



                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000


                                     ASSETS

                                                      2001               2000
                                                --------------      ------------

Cash and cash equivalents                        $1,916,578           $1,459,725
                                                --------------      ------------

Loans
   Loans secured by deeds of trust,
        held to maturity                         82,789,833          68,570,992
   Loans, unsecured                                   3,967              53,838
                                                --------------      ------------
                                                 82,793,800          68,624,830
   Less allowance for losses                      2,247,191           1,344,938
                                                --------------      ------------
       Net loans                                 80,546,609          67,279,892
                                                --------------      ------------

Interest and other receivables
   Accrued interest and late fees                 3,236,721           1,039,469
   Advances on loans                                194,655             172,004
                                                --------------      ------------
                                                  3,431,376           1,211,473
                                                --------------      ------------

Prepaid loan fees                                     6,123              13,416
                                                --------------      ------------

       Total assets                             $85,900,686         $69,964,506
                                                ==============      ============

                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities
  Accounts payable                                   73,889           $  30,000
  Note payable - bank line of credit             11,400,000          16,400,000
  Deferred interest                                      -               82,253
                                                --------------      ------------

       Total liabilities                         11,473,889          16,512,253
                                                --------------      ------------

Investors in applicant status                       672,617             224,900
                                                --------------      ------------

Partners' capital:
  Limited partners' capital, subject to redemption
     net of unallocated syndication costs of $399,249
     and $310,438 for 2001 and 2000, respectively:
     and formation loan receivable of $4,126,430
     and $3,010,871 for 2001 and 2000,
     respectively                                73,688,241          53,180,209

  General partners' capital, net of unallocated syndication
     costs of $4,033 and $3,136 for 2001 and 2000,
     respectively                                    65,939              47,144
                                                --------------      ------------

     Total partners' capital                     73,754,180          53,227,353
                                                --------------      ------------

     Total liabilities and partners' capital    $85,900,686         $69,964,506
                                                ==============      ============

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

<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                              STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999


                                               YEARS ENDED DECEMBER 31,
                                      ------------------------------------------

                                               2001         2000          1999
                                             -------      -------       --------
Revenues
  Interest on Loans                       $8,920,082    $6,261,470    $4,337,427
  Interest - interest bearing accounts         8,270        11,154         8,197
  Late charges                                98,817        65,520        27,859
  Other                                        8,031        10,675        52,762
                                          ------------  -----------  -----------
                                           9,035,200     6,348,819     4,426,245
                                          ------------  -----------  -----------

Expenses
  Mortgage servicing fees                    552,323       505,823       359,464
  Interest on note payable - bank            971,901       887,546       526,697
  Amortization of loan origination fees       13,542        11,667        10,503
  Provision for losses on loans and real
    estate acquired through foreclosure      956,639       375,579       408,890
  Asset management fees                      157,999        60,595        42,215
  Clerical costs through Redwood
    Mortgage Corp.                           241,195       113,580        85,171
  Professional services                       12,795        64,356        31,814
  Printing, supplies and postage              26,778        18,249         7,102
  Other                                       11,571        19,206        10,195
                                           ------------  -----------  ----------
                                           2,944,743     2,056,601     1,482,051
                                           ------------  -----------  ----------

Other Income (expense)
  Interest credited to partners in
     applicant status                           (800)      (4,757)       (1,914)
  Gain on sale of property and equipment       3,676          -             -
                                           ------------  -----------  ----------

Net income                                $6,093,333    $4,287,461    $2,942,280
                                           ============ ============  ==========

  Net income: general partners (1%)        $  60,933     $  42,875     $  29,423
             limited partners (99%)        6,032,400     4,244,586     2,912,857
                                           ------------ ------------  ----------
Total - net income                        $6,093,333    $4,287,461    $2,942,280
                                           ============ ============  ==========

Net income per $1,000 invested by limited
 partners for entire period
   Where income is reinvested and compounded     $90           $86           $84
                                           ============  ===========  ==========

   Where partner receives income in
      monthly distributions                      $86           $83           $81
                                           ============  ===========  ==========


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

<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999

<TABLE>
                                                                                      PARTNERS' CAPITAL
                                                             --------------------------------------------------------------------
                                                                                  LIMITED PARTNERS' CAPITAL
                                                             --------------------------------------------------------------------
<S>                                    <C>                  <C>              <C>                  <C>                     <C>
                                                            Capital
                                       Partners In          Account          Unallocated          Formation
                                        Applicant           Limited          Syndication             Loan
                                          Status           partners             Costs             Receivable              Total
                                       -------------    ----------------    ---------------     ---------------     --------------
Balances at December 31, 1998               $     -         $29,020,110        $ (353,875)        $(1,640,904)        $27,025,331
Contributions on application              9,530,318                   -                  -                   -                  -
Formation loan increases                          -                   -                  -           (708,461)          (708,461)
Formation loan payments                           -                   -                  -             164,731            164,731
Interest credited to partners
        in applicant status                   1,914                   -                  -                   -                  -
Upon admission to partnership:
    Interest withdrawn                      (1,002)                   -                  -                   -                  -
    Transfers to partners' capital      (9,201,230)           9,191,719                  -                   -          9,191,719
Net Income                                        -           2,912,857                  -                   -          2,912,857
Syndication costs incurred                        -                   -          (177,099)                   -          (177,099)
Allocation of syndication costs                   -           (175,012)            175,012                   -                  -
Partners' withdrawals                             -         (1,378,924)                  -                   -        (1,378,924)
Early withdrawal penalties                        -            (39,725)             13,628              25,960              (137)
                                       -------------    ----------------    ---------------     ---------------     --------------
Balances at December 31, 1999               330,000          39,531,025          (342,334)         (2,158,674)         37,030,017
Contributions on application             14,887,081                   -                  -                   -                  -
Formation loan increases                          -                   -                  -         (1,102,196)        (1,102,196)
Formation loan payments                           -                   -                  -             230,116            230,116
Interest credited to partners
        in applicant status                   4,757                   -                  -                   -                  -
Upon admission to partnership:
    Interest withdrawn                        (779)                   -                  -                   -                  -
    Transfers to partners' capital     (14,996,159)          14,981,287                  -                   -         14,981,287
Net income                                        -           4,244,586                  -                   -          4,244,586
Syndication costs incurred                        -                   -          (266,903)                   -          (226,903)
Allocation of syndication costs                   -           (248,361)            248,361                   -                  -
Partners' withdrawals                             -         (1,976,594)                  -                   -        (1,976,594)
Early withdrawal penalties                        -            (30,425)             10,438              19,883              (104)
                                       -------------    ----------------    ---------------     ---------------     --------------
Balances at December 31, 2000               224,900          56,501,518          (310,438)         (3,010,871)         53,180,209
Contributions on application             19,712,488                   -                  -                   -                  -
Formation loan increases                          -                   -                  -         (1,461,530)        (1,461,530)
Formation loan payments                           -                   -                  -             299,987            299,987
Interest credited to partners
        in applicant status                     800                   -                  -                   -                  -
Upon admission to partnership:
    Interest withdrawn                        (409)                   -                  -                   -                  -
    Transfers to partners' capital     (19,265,162)          19,245,470                  -                   -         19,245,470
Net income                                                    6,032,400                  -                              6,032,400
Syndication costs incurred                        -                              (291,149)                   -          (291,149)
Allocation of syndication costs                   -           (178,200)            178,200                   -                  -
Partners' withdrawals                             -         (3,316,902)                  -                   -        (3,316,902)
Early withdrawal penalties                        -            (70,366)             24,138              45,984              (244)
                                       -------------    ----------------    ---------------     ---------------     --------------
Balances at December 31, 2001             $ 672,617         $78,213,920        $ (399,249)        $(4,126,430)        $73,688,241
                                       =============    ================    ===============     ===============     ==============
</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999

