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

                                December 31, 2000

                                     Part I

                                                                        Page No.
Item 1 -Business                                                              3
Item 2 -Properties                                                          4-5
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                                            6-8
Item 7 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         9-12
Item 8 - Financial Statements and Supplementary Data                      13-36
Item 9 - Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                            37

                                    Part III

Item 10 - Directors and Executive Officers of the Registrant                 38
Item 11 - Executive Compensation                                             39
Item 12 - Security Ownership of Certain Beneficial Owners and management     40
Item 13 - Certain Relationships and Related Transactions                     40

                                    Part IV

Item 14 - Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K.                                                    40-41

Signatures                                                                42-43




<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, 2000 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,  2000,  the  limited   partnership   Units   purchased  by
non-affiliates was 49,983,150 Units computed at $1.00 a unit for $49,983,150.

Documents incorporated by reference:

Portions of the Prospectus  effective  August 31, 2000, (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 D. Russell  Burwell,  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 this offering for another  30,000,000  Units
($30,000,000). As of December 31, 2000, 5,058,559 Units for $5,050,559 were sold
in this  current  third  offering,  bringing  the  aggregate  sale of  Units  to
$49,983,150.  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 "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, 2000, the  Partnership  has investments
in loans with principal  balances  totaling  $68,570,992.  Interest rates ranged
from 8.00% to 18.00%.  Currently  First Trust Deeds comprise 55.13% of the total
amount of the loan  portfolio,  an  increase of 6.41% over 1999 level of 51.81%.
Junior loans (2nd and 3rd Trust Deeds) make up 44.87%,  a decrease of 6.89% over
1999 level of 48.19%.  Owner-occupied  homes,  combined with non-owner  occupied
loans,  total  38.24%  of the loan  portfolio.  Loans  secured  by  multi-family
properties  make up 12.34% of the total  loans.  Commercial  loans now  comprise
49.42% of the  portfolio,  an  increase  of 3.17% from last  year.  Of the total
loans,  81.02% are in six counties of the San Francisco Bay Area.  The County of
Stanislaus makes up 8.21% 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  $1,008,397  per loan, up from
$334,941 in 1999.  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, 2000,  represents  1.89% of Limited  Partners  capital and 1.47% of
outstanding  loans,  similar to December  31, 1999 average loan size of 1.82% of
Limited Partners capital and 1.89% of outstanding  loans.  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
stood at 45.12%,  an increase in equity of 15.63% from the previous  year.  This
average equity is generally  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  no  property  in
foreclosure as of the end of December 2000.










<PAGE>


Item 2 - Properties

A summary of the  Partnership's  Loan  Portfolio as of December 31, 2000, is set
forth below.

Loans as a Percentage of Total Loans

First Trust Deeds                                             $37,806,031.77
Appraised Value of Properties                                  83,067,888.00
                                                           ------------------
  Total Investment as a % of Appraisal                                45.51%
                                                           ------------------
First Trust Deed Loans                                         37,806,031.77
Second Trust Deed Loans                                        29,799,534.92
Third Trust Deed Loans                                            965,425.42
                                                           ------------------
  Total of Trust Deed Loans                                    68,570,992.11
                                                           ------------------

Priority positions:
   First Trust Deed Loans due other Lenders                    32,389,207.33
   Second Trust Deed Loans due other Lenders                    5,195,709.00
                                                           ------------------
Total Debt                                                   $106,155,908.44
                                                           ==================

  Appraised Property Value                                    193,420,663.00
  Total Investments as a % of Appraisal                               54.88%

Number of Loans Outstanding                                               68

Average Investment                                             $1,008,396.94
Average Investment as a % of Net Assets                                1.89%
Largest Investment Outstanding                                  4,000,000.00
Largest Investment as a % of Net Assets                                7.51%

Loans as a Percentage of Total Loans                                 Percent
------------------------------------                                 -------
First Trust Deed Loans                                                55.13%
Second Trust Deed Loans                                               43.46%
Third Trust Deed Loans                                                 1.41%
                                                           ------------------
   Total Trust Deed Loan Percentage                                  100.00%
                                                           ==================
Loans by
Type of Property                         Amount                 Percent
----------------                         ------                 -------
Owner Occupied Homes                    $9,753,617.06                 14.22%
Non-Owner Occupied Homes                16,471,074.29                 24.02%
Apartments                               8,458,610.12                 12.34%
Commercial                              33,887,690.64                 49.42%
                                    ------------------     ------------------
   Total                               $68,570,992.11                100.00%
                                    ==================     ==================



<PAGE>


The following is a distribution of loans  outstanding as of December 31, 2000 by
Counties.

                                       Total
County                                 Loans                     Percent
------                                 -----                     -------
San Francisco                          $28,606,696.17             41.72%
San Mateo                               14,048,621.88             20.49%
Stanislaus                               5,629,983.00              8.21%
Santa Clara                              5,213,150.30              7.60%
Marin                                    3,788,705.78              5.52%
Placer                                   3,453,995.70              5.04%
Los Angeles                              3,017,567.51              4.40%
Contra Costa                             2,725,976.86              3.98%
Alameda                                  1,171,860.69              1.71%
Lake                                       737,500.00              1.08%
Fresno                                     126,934.22              0.18%
Riverside                                   50,000.00              0.07%
                                    -----------------        -----------
Total                                  $68,570,992.11            100.00%
                                    =================        ===========

Statement of Condition of Loans
         Number of Loans in Foreclosure     0

Scheduled maturity dates of loans as of December 31, 2000 are as follows:

                         Year Ending
                         December 31,             Amount
                      -------------------     ---------------
                             2001                $42,414,963
                             2002                 14,457,279
                             2003                  5,300,000
                             2004                  1,556,762
                             2005                  1,694,680
                          Thereafter               3,147,308
                                              ---------------
                                                 $68,570,992
                                              ===============

The scheduled  maturities for 2000 include  approximately  twelve loans totaling
$4,706,644  which were past maturity at December 31, 2000.  Interest  payment on
only three of these loans was delinquent.

In 1995,  the  Partnership  chose to allow a senior  lender to foreclose out its
deed of trust on one of its loans.  The Partnership  commenced a legal action to
collect  this debt.  A settlement  was reached for this debt  collection.  As of
December 31, 2000,  $30,000 of the amount due has been collected.  The remaining
balance of $53,838 has been recorded as an accounts  receivable in the financial
statements. Additional payments are expected in year 2001.

As of January 01, 1999, the Partnership  owned a vacant lot acquired through the
foreclosure of loans.  The vacant lot was valued at $66,000 and was subsequently
sold in April 1999 for $85,000.  Additionally,  the  Partnership  wholly owned a
limited  liability  company  (LLC)  whose  sole asset is a  partially  completed
single-family  residence.  This partially completed  single-family residence was
originally  foreclosed upon by the Partnership and  subsequently  transferred to
the LLC at a cost of $181,139.  Additional expenditures over the $181,139 basis,
have been 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. The LLC's final tax return for 2000 has been prepared and filed in March
2001, and the limited liability company is now dissolved.