                                PARTNERS' CAPITAL
                  ----------------------------------------------------
                            GENERAL PARTNERS' CAPITAL
<TABLE>

                  ----------------------------------------------------
<S>                                         <C>              <C>                  <C>              <C>
                                            Capital
                                            Account          Unallocated
                                            General          Syndication                           Total Partners'
                                           Partners             Costs             Total                Capital
                                         --------------     --------------    ---------------     ------------------
Balances at December 31, 1998                $  25,897         $  (3,574)          $  22,323          $  27,047,654
Contributions on application                         -                  -                  -                      -
Formation loan increases                             -                  -                  -              (708,461)
Formation loan payments                              -                  -                  -                164,731
Interest credited to partners in
  applicant status                                   -                  -                  -                      -
Upon admission to partnership:
    Interest withdrawn                               -                  -                  -                      -
    Transfers to partners' capital               9,511                  -              9,511              9,201,230
Net income                                      29,423                  -             29,423              2,942,280
Syndication costs incurred                           -            (1,789)            (1,789)              (178,888)
Allocation of syndication costs                (1,768)              1,768                  -                      -
Partners' withdrawals                         (27,655)                  -           (27,655)            (1,406,579)
Early withdrawal penalties                           -                137                137                      -
                                         --------------     --------------    ---------------     ------------------
Balances at December 31, 1999                   35,408            (3,458)             31,950             37,061,967
Contributions on application                         -                  -                  -                      -
Formation loan increases                             -                  -                  -            (1,102,196)
Formation loan payments                              -                  -                  -                230,116
Interest credited to partners in
  applicant status                                   -                  -                  -                      -
Upon admission to partnership:
    Interest withdrawn                               -                  -                  -                      -
    Transfers to partners' capital              14,872                  -             14,872             14,996,159
Net income                                      42,875                  -             42,875              4,287,461
Syndication costs incurred                           -            (2,291)            (2,291)              (229,194)
Allocation of syndication costs                (2,509)              2,509                  -                      -
Partners' withdrawals                         (40,366)                  -           (40,366)            (2,016,960)
Early withdrawal penalties                           -                104                104                      -
                                         --------------     --------------    ---------------     ------------------
Balances at December 31, 2000                   50,280            (3,136)             47,144             53,227,353
Contributions on application                         -                  -                  -                      -
Formation loan increases                             -                  -                  -            (1,461,530)
Formation loan payments                              -                  -                  -                299,987
Interest credited to partners in
  applicant status                                   -                  -                  -                      -
Upon admission to partnership:
    Interest withdrawn                               -                  -                  -                      -
    Transfers to partners' capital              19,692                  -             19,692             19,265,162
Net income                                      60,933                  -             60,933              6,093,333
Syndication costs incurred                           -            (2,941)            (2,941)              (294,090)
Allocation of syndication costs                (1,800)              1,800                  -                      -
Partners' withdrawals                         (59,133)                  -           (59,133)            (3,376,035)
Early withdrawal penalties                           -                244                244                      -
                                         --------------     --------------    ---------------     ------------------
Balances at December 31, 2001                $  69,972         $  (4,033)          $  65,939          $  73,754,180
                                         ==============     ==============    ===============     ==================
</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999
<TABLE>
<S>                                                                   <C>                    <C>                   <C>
                                                                      2001                   2000                  1999
                                                                -----------------     -------------------    -----------------

Cash flows from operating activities
   Net income                                                         $6,093,333              $4,287,461           $2,942,280
   Adjustments to reconcile net income to
     net cash provided by operating activities
     Provision for doubtful accounts                                     902,253                 510,579              420,286
     Provision for gain on real estate held for sale
                                                                               -                       -             (11,396)
        Change in operating assets and liabilities
         Accrued interest and advances, less
             transfers to allowance for doubtful accounts            (2,219,903)               (466,701)
                                                                                                                     (74,209)
         Deferred interest                                                                     (131,276)
                                                                        (82,253)                                       88,724
         Amounts due from unsecured loans                                                        (4,748)
                                                                          49,871                                        (241)
         Deferred loan fees                                                                        6,332
                                                                           7,293                                        5,503
         Accounts payable
                                                                          43,889                     587               26,913
                                                                -----------------     -------------------    -----------------
Net cash provided by operating activities                              4,794,483               4,202,234            3,397,860
                                                                -----------------     -------------------    -----------------

Cash flows from investing activities
     Loans made                                                     (47,512,368)            (49,289,289)         (24,030,919)
     Principal collected on loans                                     33,293,527              16,411,445           20,243,729
     Proceeds from sale of real estate
                                                                               -                       -               79,282
     Payments for purchases of real estate
                                                                               -                       -              (1,886)
     Dispositions of (additions to) real estate held by
           Limited Liability Corporation                                       -                 359,942
                                                                                                                     (69,219)
                                                                -----------------     -------------------    -----------------
Net cash used in investing activities                               (14,218,841)            (32,517,902)          (3,779,013)
                                                                -----------------     -------------------    -----------------

Cash flows from financing activities
   Borrowings (repayments) on line of credit, net                    (5,000,000)              16,400,000          (5,947,000)
   Contributions by partner applicants                                19,712,488              14,887,081            9,530,318
   Interest credited to partners in applicant status                                               4,757
                                                                             800                                        1,914
   Interest withdrawn by partners in applicant status
                                                                           (409)                   (779)              (1,002)
   Partners' withdrawals                                             (3,376,035)             (2,016,960)          (1,406,579)
   Syndication costs incurred                                          (294,090)               (229,194)            (178,888)
   Formation loan lending                                            (1,461,530)             (1,102,196)            (708,461)
   Formation loan collections                                            299,987                 230,116              164,731
                                                                -----------------     -------------------    -----------------
Net cash provided by financing activities                              9,881,211              28,172,825            1,455,033

Net increase (decrease) in cash and cash equivalents                     456,853               (142,843)            1,073,880

Cash and cash equivalents - beginning of year                          1,459,725               1,602,568              528,688
                                                                -----------------     -------------------    -----------------

Cash and cash equivalents - end of year                               $1,916,578              $1,459,725           $1,602,568
                                                                =================     ===================    =================
Cash paid for interest                                                 $ 971,901               $ 887,546            $ 526,697
                                                                =================     ===================    =================
</TABLE>

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


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 1 - ORGANIZATION AND GENERAL

     Redwood  Mortgage  Investors VIII, a California  limited  partnership  (the
"Partnership"),  was  organized  in 1993 of  which  Michael  R.  Burwell,  Gymno
Corporation and Redwood Mortgage Corp.,  both California  Corporations,  are the
general  partners.  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., a general  partner.  At December 31, 2001 and 2000, the
partnership  was in the offering  stage,  wherein  contributed  capital  totaled
$69,003,330 and $49,758,250,  respectively,  in limited partner contributions of
an approved aggregate  offering of $75,000,000,  in Units of one dollar each. As
of December 31, 2001 and 2000, $672,617 and $224,900, respectively,  remained in
applicant status,  and total Units sold were in the aggregate of $69,675,947 and
$49,983,150, respectively.

     A minimum of $250,000 and a maximum of  $15,000,000 in Units were initially
offered through  qualified  broker-dealers.  This initial offering was closed in
October 1996. In December 1996, the  partnership  commenced a second offering of
an additional  $30,000,000 in Units. This offering was closed on August 30, 2000
and on August 31,  2000,  the  partnership  commenced  a third  offering  for an
additional  30,000,000  Units  ($30,000,000),  which is still open. As loans are
identified,  partners are transferred from applicant status to admitted partners
participating in loan operations. Each month's 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  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 referred to as the  "Formation  Loan".  It is
unsecured and non-interest bearing.

     The Formation  Loan relating to the initial  $15,000,000  offering  totaled
$1,074,840,  which was 7.2% of limited partners  contributions of $14,932,017 at
December  31,  1996.  It  is to be  repaid,  without  interest,  in  ten  annual
installments  of principal,  which  commenced on January 1, 1997,  following the
year the initial offering closed.

     The Formation Loan relating to the second  offering  ($30,000,000)  totaled
$2,271,916,  which was 7.6% of limited partners  contributions of $29,992,574 at
December  31,  2000.  It  is to be  repaid,  without  interest,  in  ten  annual
installments  of principal,  which  commenced on January 1, 2001,  following the
year the second offering closed.

     The Formation  Loan relating to the third  offering  ($30,000,000)  totaled
$1,839,684,  which was 7.4% of the limited partners contributions of $24,751,355
at  December  31,  2001.  It is to be repaid,  without  interest,  in ten annual
installments  of principal,  which will  commence on January 1, 2003.  The third
offering is expected to close during 2002.

     Sales  commissions  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 9% commissions.  The principal balance of the
Formation  Loan will increase as  additional  sales of Units are made each year.
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.



<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 1 - ORGANIZATION AND GENERAL(Continued)

The following summarizes Formation Loan transactions to December 31, 2001:
<TABLE>

<S>                                           <C>               <C>                  <C>                 <C>
                                              Initial           Subsequent           Current
                                             Offering of        Offering of        Offering of
                                             $15,000,000        $30,000,000        $30,000,000           Total
                                            ---------------    --------------     --------------    ----------------
Limited partner contributions                  $14,932,017       $29,992,574        $24,751,356         $69,675,947
                                            ===============    ==============     ==============    ================

Formation Loan made                             $1,074,840        $2,271,916         $1,839,684          $5,186,440
Payments to date                                 (430,882)         (467,674)           (37,816)           (936,372)
Early withdrawal penalties applied                (46,950)          (56,106)           (20,582)           (123,638)
                                            ---------------    --------------     --------------    ----------------

Balance December 31, 2001                         $597,008        $1,748,136         $1,781,286          $4,126,430
                                            ===============    ==============     ==============    ================

Percent loaned of partners'
   Contributions                                      7.2%              7.6%               7.4%                7.4%
                                            ===============    ==============     ==============    ================
</TABLE>

     The Formation Loan, which is receivable from Redwood Mortgage Corp., one of
the general  partners,  has been deducted from limited  partners' capital in the
balance  sheet.  As amounts are  collected  from  Redwood  Mortgage  Corp.,  the
deduction from capital will be reduced.

     B. 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 the individual  partners
consistent with the partnership agreement.

     Through  December  31,  2001,  syndication  costs  of  $1,690,933  had been
incurred by the partnership with the following distribution:

                                                Syndication
                                                    Costs
                                             -----------------
Costs incurred                                   $1,690,933
Early withdrawal penalties applied                 (66,479)
Allocated and amortized to date                 (1,221,172)
                                             -----------------
December 31, 2001 balance                          $403,282
                                             =================

     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 $14,932,017.
Related expenditures  totaled $582,365 ($569,865  syndication costs plus $12,500
organization expense) or 3.90%.

     As of December 31, 2000,  syndication costs  attributable to the subsequent
offering #2 ($30,000,000)  totaled $597,784,  (2.0% of contributions),  with the
costs of the offering  being greater at the initial  stages due to  professional
and filing fees related to formulating the offering documents.

     In August 2000, the current offering #3 began incurring  syndication costs.
As of December 31, 2001 and 2000 the offering  had incurred  $523,284  (2.11% of
contributions)  and $229,195  (4.7% of  contributions),  respectively,  with the
costs of the offering  being greater at the initial  stages due to  professional
and filing fees related to formulating the offering  documents.  The syndication
costs payable by the  partnership  are estimated to be $1,200,000 if the maximum
is sold (4% of  $30,000,000).  The  general  partners  will pay any  syndication
expenses  (excluding selling  commissions) in excess of ten percent of the gross
proceeds or $1,200,000, whichever is higher.

<PAGE>

                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A. Accrual  Basis - Revenues and expenses are  accounted for on the accrual
basis of  accounting  wherein  income is  recognized  as earned and expenses are
recognized as incurred.  Once a loan is categorized as impaired,  interest is no
longer accrued thereon. Any subsequent payments on impaired loans are applied to
the outstanding balances on the partnership's books.

     B. Management Estimates - 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,  including the
valuation of impaired loans,  and the valuation of real estate acquired  through
foreclosure. Actual results could differ significantly from these estimates.

     C. Loans,  Secured by Deeds of Trust - The  partnership has both the intent
and ability to hold the loans to maturity,  i.e., held for long-term investment.
Therefore  the loans are valued at cost for  financial  statement  purposes with
interest thereon being accrued by the effective interest method.

     Financial  Accounting Standards Board Statements (SFAS) 114 and 118 provide
that if the probable  ultimate  recovery of the carrying  amount of a loan, with
due  consideration  for the fair value of collateral,  is less than the recorded
investment and related  amounts due and the impairment is considered to be other
than temporary, the carrying amount of the investment (cost) shall be reduced to
the present value of future cash flows.

     At  December  31,  2001,  and 2000,  loans  categorized  as impaired by the
partnership  were  $710,235,  and  $0,  respectively,  with a  reduction  in the
carrying  value of the  impaired  loans of  $87,903,  and $0  respectively.  The
reduction  in the  carrying  value  of the  impaired  loans is  included  in the
allowance  for  doubtful  accounts.  During the year ended  December  31,  2001,
$66,037 was received as cash payments on these loans.

     As presented in Note 10 to the  financial  statements,  the average loan to
appraised  value of security at the time the loans were  consummated at December
31, 2001 and 2000 was 59.67% and 54.88%, respectively. When loans are valued for
impairment  purposes,  the  allowance  is updated  to reflect  the change in the
valuation  of  collateral  security.  However,  this loan to value ratio has the
tendency to minimize reductions for impairment.

     D. Cash and Cash Equivalents - The partnership  considers all highly liquid
financial  instruments  with a  maturity  of  three  months  or  less to be cash
equivalents.