<PAGE>


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 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  entitled  "Description of
Units" and summary of Limited Partnership Agreement,  pages 67 through 75 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 1997 through  December 31, 1999,  for prior  partnerships  are
incorporated by reference to the Prospectus  (S-11) dated August 31, 2000, Table
III, pages 139 through 146.




<PAGE>



Financial  condition and results of operation for the Partnership for five years
to December 31, 2000 were:

                                  Balance Sheet
                                     Assets
<TABLE>

                                                                               December 31,
                                        -------------------------------------------------------------------------------------------
<S>                                              <C>                <C>                 <C>               <C>                 <C>
                                                 2000               1999                1998              1997                1996
                                        --------------     --------------     ---------------    --------------     ---------------
Cash                                       $1,459,725         $1,602,568            $528,688          $663,159            $664,434
Accounts receivable:
   Loans secured by deeds of trust         68,570,992         35,693,148          31,905,958        25,304,989          15,642,990
   Accrued interest and other fees          1,039,469            711,521             459,418           341,976             196,530
   Advances on loans                          172,004             33,251             211,145           205,804               8,679
   Other receivables - unsecured               53,838             49,090              48,849            62,844              75,334
   Less allowance for losses              (1,344,938)          (834,359)           (414,073)         (257,500)           (117,803)
Investment in LLC                                   0            373,358             304,139           251,139             191,139
Real estate owned  (REO), net                       0                  0              66,000            70,138              66,991
Prepaid expenses and other assets              13,416              6,332              11,835            15,025              25,406
                                        --------------     --------------     ---------------    --------------     ---------------
                                          $69,964,506        $37,634,909         $33,121,959       $26,657,574         $16,753,700
                                        ==============     ==============     ===============    ==============     ===============


                        Liabilities and Partners Capital

                                                                            December 31,
                                      ------------------------------------------------------------------------------------------
                                               2000               1999               1998               1997               1996
                                      --------------    ---------------    ---------------    ---------------     --------------
Liabilities:
Deferred interest                           $82,253           $213,529           $124,805            $83,066           $217,480
Note payable - bank                      16,400,000                  0          5,947,000          5,640,000          1,500,000
Accounts payable                             30,000             29,413              2,500              3,355             20,625
Subscriptions to partnership
  in applicant status                       224,900            330,000                  0                  0            310,937
                                      --------------    ---------------    ---------------    ---------------     --------------
                                        $16,737,153           $572,942         $6,074,305         $5,726,421         $2,049,042
                                      --------------    ---------------    ---------------    ---------------     --------------
Partners' capital
  Limited partners subject to
       redemption                        53,180,209         37,030,017         27,025,331         20,914,721         14,693,293
  General partners subject to
       redemption                            47,144             31,950             22,323             16,432             11,365
                                      --------------    ---------------    ---------------    ---------------     --------------
Total Partners' capital                 $53,227,353        $37,061,967        $27,047,654        $20,931,153        $14,704,658
                                      --------------    ---------------    ---------------    ---------------     --------------

                                        $69,964,506        $37,634,909        $33,121,959        $26,657,574        $16,753,700
                                      ==============    ===============    ===============    ===============     ==============

</TABLE>


<PAGE>

<TABLE>

                                                                   Statement of Income


                                                                               December 31,
                                           --------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>                 <C>
                                                    2000             1999              1998             1997                1996
                                           --------------    -------------    --------------    -------------     ---------------

Gross revenue                                 $6,348,819       $4,426,245        $3,406,021       $2,629,457          $1,726,635
Expenses                                       2,056,601        1,482,051         1,127,439          820,937             493,110
                                           --------------    -------------    --------------    -------------     ---------------
Income before interest credited to
     partners in applicant status              4,292,218        2,944,194         2,278,582        1,808,520           1,233,525
Interest credited to partners in
     applicant status                              4,757            1,914             4,454            9,562               2,618
                                           --------------    -------------    --------------    -------------     ---------------

Net income                                    $4,287,461       $2,942,280        $2,274,128       $1,798,958          $1,230,907
                                           ==============    =============    ==============    =============     ===============

Net income to general partners (1%)              $42,875          $29,423           $22,741          $17,990             $12,309
                                           ==============    =============    ==============    =============     ===============

Net income to limited partners (99%)          $4,244,586       $2,912,857        $2,251,387       $1,780,968          $1,218,598
                                           ==============    =============    ==============    =============     ===============

Net income per $1,000 invested by Limited
  Partners for entire period (annualized) -
  where income is reinvested and compounded          $86              $84               $84              $84                 $84
                                           ==============    =============    ==============    =============     ===============
      - where partner receives income in
               monthly distributions                 $83              $81               $81              $81                 $81
                                           ==============    =============    ==============    =============     ===============


</TABLE>

The annualized  yield for 1998 was 8.40%, for 1999 was 8.42% and for 2000 it was
8.58%. An average  annualized  yield since inception  through December 31, 2000,
was 8.36%.



<PAGE>


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

          MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

On December 31, 2000,  the  Partnership  was in the offering  stage of its third
offering for $30,000,000.  Contributed capital totaled $14,932,017 for the first
offering,  $29,992,574  for the second  offering  and  $5,058,559  for the third
offering,  an aggregate  of  $49,983,150  (Limited  Partners) as of December 31,
2000.  Of this  amount,  $224,900  remained in  applicant  status.  Accordingly,
together with prior two approved  offerings of $45,000,000  the  Partnership has
approval for an aggregate offering of $75,000,000 in Units.

At December 31, 2000, the Partnership's loans outstanding  totaled  $68,570,992.
The primary  reason for an increase in loans  outstanding  from  $25,304,989  in
1997,  to  $31,905,958  in 1998 to  $35,693,147  in 1999 and to  $68,570,992  to
December  31,  2000,  was the  additional  capital  admitted to the  Partnership
through sale of Limited  Partnership  Units and reinvestment of Limited Partners
earnings.  Additional  Limited  Partners'  Capital  contributions  have  totaled
$5,565,372,  $5,100,458,  $9,520,806 and  $14,872,209  and the  reinvestment  of
earnings by Limited Partners who have elected to reinvest earnings, have totaled
$1,119,465,  $1,440,687, $1,911,554 and $2,751,266, for the years ended December
31,  1997,  December  31,  1998,  December  31,  1999  and  December  31,  2000,
respectively.  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, 1997,  1998, 1999
and 2000, to $2,613,008,  $3,376,293,  $4,337,427  and $6,261,470  respectively.
Interest  rates on loans  ranged  from 8.00% to 18.00%.  The  Partnership  began
funding  loans on  April  14,  1993 and as of  December  31,  2000,  distributed
earnings at an average annualized yield of 8.36%.

Since the fall of 1999,  mortgage  interest rates have been rising due primarily
to economic  forces and by the Federal  Reserve raising its core interest rates.
However,  in 2001 the Federal  Reserve has  reversed its policy  towards  higher
rates and is  lowering  its core  interest  rates.  This will have the effect of
lowering interest rates in the marketplace. 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.  Although the rates charged by the
Partnership  are  influenced by the level of interest  rates in the market,  the
General  Partners do not anticipate that rates charged by the Partnership to its
borrowers will change  significantly from the beginning of 2001 over the next 12
months.  Based upon the rates payable in connection with the existing loans, the
current 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 one half and nine and one half
percent (8.50% - 9.50%).

In 1995,  the  Partnership  established a line of credit with a commercial  bank
secured  by its loans  and since its  inception  has  increased  the limit  from
$3,000,000 to $20,000,000. For the years ended December 31, 1997, 1998, 1999 and
2000,  interest  on Note  Payable-Bank  was  $340,633,  $513,566,  $526,697  and
$887,546,  respectively. For 1997, 1998, 1999 and 2000, the increase in interest
on notes  payable-Bank  has been  attributed to a higher overall credit facility
utilization.  This facility  could again increase as the  Partnership's  capital
increases.  This added source of funds will help in maximizing  the  Partnership
yield by allowing the Partnership to minimize the amount of funds in lower yield
investment  accounts  when  appropriate  loans  are  not  currently   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, 2000, the balance was $16,400,000 and in accordance with the line of credit,
the Partnership paid all accrued interest as of that date. The zero balance,  as
of December 31, 1999,  was primarily due to a combination  of  significant  loan
repayments  and  strong  Partnership  unit  sales  in the  fourth  quarter.  The
Partnership  used these  strong  cash flows to pay down its line of credit  from
$4,452,000, as of September 30, 1999, to $0 on December 31, 1999.

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-three  years.  Mortgage
servicing fees increased from $189,692,  to $295,052 to $359,464 and to $505,823
for the years  ended  December  31,  1997,  1998,  1999 and 2000.  The  mortgage
servicing  fees  increased  primarily  due to increase in the  outstanding  loan
portfolio.  Asset Management fees increased from $24,966, to $31,651, to $42,215
and to $60,595 for the years  ended  December  31,  1997,  1998,  1999 and 2000,
<PAGE>

respectively.  The  Asset  Management  fee  increase  was due  primarily  to the
increased Partner's capital,  which the General Partners are managing. All other
Partnership  expenses  fluctuated  within a narrow  range  commonly  expected to
occur, except for interest on note payable - bank, which is discussed earlier in
the  Management  Discussion  and Analysis of Financial  Condition and Results of
Operations.  Borrower's foreclosures,  as set forth under Results of Operations,
are  a  normal  aspect  of  Partnership  operations  and  the  General  Partners
anticipate  that they will not have a  material  effect  on  liquidity.  Cash is
constantly  being generated from interest  earnings,  late charges,  pre-payment
penalties,  amortization of principal and pay-off on loans. Currently, cash flow
exceeds Partnership expenses and earnings payout requirements.  Excess cash flow
will be invested in new loan  opportunities  when available,  used to reduce the
Partnership credit line or in other Partnership business.

The General Partners  regularly review the loan portfolio,  examining the status
of  delinquencies,  the underlying  collateral  securing these loans,  borrowers
payment records, etc. Data from the local real estate market and of the national
and local economy are reviewed. Based upon this information and other data, loss
reserves  are  increased  or  decreased.  In  1997,  1998,  1999 and  2000,  the
Partnership  made  provisions  for  doubtful  accounts  of  $139,804,  $162,969,
$408,890 and $375,579, respectively. These provisions for doubtful accounts were
made  primarily as a prudent  action to guard  against  unidentified  collection
losses.  The  provision  for  doubtful  accounts as of  December  31,  2000,  of
$1,344,938 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.

The much publicized  California  energy crises has not only affected the hi-tech
and  manufacturing  industries,  the  professional  and  commercial  businesses,
transportation  and utilities  sectors,  but every household and individual as a
whole.  The crisis,  which means higher cost to the consumers,  could  adversely
affect the economy,  employment and the Partnership's  lending in its commercial
sector.  On the real estate scene,  The San Mateo Times February 22, 2001 issue,
reported that despite the energy crises and talk of recession,  the median price
of a San Mateo County home soared to near record levels in January.  "The median
price of a  single-family  home  jumped 4 percent  over  December  to  $651,000,
nearing the record $653,000 of last May, during the spring price-soaring frenzy.
Realtors  insist  the  hysteria  of last  spring  is over  and  the  market  has
plateaued. But prices aren't reflecting that yet.

For  example,  the median price of a home in East Palo Alto soared 25 percent in
January to $736,000. Sure, median prices can be skewed by high-priced homes. But
East  Palo  Alto's  median  was  well  under  $200,000  in  January  1998,  with
fixer-uppers in the low $100,000s.  In addition, the January median price nearly
doubled in Half Moon Bay to $850,000.

Popular three-bedroom,  two-bath homes settled in between $600,000 and $800,000.
Many two-bedroom, one-bath homes are selling for $500,000 and up.

Sales slowed in January, as usual, to 269 from 362 in December countywide.  They
were off from 315 sales in January 2000.

"There are still plenty of buyers  wanting to buy, and now there are more people
wanting  to sell,"  said  Denise  Aquila,  a real  estate  agent at ReMax in San
Carlos.  Despite the stock market's  recent  tanking and many dot-com  failures,
Aquila and other realtors see a strong market this year  countywide  with prices
holding  their own. Part of the reason for the  resilience  is that  entry-level
homes are in the $500,000 to $700,000 range countywide,  and "they aren't making
any more of them," Aquila said. The County's median price for January climbed 21
percent  over the same  period  last  year.  Although  the  article  focuses  on
single-family  residences  only,  corresponding  increase  in values had similar
impact on commercial, industrial and apartment buildings in general.

To the Partnership,  these sales statistics indicate a strong real estate market
that is  beginning  to slow down from the rapid  appreciation  that has occurred
over the last 3 years.  The real  estate  market  appears to be coming more into
balance with similar  numbers of buyers and sellers which will allow buyers more
opportunity to negotiate and be selective in their real estate purchases.

The  California  energy  crisis is a longer-term  problem which the  Partnership
cannot  affect.  Creative and pragmatic  solutions  will need to be developed by
Industry and  Government so as not to stifle the business  growth in California.
The crises  which  means  higher  cost to the  consumers  in the near term could
adversely  affect the economy,  employment and the  Partnerships  lending in its
residential and commercial loans by lowering the real estate values.