     The partnership  maintains  deposits in financial  institutions that are in
excess of amounts that would be covered by federal insurance. The maximum amount
of loss based upon the  deposits  held in the bank that could  result  from this
risk at December 31, 2001 and 2000, is approximately  $2,828,574 and $1,359,725,
respectively.


     E. Real Estate  Owned,  Held for Sale - Real Estate  owned,  held for sale,
includes real estate acquired through  foreclosure and is stated at the lower of
the recorded investment in the property,  net of any senior indebtedness,  or at
the property's  estimated fair value,  less estimated costs to sell. At December
31, 2001,  there were no properties  acquired by the  partnership as real estate
owned (REO).

     F. Income Taxes - 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.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     G.  Allowance  for  Doubtful  Accounts  -  Loans  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 loan
system.  A provision is made for bad debt to adjust the  allowance  for doubtful
accounts  to an  amount  considered  by  management  to be  adequate,  with  due
consideration  to  collateral  values,  to provide  for  unrecoverable  accounts
receivable,  including impaired loans, other loans, accrued interest,  late fees
and  advances  on  loans,  and  other  accounts  receivable   (unsecured).   The
composition of the allowance for doubtful  accounts as of December 31, 2001, and
2000 was as follows:

                                                   December 31,
                                        ------------------------------------
                                              2001                  2000
                                        -------------       ----------------
Impaired loans                               $87,903                     $0
Unspecified loans                          2,155,321              1,291,150
Loans, unsecured                               3,967                 53,788
                                        -------------       ----------------
                                          $2,247,191             $1,344,938
                                        =============       ================

Allowance for Doubtful Accounts reconciliation:
Activity in the allowance for doubtful accounts is as follows for the years
ending December 31:

                                       2001             2000             1999
                                 --------------    --------------    -----------
Beginning Balance                  $1,344,938       $ 834,359         $ 414,073
Provision for bad debt                956,639         469,442           448,161
Write-off of bad debt                (54,386)        (99,758)           (39,271)
Gain on sale of property                 -            140,895            11,396
                                 --------------    -------------     -----------
Ending Balance                     $2,247,191      $1,344,938         $ 834,359
                                 ==============    =============     ===========

     H. 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  actual  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 monthly quarterly or annual 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.

     I. Late Fee Revenue - The Company  recognizes  late fee revenue  when it is
earned. Late fees are charged at 6% of the monthly balance,  and are accrued net
of an allowance for  uncollectible  late fees.  For the years ended December 31,
2001,  2000,  and 1999  late fee  revenue  of  $98,817,  $65,520,  and  $19,384,
respectively, was recorded.

<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES

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

     A. Mortgage Brokerage Commissions - For fees in connection with the review,
selection,  evaluation,  negotiation  and extension of loans the partnership 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 2001 and 2000,  loan brokerage
commissions paid by the borrowers were $1,155,636 and $1,877,921, respectively.

     B. Mortgage  Servicing Fees - Monthly mortgage  servicing fees of up to 1/8
of 1% (1.5% annual) are paid to Redwood  Mortgage Corp.  based on the collection
of payments from the borrowers.  Mortgage  servicing fees of $552,323,  $505,823
and $359,464 were incurred for the years ended December 31, 2001, 2000 and 1999,
respectively.

     C. 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).  Management fees of $157,999, $60,595, and
$42,215 were incurred for years 2001, 2000 and 1999, respectively.

     D. 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.

     E.  Income and Losses - All  income and losses are  credited  or charged to
partners in relation to their respective partnership interests. The distribution
to the general partners (combined) shall be a total of 1%.

     F. Operating Expenses - One of the general partners, Redwood Mortgage Corp.
is reimbursed by the partnership for all operating expenses actually incurred by
it 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.  Such  reimbursements  are  reflected as expenses in the  Statement of
Income.

     G. Contributed  Capital - The general partners jointly or severally were to
contribute 1/10 of 1% of the cash  contributions  as proceeds from the offerings
are  received  from the limited  partners.  As of  December  31, 2001 and 2000 a
general  partner,  Gymno  Corporation,  had  contributed  $69,972  and  $50,280,
respectively,  as capital in accordance  with Section 4.02(a) of the partnership
agreement.


NOTE 4 - OTHER PARTNERSHIP PROVISIONS

A. Applicant Status
Subscription  funds  received from  purchasers of Units are not admitted to  the
partnership until appropriate  lending  opportunities are available.  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.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 4 - OTHER PARTNERSHIP PROVISIONS  (Continued)

     During the  periods  ending  December  31,  2001,  2000 and 1999,  interest
totaling  $800,  $4,757 and $1,914,  respectively,  was  credited to partners in
applicant  status.  As loans were made and partners were  transferred to regular
status to begin  sharing  in income  from loans  secured by deeds of trust,  the
interest  credited was either paid to the investors or  transferred to partners'
capital along with the original investment.

     B. Term of the Partnership - The term of the  partnership is  approximately
40 years,  unless sooner terminated as provided.  The provisions  provide for no
capital  withdrawal  for the first  year.  For years two through  five,  limited
partners may withdraw their capital balance subject to the penalty provision set
forth in (E)  below.  Thereafter,  partners  have the right to  withdraw  over a
five-year period, or longer.

     C.  Election to Receive  Monthly,  Quarterly or Annual  Distributions  - At
subscription,  investors  elect either 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.

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

     E.  Liquidity,  Capital  Withdrawals  and  Early  Withdrawals  - There  are
substantial   restrictions  on  transferability  of  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  (20)  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
(20) 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.

     F.  Guaranteed  Interest  Rate For  Offering  Period -  During  the  period
commencing  with the day a limited  partner is admitted to the  partnership  and
ending 3 months after the offering  termination date, which is one year from the
effective date of the prospectus,  unless  extended by the general  partners for
additional  one-year  periods,  the general partners shall guarantee an earnings
rate equal to the greater of actual  earnings  from  mortgage  operations  or 2%
above The Weighted Average Cost of Funds Index for the Eleventh District Savings
Institutions  (Savings & Loan & Thrift  Institutions) as computed by the Federal
Home Loan Bank of San  Francisco on a monthly  basis,  up to a maximum  interest
rate of 12%. To date, actual realization exceeded the guaranteed amount for each
month.

<PAGE>

                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 5- 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.

NOTE 6 - NOTE PAYABLE - BANK LINE OF CREDIT

     The  partnership has a bank line of credit expiring June 30, 2002, of up to
$20,000,000 at .25% over prime secured by its Loan  portfolio.  The note payable
balances  were  $11,400,000  and  $16,400,000  at December 31,  2001,  and 2000,
respectively. The interest rate was 5.0% and 9.75% at December 31, 2001 and 2000
respectively, (4.75% and 9.50 prime plus .25%).

     Should the  general  partners  choose not to renew the line of credit,  the
balance would be converted to a three year fully amortized loan.

NOTE 7 - INVESTMENT IN LIMITED LIABILITY CORPORATION

     As a result of acquiring real property through foreclosure, the partnership
contributed its interest  (principally land) to a Limited Liability  Corporation
(LLC),  which was owned 100% by the partnership.  During the year ended December
31, 2000,  the LLC  completed  construction  and sold the property for a gain of
$140,895 which was added to the reserves during the year.  During the year ended
December 31, 2001, the LLC was dissolved.