Bank discount rate fell from 6.00% in May 2000 to 4.5% in March 2001.  The price
hike in real estate  properties  means more equity to the  homeowners,  which in
turn means more borrowing power at stable  interest  rates.  Lower interest rate
means  cut  in  cost  of  capital,  improving  profit  margins  and  encouraging
expansion.  It also means inducing  consumer  spending,  sparking home sales and
mortgage  refinancing.  This all translates  into more loan activity,  which, of
course, is healthy for the Partnership's lending activity.
<PAGE>

At the  time  of  subscription  to the  Partnership,  Limited  Partners  make an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound  earnings  in their  capital  account.  For the years
ended December 31, 1997,  December 31, 1998,  December 31, 1999 and December 31,
2000, the Partnership  made  distributions of earnings to Limited Partners after
allocation of syndication costs of $495,480,  $614,383, $826,291 and $1,244,959,
respectively.  Distribution of Earnings to Limited  Partners after allocation of
syndication  costs for the years ended  December  31,  1997,  December 31, 1998,
December 31, 1999 and December 31, 2000, to Limited  Partners'  capital accounts
and  not  withdrawn  was  $1,119,465,  $1,440,687,  $1,911,554  and  $2,751,266,
respectively.  As of December 31, 1997, December 31, 1998, December 31, 1999 and
December 31, 2000,  Limited Partners electing to withdraw  earnings  represented
30%, 30%, 31% and 32% respectively of the Limited Partners  outstanding  capital
accounts.  These percentages are remaining  relatively stable as new Partnership
unit sales continue to mirror previous sales of compounding and  non-compounding
unit sales. Liquidations are not occurring  disproportionately to compounding or
non-compounding accounts.

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  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
of the  investors  has yet to expire,  as of December  31,  2000,  many  Limited
Partners may not as yet avail  themselves  of this  provision  for  liquidation.
Earnings and capital  liquidations  including early withdrawals since inception,
1993 through December 31, 2000 were:
<TABLE>

<S>                 <C>         <C>         <C>        <C>         <C>         <C>          <C>           <C>
                    1993        1994        1995       1996        1997        1998         1999          2000
                  ---------- ----------- ----------- ---------- ----------- ----------- ------------- --------------
Earnings
Liquidation         $46,855    $165,814    $303,477   $418,380    $495,480    $614,383      $826,291     $1,244,959
Capital
Liquidation               0           0      $5,640   $146,755    $132,619    $257,344      $592,357       $762,060
                  ---------- ----------- ----------- ---------- ----------- ----------- ------------- --------------

     Total          $46,855    $165,814    $309,117   $565,135    $628,099    $871,727    $1,418,648     $2,007,019
                  ========== =========== =========== ========== =========== =========== ============= ==============
</TABLE>

Additionally, Limited Partners may withdraw over a period of one year subject to
certain  limitations  and  penalties.  For the years ended  December  31,  1997,
December 31, 1998, December 31, 1999 and December 31, 2000, $132,619,  $244,213,
$411,838 and $309,643,  respectively were liquidated  subject to the 10% penalty
for  early  withdrawal.  This  represents  0.63%,  0.90%,  1.11% and .58% of the
Limited  Partners  ending capital for the years ended  December 31, 1997,  1998,
1999  and  2000,  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  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,  December  31,  1998,  December  31, 1999 and
December  31,  2000,  respectively,  and is expected by the General  Partners to
commonly occur at these levels.

The Year 2000 was considered by most to be a challenge for the entire world with
respect to the conversion of existing computerized  operations.  The Partnership
relied on Redwood Mortgage Corp., third parties and various software vendors for
its hardware and software needs.  Since year 2000 has come and gone, we have not
experienced  any computer  hardware  breakdowns.  We assume that our testing and
upgrading of computer  hardware prior to year 2000 identified all hardware areas
of concern.  Computer  software  programs  are all  operational  with only minor
problems  being  experienced  with  some  programs.  These  problems  have  been
addressed  by the  appropriate  software  vendors or software  programmers.  All
annual  computerized  functions  have been run and testing of the operations has
taken place. We did not experience any significant problems.
<PAGE>

The costs of updating  our  computer  systems  were  substantially  borne by the
non-affiliated  software vendors and the in house system conversion costs to the
partnership were marginal.

Year 2000 issues did not appear to have affected, in any significant manner, any
industries or businesses in the marketplace in which the Partnership  places its
loans.  We believe that year 2000 issues were a non-event  and will have little,
if any,  future  effect on the  Partnership,  its  affiliates  or the people and
businesses with which it associates.

With this report we hereby conclude our discussion on the Y2K issue.

On February 7, 2000, the General  Partners,  pursuant to Section 12.4 (d) of the
Partnership  Agreement, admitted Redwood Mortgage Corp., a California corpora-
tion, as a General Partner of  the  Partnership.  Redwood  Mortgage  Corp. is an
affiliate of the  General  Partners. Redwood Mortgage Corp. was incorporated  in
1978.  Its principal  stockholder is the Redwood Group,  Ltd.,  whose  principal
stockholder is D. Russell Burwell, a General Partner of the Partnership. Redwood
Mortgage  Corp. is a licensed real estate broker and has been engaged  primarily
in the business of arranging  and servicing  the  Partnership's  loans since its
inception.  The General  Partners  believe that the addition of Redwood Mortgage
Corp as a General Partner strengthen Partnership's management team.

After 25 years of active  participation  in the  mortgage  business,  D. Russell
Burwell,  our founder and a General  Partner of the  Partnership  has decided to
retire  effective  September 30, 2001.  "Russ" has enjoyed a long and successful
career.  His original  business model, upon which our Partnership has its roots,
has withstood the test of time through varying  economic  cycles.  Collectively,
the various Redwood Mortgage Investors  Partnerships (I-VIII) have grown from an
idea to over  $110,000,000  in assets and  produced  excellent  results  for the
Limited Partners. Through December 31, 2000 and under Russ' stewardship, Redwood
Mortgage   Investor's  VIII  raised   $49,983,150  in  Limited  Partner  Capital
contributions  and at December 31, 2000 had  $53,180,209  in  remaining  Limited
Partner Capital.

Over  the  last  few  years,   Russ  has  been  passing  along  his  duties  and
responsibilities  to the  remaining  General  Partners.  The  remaining  General
Partners are Mr. Michael Burwell,  Gymno Corporation and Redwood Mortgage Corp.,
both California Corporations.  Mr. Michael Burwell has been a General Partner of
Redwood  Mortgage  Investors  VIII since its  inception and has been employed by
Redwood  Mortgage  Corp,  an  affiliate  of the  Partnership,  since  1979.  The
Partnership  through the  remaining  General  Partners and the  employees of its
affiliate Redwood Mortgage Corp., are well prepared for Russ' departure and look
forward to emulating  the steady  consistent  returns that the Limited  Partners
have enjoyed during Russ' tenure.

Mr. D. Russell  Burwell is  providing this  notification  pursuant  to Article 8
Section  8.02  of the  Limited  Partnership  Agreement.  The  remaining  General
Partners have elected to continue the business of the  Partnership  as described
in Article 9 Section 9.01(d) of the Limited Partnership Agreement.


The General  Partners have  determined that for purposes of establishing a value
for reporting purposes,  including brokerage and trustee account statements, the
estimated  value of the  limited  partnership  interests  on a per unit basis is
equal to the capital account balance of each investor 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,  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").


<PAGE>



Item 8 - Financial Statements and Supplementary Data

Redwood  Mortgage  Investors VIII, a California  Limited  Partnership's  list of
Financial Statements and Financial Statement schedules:

A-Financial Statements

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

        -  Independent Auditors' Report
        -  Balance  Sheets - December  31,  2000,  and  December  31, 1999 -
           Statements of Income for the three years ended  December 31, 2000 -
           Statements of Partners'  Capital for the three years ended December
           31,  2000 -  Statements  of Cash  Flows for the three  years  ended
           December 31, 2000 - 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, 2000
                         (With Auditors' Report Thereon)





<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 sheet of REDWOOD  MORTGAGE  INVESTORS
VIII (A California  Limited  Partnership) and the related  statements of income,
changes in  partners'  capital  and cash flows for the year ended  December  31,
2000.  Our audit also included the financial  statement  schedule  listed in the
Index at Item 8. Our  responsibility is to express an opinion on these financial
statements based on our audit. The financial  statements as of December 31, 1999
and the two years then ended,  were audited by other auditors whose report dated
March 15, 2000 expressed an unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
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 financial position of REDWOOD MORTGAGE INVESTORS VIII
as of December 31, 2000,  and the results of its  operations  and cash flows for
the year ended  December  31,  2000 in  conformity  with  accounting  principals
generally  accepted in the United States of America.  Also, in our opinion,  the
related financial statement schedules,  when considered in relation to the basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein..





                            /s/ ARMANINO McKENNA LLP






Walnut Creek, California
February 23, 2001




<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  and related  schedules  of REDWOOD
MORTGAGE INVESTORS VIII (A California Limited  Partnership)  listed in Item 8 on
form 10-K  including  balance  sheets as of  December  31, 1999 and 1998 and the
statements of income,  changes in partners' capital and cash flows for the three
years 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 audits.

We  conducted  our  audits  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 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, 1999 and 1998,  and the results of its  operations  and cash
flows for the three years ended December 31, 1999, in conformity  with generally
accepted  accounting  principles.  Further, it is our opinion that the schedules
referred to above present fairly the information set forth therein in compliance
with the  applicable  accounting  regulations  of the  Securities  and  Exchange
Commission.





                              /s/ A. Bruce Cropper
                        Caporicci, Cropper & Larson, LLP





Walnut Creek, California
March 15, 2000











<PAGE>



                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999


                                     ASSETS

                                                    2000              1999
                                               ---------------    --------------

Cash                                                $1,459,725        $1,602,568
                                               ---------------    --------------

Accounts receivable:
  Loans, secured by deeds of trust                  68,570,992        35,693,148
  Accrued Interest on Loans                          1,039,469           711,521
  Advances on Loans                                    172,004            33,251
  Accounts receivable, unsecured                        53,838            49,090
                                               ---------------    --------------
                                                    69,836,303        36,487,010

  Less allowance for doubtful accounts               1,344,938           834,359
                                                --------------    --------------
                                                    68,491,365        35,652,651
                                               ---------------    --------------



Investment in limited liability corporation, at cost
    which approximates market                                0           373,358
Prepaid expense-deferred loan fee                       13,416             6,332
                                                --------------    --------------

                 Total assets                      $69,964,506       $37,634,909
                                               ===============    ==============





















The accompanying notes are an integral part of the financial statements


<PAGE>



                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999


                        LIABILITIES AND PARTNERS' CAPITAL

                                                        2000            1999
                                                   -------------   -------------

Liabilities:
  Accounts payable and accrued expenses               $30,000           $29,413
  Note payable - bank line of credit               16,400,000                 0
  Deferred interest income                             82,253           213,529
                                                  --------------   -------------

                          Total liabilities        16,512,253           242,942
                                                  --------------   -------------

Investors in applicant status                         224,900           330,000
                                                  --------------   -------------


Partners' capital:
  Limited partners' capital, subject to
   redemption Net of unallocated syndication
   costs of $310,438 and $342,334 for 2000
   and 1999, respectively: and formation loan
   receivable of $3,010,871 and $2,158,674
   for 2000 and 1999, respectively                  53,180,209       37,030,017

General partners' capital, net of unallocated
  syndication costs of $3,136 and $3,458 for
  2000 and 1999, respectively                           47,144           31,950
                                                  --------------    ------------

         Total partners' capital                    53,227,353       37,061,967
                                                  --------------    ------------
         Total liabilities and partners' capital   $69,964,506      $37,634,909
                                                  ==============    ============










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 THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>

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

<S>                                                                <C>                <C>                <C>
                                                                   2000               1999               1998
Revenues:
  Interest on Loans                                               $6,261,470         $4,337,427         $3,376,293
  Interest on bank deposits                                           11,154              8,197              8,946
  Late charges                                                        65,520             27,859             19,384
  Miscellaneous                                                       10,675             52,762              1,398
                                                               --------------     --------------    ---------------
                                                                   6,348,819          4,426,245          3,406,021
                                                               --------------     --------------    ---------------
Expenses:
  Mortgage servicing fees                                            505,823            359,464            295,052
  Interest on note payable - bank                                    887,546            526,697            513,566
  Amortization of loan origination fees                               11,667             10,503             11,415
  Provision for doubtful accounts and losses on
    real estate acquired through foreclosure                         375,579            408,890            162,969
  Asset management fee - General Partner                              60,595             42,215             31,651
  Amortization of organization costs                                       0                  0              1,875
  Clerical costs through Redwood Mortgage Corp.                      113,580             85,171             67,453
  Professional services                                               64,356             31,814             27,462
  Printing, supplies and postage                                      18,249              7,102              7,089
  Other                                                               19,206             10,195              8,907
                                                               --------------     --------------    ---------------
                                                                   2,056,601          1,482,051          1,127,439
                                                               --------------     --------------    ---------------
Income before interest credited to partners
   in applicant status                                             4,292,218          2,944,194          2,278,582

Interest credited to partners in applicant status                      4,757              1,914              4,454
                                                               --------------     --------------    ---------------
Net income                                                        $4,287,461         $2,942,280         $2,274,128
                                                               ==============     ==============    ===============
Net income: To General Partners (1%)                                 $42,875            $29,423            $22,741
                     To Limited Partners (99%)                     4,244,586          2,912,857          2,251,387
                                                               --------------     --------------    ---------------
Total - net income                                                $4,287,461         $2,942,280         $2,274,128
                                                               ==============     ==============    ===============

Net income per $1,000 invested by Limited Partners for entire period:

-where income is reinvested and compounded                               $86                $84                $84
                                                               ==============     ==============    ===============
-where partner receives income in monthly distributions                  $83                $81                $81
                                                               ==============     ==============    ===============