NOTE 8 - INCOME TAXES

     The following reflects  reconciliation  from net assets (Partners' Capital)
reflected in the financial statements to the tax basis of those net assets:

                                                         December 31,
                                            ------------------------------------
                                                   2001                 2000
                                            ---------------      ---------------
Net Assets - partners' capital
      per financial statements                  $73,754,180          $53,227,353
Non-amortized syndication costs                     403,282              313,574
Allowance for doubtful accounts                   2,247,191            1,344,938
Formation loans receivable                        4,126,430            3,010,871
                                             ---------------       -------------
Net assets tax basis                             80,531,083          $57,896,736
                                             ===============       =============

     In 2001 and 2000, approximately 48% and 54% of taxable income was allocated
to tax exempt organizations, i.e., retirement plans, respectively. Such plans do
not have to file income tax returns  unless their  "unrelated  business  income"
exceeds $1,000.  Applicable  amounts become taxable when distribution is made to
participants.

NOTE 9 - 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) Loans (see note 2(c)) carrying value was $82,789,833 and $68,570,992 at
December 31, 2001 and 2000, respectively. The fair value of these investments of
$84,000,435  and  $69,150,298  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 doubtful accounts along with
accrued  interest and advances  related  thereto  should also be  considered  in
evaluating the fair value versus the carrying value.

<PAGE>

                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS

The loans are secured by recorded deeds of trust. At December 31, 2001 and 2000,
there were 76 and 68 loans outstanding, respectively, with the following
characteristics:

                                                      2001               2000
                                               --------------      -------------
Number of loans outstanding                                76                 68
Total loans outstanding                           $82,789,833        $68,570,992

Average loan outstanding                           $1,089,340         $1,008,397
Average loan as percent of total                        1.32%              1.47%
Average loan as percent of Partners' Capital            1.48%              1.89%

Largest loan outstanding                            7,000,000          4,000,000
Largest loan as percent of total                        8.46%              5.83%
Largest loan as percent of Partners' Capital            9.49%              7.51%

Number of counties where security is located
     (all California)                                      12                 12
Largest percentage of loans in one county              41.40%             41.72%
Average loan to appraised value of security
    at time loan was consummated                       59.67%             54.88%

Number of loans in foreclosure status                       3                  0
Amount of loans in foreclosure                     $1,050,790                  0

The following loan categories were held at December 31, 2001 and 2000:

                                                      2001               2000
                                                 -------------      ------------
First Trust Deeds                                 $42,984,020        $37,806,032
Second Trust Deeds                                 34,640,619         29,799,535
Third Trust Deeds                                   5,165,194            965,425
                                                 -------------      ------------
  Total loans                                      82,789,833         68,570,992
Prior liens due other lenders                      67,944,616         37,584,916
                                                 -------------      ------------
  Total debt                                     $150,734,449       $106,155,908
                                                 -------------      ------------

Appraised property value at time of loan         $252,604,011       $193,420,663
                                                 -------------      ------------

Total investments as a percent of appraisals           59.67%             54.88%
                                                 -------------      ------------

Investments by Type of Property
Owner occupied homes                              $11,018,765         $9,753,617
Non-Owner occupied homes                           26,523,195         16,471,074
Apartments                                          7,336,898          8,458,610
Commercial                                         37,910,975         33,887,691
                                                 -------------      ------------
                                                  $82,789,833        $68,570,992
                                                 =============      ============
<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS (Continued)

The interest rates on the loans range from 8.00% to 18.00% at December 31, 2001.

Scheduled maturity dates of loans as of December 31, 2001 are as follows:

                        Year Ending
                       December 31,              Amount
                      ----------------    -----------------
                           2002                $57,822,416
                           2003                 16,382,004
                           2004                  3,690,525
                           2005                    396,260
                           2006                  2,784,413
                        Thereafter               1,714,215
                                          -----------------
                                               $82,789,833
                                          =================


     The  scheduled  maturities  for 2002  include  twenty-five  loans  totaling
$23,610,528,  which are past maturity at December 31, 2001. Interest payments on
nine of these loans were delinquent.

     The cash  balance at December 31, 2001 of  $2,928,574  was in one bank with
interest  bearing  balances  totaling  $2,013,286.  The balances  exceeded  FDIC
insurance limits (up to $100,000 per bank) by $2,828,574.  This bank is the same
financial  institution  that has provided the  partnership  with the $20,000,000
limit  line of  credit  (LOC).  December  31,  2001,  the LOC had a  balance  of
$11,400,000.  As and when deposits in the  partnership's  bank accounts increase
significantly beyond the insured limit, the funds are either placed on new loans
or used to pay-down the line of credit balance.

     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  is not  obligated  to  fund
additional  money as of December  31,  2001.  There are  approximately  11 loans
totaling $11,226,000 in workout agreements as of December 31, 2001.

NOTE 11:  SUBSEQUENT EVENTS

     The  partnership  is in  the  process  of  issuing  a new  offering  for an
additional 50,000,000 units ($50,000,000).

NOTE 12:  COMMITMENTS & CONTINGENCIES

     Construction  Loans - The partnership has construction  loans, which are at
various stages of completion of the  construction  process at December 31, 2001.
The  partnership  has  approved  the  borrowers  up to a maximum  loan  balance;
however,   disbursements  are  made  during  completion  phases  throughout  the
construction   process.   At  December  31,  2001,   there  were  $9,990,881  of
undistributed  construction  loans which will be funded by a combination  of new
investors'  money,  line of credit draw down,  and  retirement  of  principal on
current loans.

<PAGE>


SCHEDULE II

                         REDWOOD MORTGAGE INVESTORS VIII
                        VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<S>                 <C>                              <C>                      <C>              <C>
Column A            Column B                         Column C                 Column D         Column E
Description         Balance                          Additions                Deductions       Balance at
                                       --------------------------------------
                    beginning of              (1)                 (2)         Describe         End of Period
                    of period         Charged to           Charged
                                      Costs & Expenses     (credited) to
                                                           Other accounts -
                                                           Describe
Year Ended
12/31/01

Deducted from
Asset accounts:

Allowance for
Doubtful accts            $1,344,938             $956,639                  -       ($54,386)*       $2,247,191

                    ----------------- -------------------- ------------------ ---------------- ----------------

Totals                    $1,344,938             $956,639                  -      ($54,386)         $2,247,191
                    ================= ==================== ================== ================ ================

</TABLE>

* An actual write-off against the allowance for doubtful accounts.

<PAGE>

SCHEDULE IV
                         REDWOOD MORTGAGE INVESTORS VIII
                              LOANS ON REAL ESTATE.
                    RULE 12-29 MORTGAGE LOANS ON REAL ESTATE
<TABLE>

<S>      <C>         <C>          <C>             <C>               <C>              <C>         <C>          <C>         <C>
Col. A   Col. B      Col. C       Col. D          Col. E            Col. F           Col. G      Col. H       Col.I       Col. J
------    ------      ------       ------          ------            ------           ------     ------       -----       ------
Descp.  Interest   Final         Periodic       Prior Liens      Face Amt. of       Carrying    Principal      Type      Geographic
         Rate %    Maturity      Payment                         Loans(original      Amount     Amount of       of         County
                    Date          Terms                               amount)      of loans   Loans Subject    Lien       Location
                                                                                              to Delinquency
                                                                                               Principal or
                                                                                                 Interest
======= ======= ==========  =============   ==============   ===============    =============   ============= ===     =============
Comm     10.00   12/01/98      $ 1,689.33        $       -      $ 192,500.00     $ 188,777.76   $           -    1st   Alameda
Comm     12.00   02/01/99        5,131.14                -        503,457.45       503,457.45               -    1st   Santa Clara
Comm     12.00   03/01/01          789.92                -         75,000.00        70,806.52               -    1st   San Mateo
Res      11.00   04/01/06        1,039.81                -        105,000.00       100,998.89               -    1st   San Francisco
Comm     12.00   03/01/01          684.60        74,754.00         65,000.00        61,794.68               -    2nd   San Mateo
Comm     12.00   02/01/99          186.00       468,000.00         18,000.00        18,000.00               -    2nd   Santa Clara
Comm     14.00   04/01/06       12,160.05                -        700,000.00       472,071.13               -    1st   San Francisco
Comm     10.75   04/01/00          447.92       121,264.00         50,000.00        50,000.00               -    2nd   Riverside
Res      12.00   06/01/99          500.00       262,342.00         50,000.00        50,000.00               -    2nd   Alameda
Res      10.00   07/01/00        5,068.88                -        579,300.00       579,300.00               -    1st   San Francisco
Comm     12.00   10/01/02        1,562.50                -        150,000.00        58,479.99               -    1st   San Francisco
Res      11.00   04/01/99       11,661.04       579,300.00      1,320,000.00     1,320,000.00               -    2nd   San Francisco
Comm     11.00   10/01/07        6,190.11                -        650,000.00       635,381.94               -    1st   San Francisco
Res       8.00   11/01/27        1,834.42                -        250,000.00       239,606.08               -    1st   San Mateo
Land     11.00   09/01/99        3,354.17                -        350,000.00       350,000.00       43,604.21    1st   Stanislaus
Land     11.00   12/01/00       10,273.34                -      1,072,000.00       573,927.16               -    1st   Stanislaus
Res      11.00   03/01/00        1,126.59       579,300.00        950,700.00       761,909.89               -    2nd   San Francisco
Res      11.00   05/01/00        8,720.83                -        910,000.00       910,000.00               -    1st   San Francisco
Res      11.00   05/01/00        9,132.92       910,000.00        953,000.00     2,330,575.84               -    2nd   San Francisco
Res      12.00   03/01/01       12,336.18                -      1,210,000.00     1,210,000.00      181,495.95    1st   Marin
Land     11.00   01/01/01       16,500.00       363,035.00      1,800,000.00     1,440,202.18               -    2nd   Stanislaus
Land     11.00   07/01/01       23,833.33       358,116.00      2,600,000.00     2,600,000.00               -    2nd   Stanislaus
Res      10.25   09/01/09        7,616.86       668,433.00        850,000.00       839,227.22               -    2nd   Santa Clara
Comm     13.75   11/01/99        2,044.77       156,750.00        175,500.00       162,509.83               -    2nd   Alameda
Apts     12.50   03/14/00        3,552.87        46,727.69         38,727.14       308,344.28               -    2nd   Contra Costa
Land     11.00   11/01/00        2,034.55     2,968,393.00        221,951.22       190,243.90       26,449.15    3rd   Stanislaus
Comm     10.25   12/01/01       13,158.44                -      1,185,000.00     1,540,500.00               -    1st   Contra Costa
Comm     11.00   01/01/02        5,041.67       495,031.00        550,000.00       548,770.32               -    2nd   San Francisco
Comm     11.50   02/01/05        4,065.88       492,978.13        400,000.00       396,260.03       32,527.04    2nd   San Francisco
Res      11.50   09/01/01        7,272.16       539,843.20      1,292,800.00     1,279,929.24               -    2nd   San Mateo
Comm     11.50   03/01/02       12,496.45                -      1,303,977.27     1,303,977.27               -    1st   San Francisco
Comm     11.50   03/01/02       12,468.09     1,303,977.00      1,696,022.72     1,559,659.13               -    2nd   San Francisco
Land     11.50   07/01/01        4,557.93     2,600,000.00        475,609.76       475,609.76       59,253.09    2nd   Stanislaus
Comm     12.50   04/01/02       30,208.33                -      2,900,000.00     2,900,000.00               -    1st   San Mateo
Res      12.00   05/01/01        4,099.50     3,297,500.00        409,949.98       409,949.98       19,062.66    2nd   Placer
Apts     12.00   05/01/01       38,558.51                -      3,939,310.37     1,870,017.96               -    1st   San Francisco
Comm     12.00   12/01/01       28,031.03                -      4,970,000.00     4,095,941.90               -    1st   Los Angeles
Comm     10.50   06/01/06        7,089.23                -        775,000.00       769,024.18               -    1st   San Mateo
Res      11.00   02/01/02        7,376.67       730,284.00      1,661,035.00       315,693.37               -    2nd   San Mateo
Apts     12.00   08/01/03       40,000.00                -      4,000,000.00     4,000,000.00               -    1st   San Francisco
Res      12.00   03/01/01       13,250.00                -      1,325,000.00     1,325,000.00      129,187.53    1st   Marin
Land     12.00   09/01/01        7,500.00                -        750,000.00       750,000.00               -    1st   Santa Clara
Res      12.00   11/01/01       20,950.64     1,320,000.00      3,680,000.00     3,651,788.60      328,660.98    2nd   San Francisco
</TABLE>

<PAGE>
<TABLE>


SCHEDULE IV    CONT'D
                         REDWOOD MORTGAGE INVESTORS VIII
                              LOANS ON REAL ESTATE.
                    RULE 12-29 MORTGAGE LOANS ON REAL ESTATE