</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 THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
                                                                                      PARTNERS' CAPITAL
                                                             --------------------------------------------------------------------
                                                                                  LIMITED PARTNERS' CAPITAL
                                                             --------------------------------------------------------------------
                                                           Capital
                                       Partners In         Account           Unallocated          Formation
                                        Applicant          Limited           Syndication             Loan
                                          Status           Partners             Costs             Receivable            Total
                                       -------------    ---------------     ---------------     ---------------     --------------
<S>                                              <C>       <C>                  <C>               <C>                 <C>
Balances at January 1, 1998                      $0        $22,733,408          $(431,994)        $(1,386,693)        $20,914,721
Contributions on application              5,105,559                  0                   0                   0                  0
Formation loan increases                          0                  0                   0           (403,518)          (403,518)
Formation loan payments                           0                  0                   0             133,580            133,580
Interest credited to partners
        in applicant status                   4,454                  0                   0                   0                  0
Upon admission to partnership:
    Interest withdrawn                      (1,553)                  0                   0                   0                  0
    Transfers to partners' capital      (5,108,460)          5,103,359                   0                   0          5,103,359
Net income                                        0          2,251,387                   0                   0          2,251,387
Syndication costs incurred                        0                  0           (126,453)                   0          (126,453)
Allocation of syndication costs                   0          (196,317)             196,317                   0                  0
Partners' withdrawals                             0          (847,661)                   0                   0          (847,661)
Early withdrawal penalties                        0           (24,066)               8,255              15,727               (84)
                                       -------------    ---------------     ---------------     ---------------     --------------
Balances at December 31, 1998                     0         29,020,110           (353,875)         (1,640,904)         27,025,331
Contributions on application              9,530,318                  0                   0                   0                  0
Formation loan increases                          0                  0                   0           (708,461)          (708,461)
Formation loan payments                           0                  0                   0             164,731            164,731
Interest credited to partners
        in applicant status                   1,914                  0                   0                   0                  0
Upon admission to partnership:
    Interest withdrawn                      (1,002)                  0                   0                   0                  0
    Transfers to partners' capital      (9,201,230)          9,191,719                   0                   0          9,191,719
Net Income                                        0          2,912,857                   0                   0          2,912,857
Syndication costs incurred                        0                  0           (177,099)                   0          (177,099)
Allocation of syndication costs                   0          (175,012)             175,012                   0                  0
Partners' withdrawals                             0        (1,378,924)                   0                   0        (1,378,924)
Early withdrawal penalties                        0           (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                  0                   0                   0                  0
Formation loan increases                          0                  0                   0         (1,102,196)        (1,102,196)
Formation loan payments                           0                  0                   0             230,116            230,116
Interest credited to partners
        in applicant status                   4,757                  0                   0                   0                  0
Upon admission to partnership:
    Interest withdrawn                        (779)                  0                   0                   0                  0
    Transfers to partners' capital     (14,996,159)         14,981,287                   0                   0         14,981,287
Net income                                        0          4,244,586                   0                   0          4,244,586
Syndication costs incurred                        0                  0           (266,903)                   0          (226,903)
Allocation of syndication costs                   0          (248,361)             248,361                   0                  0
Partners' withdrawals                             0        (1,976,594)                   0                   0        (1,976,594)
Early withdrawal penalties                        0           (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
                                       =============    ===============     ===============     ===============     ==============
The accompanying notes are an integral part of the financial statements

</TABLE>

<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000
<TABLE>

                                                                               PARTNERS' CAPITAL
                                                    -------------------------------------------------------------------------
                                                                           GENERAL PARTNERS' CAPITAL
                                                    -------------------------------------------------------------------------
                                                        Capital          Unallocated                             Total
                                                        Account          Syndication          Total            Partners'
                                                        General             Costs                               Capital
                                                       Partners
                                                    ----------------    --------------     -------------    ----------------
<S>                                                         <C>              <C>                <C>             <C>
Balances at January 11, 1998                                $20,796          $(4,364)           $16,432         $20,931,153

Contributions on application                                      0                 0                 0                   0
Formation loan increases                                          0                 0                 0           (403,518)
Formation loan payments                                           0                 0                 0             133,580
Interest  credited  to  partners  in  applicant                   0                 0                 0                   0
status
Upon admission to partnership:
    Interest withdrawn                                            0                 0                 0                   0
    Transfers to partners' capital                            5,101                 0             5,101           5,108,460
Net income                                                   22,741                 0            22,741           2,274,128
Syndication costs incurred                                        0           (1,277)           (1,277)           (127,730)
Allocation of syndication costs                             (1,983)             1,983                 0                   0
Partners' withdrawals                                      (20,758)                 0          (20,758)           (868,419)
Early withdrawal penalties                                        0                84                84                   0
                                                    ----------------    --------------     -------------    ----------------
Balances at December 31, 1998                                25,897           (3,574)            22,323          27,047,654
Contributions on application                                      0                 0                 0                   0
Formation loan increases                                          0                 0                 0           (708,461)
Formation loan payments                                           0                 0                 0             164,731
Interest  credited  to  partners  in  applicant                   0                 0                 0                   0
status
Upon admission to partnership:
    Interest withdrawn                                            0                 0                 0                   0
    Transfers to partners' capital                            9,511                 0             9,511           9,201,230
Net income                                                   29,423                 0            29,423           2,942,280
Syndication costs incurred                                        0           (1,789)           (1,789)           (178,888)
Allocation of syndication costs                             (1,768)             1,768                 0                   0
Partners' withdrawals                                      (27,655)                 0          (27,655)         (1,406,579)
Early withdrawal penalties                                        0               137               137                   0
                                                    ----------------    --------------     -------------    ----------------
Balances at December 31, 1999                                35,408           (3,458)            31,950          37,061,967
Contributions on application                                      0                 0                 0                   0
Formation loan increases                                          0                 0                 0         (1,102,196)
Formation loan payments                                           0                 0                 0             230,116
Interest  credited  to  partners  in  applicant                   0                 0                 0                   0
status
Upon admission to partnership:
    Interest withdrawn                                            0                 0                 0                   0
    Transfers to partners' capital                           14,872                 0            14,872          14,996,159
Net income                                                   42,875                 0            42,875           4,287,461
Syndication costs incurred                                        0           (2,291)           (2,291)           (229,194)
Allocation of syndication costs                             (2,509)             2,509                 0                   0
Partners' withdrawals                                      (40,366)                 0          (40,366)         (2,016,960)
Early withdrawal penalties                                        0               104               104                   0
                                                    ----------------    --------------     -------------    ----------------
Balances at December 31, 2000                               $50,280          $(3,136)           $47,144         $53,227,353
                                                    ================    ==============     =============    ================
The accompanying notes are an integral part of the financial statements