<S>      <C>        <C>          <C>             <C>               <C>               <C>            <C>           <C>        <C>
Col. A   Col. B     Col. C       Col. D          Col. E            Col. F            Col. G         Col. H        Col.I      Col. J
------   ------     ------       ------          ------            ------            ------         ------        ------     ------
Descp.   Interest   Final       Periodic       Prior Liens       Face Amount of     Carrying       Principal     Type   Geographic
          Rate %   Maturity     Payment                         Loans (original      Amount       Amt of Loans    of       County
                     Date         Terms                                 amount)     of Loans       Subject to    Lien     Location
                                                                                                   Delinq. Prin
                                                                                                   or Interest
======= ======== ==========   =============   ===============    ================ ================ ===========   ====   ==========
Res       12.00   10/01/03      $ 13,000.00      $ 785,819.00      $ 1,300,000.00   $ 1,300,000.00  $     -      2nd   San Mateo
Apts      12.50   04/01/02         1,089.38      4,000,000.00          289,855.07       289,855.08   15,096.65   2nd   San Francisco
Comm      13.00   11/01/02         2,220.84        310,381.00          205,000.00       204,866.75        -      2nd   Alameda
Comm      12.50   01/01/04           246.95        845,350.00          692,000.00       442,774.76        -      2nd   San Francisco
Land      14.00   01/01/02           875.78                 -        5,000,000.00     7,000,000.00        -      1st   Alameda
Res       13.00   05/01/01         3,802.34      3,707,450.00          350,984.57       350,984.57        -      3rd   Placer
Res       11.50   03/01/01         6,229.17      1,298,693.00          650,000.00       650,000.00        -      2nd   Contra Costa
Res       12.00   03/01/01         9,500.00                 -          950,000.00       950,000.00        -      1st   San Francisco
Res       12.50   11/01/02        11,295.57                 -        1,675,000.00     1,120,170.40        -      1st   Napa
Res       13.25   10/01/02         4,633.44        950,000.00          764,000.00       503,953.29        -      2nd   San Francisco
Comm      11.50   04/01/02        45,520.83                 -        4,750,000.00     4,750,000.00        -      1st   San Francisco
Comm      12.00   04/01/02        22,500.00      4,750,000.00        2,250,000.00     2,250,000.00        -      2nd   San Francisco
Res       12.00   05/01/03        18,305.00      5,910,000.00        1,830,500.00     1,830,500.00        -      2nd   Santa Clara
Res       12.00   05/01/03        15,604.36      7,740,500.00        4,116,500.00     1,748,097.28        -      3rd   Santa Clara
Res       11.50   05/01/02         5,802.71                 -          605,500.00       604,090.61        -      1st   Marin
Apts      11.50   06/01/06         1,849.97                 -          182,000.00       181,237.75        -      1st   Merced
Res       13.25   12/01/02        19,725.93        581,870.00        2,188,000.00     1,856,635.68        -      2nd   Santa Clara
Res       13.25   01/01/03        20,350.98                 -        3,515,500.00     2,215,912.45        -      1st   Napa
Res       11.00   07/01/06         4,583.33      1,254,113.10          500,000.00       500,000.00        -      3rd   Santa Clara
Res       12.50   06/01/06         3,645.83      1,830,194.00          350,000.00         350,000.00      -      3rd   San Mateo
Res       12.00   07/01/03         5,101.34        996,773.00        1,727,400.00         560,115.92      -      2nd   San Mateo
Comm      11.50   08/01/06         3,557.64                 -          350,000.00         341,080.57      -      1st   San Mateo
Res       11.00   08/01/03         7,333.33        664,591.15          800,000.00         800,000.00      -      2nd   Santa Clara
Res       10.50   09/01/02        17,500.00      1,071,429.00        2,000,000.00       2,000,000.00      -      2nd   San Francisco
Res       13.25   03/01/03        14,249.52                 -        3,368,000.00       1,374,260.40      -      1st   San Mateo
Res       12.00   09/01/04         3,750.00        488,053.00          375,000.00         375,000.00      -      2nd   Los Angeles
Res       12.00   09/01/02         4,392.50        726,250.00          439,250.00         439,250.00      -      2nd   Santa Clara
Apts      12.50   05/01/02         7,082.55        523,140.63          740,000.00         687,443.30      -      2nd   San Francisco
Res       11.00   11/01/04         3,875.21      1,131,981.00          422,750.00         422,750.00      -      3rd   San Mateo
Res       10.25   11/01/04        12,812.50      2,484,362.94        1,500,000.00       1,500,000.00      -      2nd   San Mateo
Res       11.50   12/01/06           693.20        166,539.67           70,000.00          70,000.00      -      2nd   Stanislaus
Res       10.25   12/01/04         2,562.50        977,654.72          300,000.00         300,000.00      -      2nd   San Francisco
Comm      12.50   01/01/03         9,937.69      7,000,000.00        2,454,500.00       1,603,117.51      -      3rd   San Francisco

                              ---------------   -------------    ----------------    ---------------   -----------
                   TOTALS       $709,227.05    $67,944,614.23      $93,865,580.55     $82,789,832.80   $835,340.26
                              ===============   =============    ================    ===============   ===========
</TABLE>

Notes:

o             The allowance for doubtful accounts  includes $2,155,321  relating
              to the above loans and  accrued interest  receivable and  advances
              related thereto.

o             Amounts reflected in column G(carrying amount of loans) represents
              both cost and the tax basis of the loans.

<PAGE>


SCHEDULE IV   CONT'D

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

                                         Year ended December 31,
                               -------------------------------------------------
                                           2001             2000          1999
                                    -------------      ------------   ----------

Balance at beginning of year         $68,570,992     $35,693,148     $31,905,958
                                  ---------------    --------------  -----------
Additions during period:
  New loans                           47,512,368      49,289,289      24,030,920
  Other                                        -               -              -
                                  ---------------    --------------  -----------
         Total Additions              47,512,368      49,289,289      24,030,920
                                  ---------------    --------------  -----------


Deductions during period:
  Collections of principal            33,293,527      16,411,445      20,243,730
  Foreclosures                                 -               -              -
  Cost of loans sold                           -               -              -
  Amortization of Premium                      -               -              -
  Other                                        -               -              -
                                  ---------------    --------------  -----------
         Total Deductions             33,293,527      16,411,445      20,243,730
                                  ---------------    --------------  -----------

Balance at close of year             $82,789,833     $68,570,992     $35,693,148
                                  ===============    ==============  ===========


<PAGE>


Item  9  -  Changes  in  and Disagreements  with Accountants on  Accounting  and
            Financial Disclosure

     Bruce and/or John Cropper (the  Croppers)  have been  performing  audit and
accounting  services  to the  general  partners  of the  partnership  and  their
affiliates for over 17 years.  They have been providing  auditing and accounting
services  to the  partnership  for the past 8 years  through the  following  CPA
firms: 1993-1998 - Parodi & Cropper, CPA's; 1999 - Caporicci,  Cropper & Larson,
LLP and 2000-2001 - Armanino McKenna LLP.

     Bruce and John  Cropper  were  shareholders  in Cropper  Accountancy  Corp.
through December 31, 2000.

     Cropper Accountancy was a partner in the firm of Parodi & Cropper from 1993
until  April  of 1998.  In May of  1998,  Cropper  Accountancy  Corp.,  formed a
partnership  with Caporicci & Larson creating a new firm,  Caporicci,  Cropper &
Larson,  LLP with offices in Irvine and Walnut Creek,  California.  The Parodi &
Cropper firm was dissolved.

     Effective  January  1,  2001,  Cropper  Accountancy  Corp.,  withdrew  from
Caporicci,  Cropper & Larson,  LLP  partnership.  John Cropper joined the larger
regional firm of Armanino  McKenna LLP as a partner and Bruce Cropper  continues
to provide services through Cropper Accountancy.

     As a result, the partnership has retained the firm of Armanino McKenna LLP,
to provide its audit and financial  services.  Thus,  although  there has been a
change in accounting firms, there has not been a change in accountants and there
have  not  been  any  disagreements  on any  matter  of  accounting  principles,
practices or financial status disclosures.


                                    Part III

Item 10 - Directors and Executive Officers of the Registrant

     The partnership has no Officers or Directors. Rather, the activities of the
partnership  are managed by three  general  partners of which one  individual is
Michael R. Burwell.  The other two general  partners are Gymno  Corporation  and
Redwood  Mortgage  Corp.  Both are California  corporations,  formed in 1986 and
1978,  respectively.  Mr.  Burwell  is one  of the  two  shareholders  of  Gymno
Corporation,  a  California  corporation,  on an equal  (50-50)  basis.  Redwood
Mortgage  Corp.  is a  subsidiary  of the Redwood  Group Ltd.,  whose  principal
stockholder is D. Russell Burwell, the other shareholder of Gymno Corporation.

Item 11 - Executive Compensation

COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP

     As  indicated  above  in  Item  10,  the  partnership  has no  officers  or
directors. The partnership is managed by the general partners. There are certain
fees and other items paid to management and related parties.


     A more  complete  description  of management  compensation  is found in the
prospectus (S-11) dated August 31, 2000, page 2, under the section "Compensation
of the General Partners and the Affiliates", which is incorporated by reference.
Such compensation is summarized below.

<PAGE>

     The  following  compensation  has been  paid to the  general  partners  and
affiliates  for services  rendered  during the year ended December 31, 2001. All
such compensation is in compliance with the guidelines and limitations set forth
in the prospectus.

Entity Receiving            Description of Compensation                Amount
  Compensation                 and Services                            Rendered
--------------------------------------------------------------------------------

I. Redwood Mortgage         Mortgage Servicing Fee
   Corp. (General Partner)   for servicing loans                       $552,323

General Partners            Asset Management Fee
&/or Affiliates              for managing assets                       $157,999

General Partners            1% interest in profits                      $60,933
                            Less allocation of syndication
                              costs                                      $1,800
                                                                 ---------------
                                                                        $59,133

General Partners            Portion of early withdrawal penalties
&/or Affiliates              applied to reduce Formation Loan           $45,984

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 Corp.      Mortgage  Brokerage  Commissions  for services in
                            connection    with   the    review,    selection,
                            evaluation,  negotiation,  and  extension  of the
                            loans  paid  by  the  borrowers  and  not  by the
                            partnership                              $1,155,636

Redwood Mortgage Corp.     Processing and Escrow Fees for services in connection
                           with notary, document preparation, credit investig-
                           ation, and escrow fees payable by the borrowers and
                           not by the partnership                       $19,149

Gymno Corporation, Inc.    Reconveyance Fee                              $3,076


III.  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.                                      $241,195


Item 12 - Security Ownership of Certain Beneficial Owners and Management

     The  general  partners  own a  combined  total  of 1%  of  the  partnership
including a 1% portion of income and losses.

Item 13 - Certain Relationships and Related Transactions

     Refer to footnote 3 of the notes to financial statements in Part II item 8,
which describes related party fees and data.

     Also refer to the prospectus dated August 31, 2000, (incorporated herein by
reference) on page 2 "Compensation  of General Partners and Affiliates" and page
2 "Conflicts of Interest", supplement No. 1 dated April 30, 2001, and supplement
No. 2 dated February 12, 2002.

<PAGE>
                                     Part IV

Item 14 - Exhibits, Financial Statements Schedules, and Reports on Form 8-K.

A.       Documents filed as part of this report are incorporated:

         1.  In Part II, Item 8 under A - Financial Statements.

         2. The Financial Statement Schedules are listed in Part II - Item 8
under B - Financial Statement Schedules.

         3.  Exhibits.

A.

   Exhibit No.            Description of Exhibits
------------------        -------------------------
         3.1              Limited Partnership Agreement
         3.2              Form of Certificate of Limited Partnership Interest
         3.3              Certificate of Limited Partnership
        10.1              Escrow Agreement
        10.2              Servicing Agreement
        10.3              (a) Form of Note secured by Deed of Trust for
                          Construction Loans, which provides for principal and
                          interest payments.
                          (b) Form of Note secured by Deed of
                          Trust for Commercial and Multi-Family loans which
                          provides for principal and interest payments
                          (c) Form of Note secured by Deed of Trust for Com-
                          mercial and Multi-Family loans which provides for
                          interest only payments
                          (d) Form of Note secured by Deed of Trust for Single
                          Family Residential Loans, which provides for interest
                          and principal payments. (e) Form of Note secured by
                          Deed of Trust for Single Family Residential loans,
                          which provides for interest only payments.
        10.4              (a)  Deed of Trust, Assignment of Leases and Rents,
                          Security Agreement and Fixture Filing to accompany
                          Exhibits   10.3  (a),  and (c).
                          (b)  Deed of Trust, Assignment of Leases and Rents,
                          Security Agreement and Fixture Filing to accompany
                          Exhibit 10.3 (b).
                          (c)  Deed of Trust, Assignment of Leases and Rents,
                          Security Agreement and Fixture Filing to accompany
                          Exhibit 10.3 (c).
        10.5              Promissory Note for Formation Loan
        10.6              Agreement to Seek a Lender


     All of these exhibits were previously filed as the exhibits to Registrant's
Registration Statement on Form S-11 (Registration No. 333-41410 and incorporated
by reference herein).


B.       Reports of Form 8-K.

         No reports on Form 8-K have been filed during the last quarter of the
         period covered by this report. A Form 8-K was filed on February 11,
         2000 relating to a change in accounting firms and the admittance of an
         additional general partner. Another Form 8-K was filed on February 14,
         2001, relating to the subsequent change in accounting firms. An amended
         Form 8-K was filed on August 31, 2001 amending certain disclosure items
         set forth in the Form 8-K filed on February 13, 2001 relating to the
         change in accountants. A Form 8-K was filed on April 11, 2001 relating
         to the retirement of D. Russell Burwell as a general partner of the
         partnership effective September 1, 2001.


C.       See A (3) above.

D.       See A (2) above. Additional reference is made to the prospectus  (filed
         as part of the S-11  registration  statement)  dated August 31, 2000,
         supplement No. 1 dated April 30, 2001 (post effective  amendment No. 1
         to the S-11 registration  statement), and supplement No. 2 dated
         February 12, 2002 (post  effective  amendment to the S-11  registration
         statement),  for financial data related to Gymno Corporation, and
         Redwood Mortgage Corp., the Corporate General Partners.


                                   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 26th day of March,
2002.


REDWOOD MORTGAGE INVESTORS VIII


By:       /S/ Michael R. Burwell
          -----------------------------------------
          Michael R. Burwell, General Partner


By:       Gymno Corporation, General Partner


          By:     /S/ Michael R. Burwell
                  -------------------------------------------
                  Michael R. Burwell, President, Secretary,
                  and Principal Financial Officer



By:       Redwood Mortgage Corp.


          By:     /S/ Michael R. Burwell
                  -----------------------------------------------------
                  Michael R. Burwell, President, Secretary/Treasurer




<PAGE>


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacity indicated on the 26th day of March, 2002.


Signature                                   Title                     Date



/S/ Michael R. Burwell
-------------------------
Michael R. Burwell                     General Partner            March 26, 2002


/S/ Michael R. Burwell
-------------------------
Michael R. Burwell            President of Gymno Corporation,     March 26, 2002
                              (Principal Executive Officer);
                               Director of Gymno Corporation
                               Secretary/Treasurer of Gymno
                               Corporation (Principal Financial
                               and Accounting Officer);




/S/ Michael R. Burwell
-------------------------
Michael R. Burwell         President, Secretary/Treasurer of      March 26, 2002
                            Redwood Mortgage Corp. (Principal
                           Financial and Accounting Officer);
                           Director of Redwood Mortgage Corp.