</TABLE>

<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000
<TABLE>
<S>                                                                     <C>                 <C>               <C>
                                                                        2000                1999              1998
                                                                   ---------------     ---------------    --------------
Cash flows from operating activities:
  Net income                                                           $4,287,461          $2,942,280        $2,274,128
  Adjustments to reconcile net income to net cash
        provided by operating activities:
    Amortization of organization costs                                          0                   0             1,875
    Provision for doubtful accounts.                                      510,579             420,286           156,573
    Provision for losses (gains) on real estate held for sale                   0            (11,396)             6,396
Change in operating asset and liabilities:
    Accounts payable                                                          587              26,913             (855)
    Accrued interest & advances                                         (466,701)            (74,209)         (122,783)
    Amount due from related companies                                     (4,748)               (241)             2,999
    Deferred loan fee                                                       6,332               5,503           (1,684)
    Deferred interest income                                            (131,276)              88,724            41,739
                                                                   ---------------     ---------------    --------------
      Net cash provided by operating activities                         4,202,234           3,397,860         2,358,388
                                                                   ---------------     ---------------    --------------
Cash flows from investing activities:
    Principal collected on Loans                                       16,411,445          20,243,729        14,262,838
    Loans made                                                       (49,289,289)        (24,030,919)      (20,863,807)
    Proceeds from real estate held for sale                                     0              79,282                 0
    Payments for real estate held for sale                                      0             (1,886)           (2,258)
    Dispositions of (Additions to) Limited Liability Corporation          359,942            (69,219)          (53,000)
    Accounts receivables, unsecured - (disbursements) receipts                  0                   0            13,995
                                                                   ---------------     ---------------    --------------
      Net cash used in investing activities:                         (32,517,902)         (3,779,013)       (6,642,232)
                                                                   ---------------     ---------------    --------------
Cash flows from financing activities
   Increase (decrease) in note payable-bank, net                       16,400,000         (5,947,000)           307,000
   Contributions by partner applicants                                 14,887,081           9,530,318         5,105,559
   Interest credited to partners in applicant status                        4,757               1,914             4,454
   Interest withdrawn by partners in applicant status                       (779)             (1,002)           (1,553)
   Partners withdrawals                                               (2,016,960)         (1,406,579)         (868,419)
   Syndication costs incurred                                           (229,194)           (178,888)         (127,730)
   Formation loan increases                                           (1,102,196)           (708,461)         (403,518)
   Formation loan collections                                             230,116             164,731           133,580
                                                                   ---------------     ---------------    --------------
      Net cash used in financing activities                            28,172,825           1,455,033         4,149,373
                                                                   ---------------     ---------------    --------------
Net increase (decrease) in cash and cash equivalents                    (142,843)           1,073,880         (134,471)

Cash - beginning of period                                              1,602,568             528,688           663,159
                                                                   ---------------     ---------------    --------------
Cash - end of period                                                    1,459,725          $1,602,568          $528,688
                                                                   ===============     ===============    ==============
Cash paid for interest                                                   $887,546            $526,697          $513,566
</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, 2000

NOTE 1 - ORGANIZATION AND GENERAL

Redwood  Mortgage  Investors  VIII,  a  California   Limited   Partnership  (the
"Partnership"),  was organized in 1993 of which D. Russell  Burwell,  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., an affiliate of the General  Partners.  At
December  31,  2000,  the  Partnership  was  in  the  offering  stage,   wherein
contributed capital totaled  $49,758,250 in limited partner  contributions of an
approved aggregate  offering of $75,000,000,  in Units. As of December 31, 2000,
$224,900  remained  in  applicant  status,  and  total  Units  sold  were in the
aggregate of $49,983,150.

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 1997. 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). 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., an affiliate
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
(under the limit of 9.1% relative to the initial offering).  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,  which was in
1996.

The  Formation  Loan  relating  to the  second  offering  ($30,000,000)  totaled
$2,271,916  at  December  31,  2000,  which  was  6.7% of the  limited  partners
contributions  of $29,992,574.  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.  Such  payment  shall be due and  payable  by
December 31 of the following year with the first such payment beginning December
31, 1997.  Upon  completion of the  offering,  the balance will be repaid in ten
equal annual installments.



<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

The following summarizes Formation Loan transactions to December 31, 2000:
<TABLE>

                                              Initial            Subsequent         Current
                                             Offering of        Offering of        Offering of
<S>                                          <C>                <C>                <C>                   <C>
                                             $15,000,000        $30,000,000        $30,000,000           Total
                                            ---------------    --------------     --------------    ----------------

Limited Partner contributions                  $14,932,017       $29,992,574         $4,833,659         $49,758,250
                                            ===============    ==============     ==============    ================

Formation Loan made                             $1,074,840        $2,271,916           $378,154          $3,724,910
Payments to date                                 (369,342)         (267,043)                  0           (636,385)
Early withdrawal penalties applied                (77,654)                 0                  0            (77,654)
                                            ---------------    --------------     --------------    ----------------

Balance December 31, 2000                         $627,844        $2,004,873           $378,154          $3,010,871
                                            ===============    ==============     ==============    ================
Percent loaned of Partners'
   Contributions                                      7.2%              7.6%               7.8%                7.5%
                                            ===============    ==============     ==============    ================
</TABLE>

The  Formation  Loan,  which  is receivable  from  Redwood  Mortgage  Corp., an
affiliate 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. Other Organizational and Offering Expenses
Organizational and offering expenses,  other than sales commissions,  (including
printing costs,  attorney and accountant fees,  registration and filing fees and
other costs), will be paid by the Partnership.

Through December 31, 2000,  organization  costs of $12,500 and syndication costs
of  $1,396,843  had  been  incurred  by  the  Partnership   with  the  following
distribution:

                                    Syndication    Organization
                                        Costs           Costs             Total
                                    ------------    -----------       ----------
Costs incurred                         1,396,843      $12,500        $1,409,343
Early withdrawal
  penalties applied                      (42,097)           0           (42,097)
Allocated and
  amortized to date                   (1,041,172)     (12,500)       (1,053,672)
                                    ------------   -----------       -----------
December 31, 2000 balance               $313,574           $0          $313,574
                                    ============   ===========       ===========

Organization  and  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,  1999  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, 2000 the offering had incurred  $229,195  (4.5% 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.  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.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

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.

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  they are  valued at cost for
financial  statement  purposes with interest thereon being accrued by the simple
interest method.

Financial  Accounting  Standards Board Statements  (SFAS) 114 and 118 (effective
January 1, 1995) 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.  The adoption
of these  statements did not have a material effect on the financial  statements
of the  Partnership  because that was the valuation  method  previously  used on
impaired loans.

At  December  31,  2000,  1999,  and 1998,  there were no loans  categorized  as
impaired by the Partnership.  Had there been a computed amount for the reduction
in carrying values of impaired loans,  the reduction would have been included in
the allowance for doubtful accounts.

As  presented  in Note  10 to the  financial  statements,  the  average  loan to
appraised value of security at the time the losses were  consummated was 54.88%.
When a loan is  valued  for  impairment  purposes,  an  updating  is made in the
valuation of collateral  security.  However,  such a low loan to value ratio has
the tendency to minimize reductions for impairment.

D. Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents  include
interest bearing and non-interest bearing bank deposits.

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,  2000,  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, 2000

G. Organization and Syndication Costs

The Partnership  bears its own  organization  and syndication  costs (other than
certain  sales  commissions  and  fees  described  above)  including  legal  and
accounting  expenses,   printing  costs,  selling  expenses,  and  filing  fees.
Organizational  costs have been  capitalized and were amortized over a five-year
period.  Syndication  costs are charged against  partners' capital and are being
allocated to individual partners consistent with the partnership agreement.

H. 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  and  advances  on  loans,   and  other  accounts   receivable
(unsecured).  The  composition  of the  allowance  for  doubtful  accounts as of
December 31, 2000, and 1999 was as follows:

                                                December 31,
                                     -----------------------------------
                                              2000                1999
                                     ----------------     --------------
Impaired loans                                    $0                 $0
Unspecified loans                          1,291,151            795,268
Amounts receivable, unsecured                 53,787             39,091
                                     ----------------     --------------
                                          $1,344,938           $834,359
                                     ================     ==============

I. 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  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 select other options.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES

The following are commissions and/or fees which are paid to the General Partners
and/or related parties.

A. Mortgage Brokerage Commissions

For fees in connection with the review, selection,  evaluation,  negotiation and
extension of  Partnership  loans in an amount to 12% of the loans until 6 months
after  the  termination  date  of  the  offering.   Thereafter,  loan  brokerage
commissions  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 2000 and 1999,
loan brokerage  commissions  paid by the borrowers were $1,877,921 and $682,118,
respectively.

B. Mortgage Servicing Fees

Monthly  mortgage  servicing fees of up to 1/8 of 1% (1.5% annual) of the unpaid
principal  is paid to  Redwood  Mortgage  Corp.,  or such  lesser  amount  as is
reasonable and customary in the geographic area where the property  securing the
mortgage is located. Mortgage servicing fees of $505,823,  $359,464 and $295,052
were incurred for the year ended December 31, 2000, 1999 and 1998, 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 $60,595, $42,215 and $31,651 were incurred for years
2000, 1999 and 1998, 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 parties related 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  partnership  interest  of the  General
Partners (combined) shall be a total of 1%.

F. Operating Expenses

The General Partners or their affiliate  (Redwood Mortgage Corp.) are reimbursed
by the  Partnership  for all  operating  expenses  actually  incurred by them on
behalf of the Partnership,  including without limitation,  out-of-pocket general
and administration expenses of the Partnership, accounting and audit fees, legal
fees and expenses,  postage and preparation of reports to Limited Partners. Such
reimbursements are reflected as expenses in the Statement of Income.

The General Partners  collectively or severally were to contribute 1/10 of 1% in
cash contributions as proceeds from the offering are admitted to Limited Partner
capital.  As of December  31, 2000 a General  Partner,  Gymno  Corporation,  had
contributed  $49,971,  as  capital in  accordance  with  Section  4.02(a) of the
Partnership Agreement.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

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 1-120
days in most cases,  purchasers'  subscriptions will remain irrevocable and will
earn interest at money market rates, which are lower than the anticipated return
on the Partnership's loan portfolio.

During the periods ending  December 31, 2000, 1999 and 1998,  interest  totaling
$4,757, $1,914 and $4,454,  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 five
years,  subject to the  penalty  provision  set forth in (E) below.  Thereafter,
investors 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% is allocated to the General Partners.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

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, 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.

NOTE 5- LEGAL PROCEEDINGS

The Partnership is not a defendant in any legal actions.

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  $16,400,000 and $0 at December 31, 2000, and 1999,  respectively.
The interest rate was 9.75% at December 31, 2000, (9.50% prime plus .25%).

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.


<PAGE>



                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

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,
                                              ----------------------------------
                                                    2000                1999
                                              ---------------    ---------------
Net Assets - partners' capital
    per financial statements                    $53,227,353          $37,061,967
Non-amortized syndication costs                     313,574              345,792
Allowance for doubtful accounts                   1,344,938              834,359
Formation loans receivable                        3,010,871            2,158,674
                                              ---------------    ---------------
Net assets tax basis                            $57,896,736          $40,400,792
                                              ===============    ===============

In 2000 and 1999,  approximately  54% and 58% 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  $68,570,992 at December 31, 2000.
The fair value of these  investments  of  $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, 2000

NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS

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

Number of loans outstanding                                                  68
Total loans outstanding                                             $68,570,992

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

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

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

Number of loans in foreclosure status                                         0
Amount of loans in foreclosure                                                0

The following loan categories  were held at December 31, 2000 and 1999:
                                                   2000                 1999
                                              --------------       -------------
First Trust Deeds                               $37,806,032          $19,388,394
Second Trust Deeds                               29,799,535           16,082,803
Third Trust Deeds                                   965,425              221,951
                                              --------------       -------------
  Total loans                                    68,570,992           35,693,148
Prior liens due other lenders                    37,584,916           23,719,420
                                              --------------       -------------
  Total debt                                   $106,155,908          $59,412,568
                                              ==============       =============

Appraised property value at time of loan       $193,420,663          $97,556,330
                                              ==============       =============

Total investments as a percent of appraisals          54.88%              60.90%
                                              ==============       =============

Investments by Type of Property
Owner occupied homes                              $9,753,617          $7,336,276
Non-Owner occupied homes                          16,471,074          10,957,622
Apartments                                         8,458,610             302,797
Commercial                                        33,887,691          17,096,453
                                               -------------       -------------
                                                 $68,570,992         $35,693,148
                                               =============       =============

The interest rates on the loans range from 8.00% to 18.00% at December 31, 2000.


<PAGE>


                         REDWOOD MORTGAGE INVESTORS VIII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

Scheduled maturity dates of loans as of December 31, 2000 are as follows:

                        Year Ending
                       December 31,            Amount
                      ---------------- -- -----------------
                           2001                $42,414,963
                           2002                 14,457,279
                           2003                  5,300,000
                           2004                  1,556,762
                           2005                  1,694,680
                        Thereafter               3,147,308
                                          -----------------
                                               $68,570,992
                                          =================


The scheduled  maturities for 2001 include  approximately  $4,706,644  (6.7%) in
loans,  which are past maturity at December 31, 2000.  Interest  payment on only
three of these loans was delinquent.

The cash balance at December 31, 2000 of $1,459,725  (2.1%) was in one bank with
interest  bearing  balances  totaling  $1,204,161.  The balances  exceeded  FDIC
insurance limits (up to $100,000 per bank) by $1,359,725.  This bank is the same
financial  institution  that has provided the  Partnership  with the $20,000,000
limit line of credit  (LOC).  At  December  31,  2000,  the LOC had a balance of
$16,400,000.  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.




<PAGE>



SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                         REDWOOD MORTGAGE INVESTORS VIII
<TABLE>


<S>                 <C>               <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
                                                           (credited) to
                                      Costs & Expenses     Other accounts -
                                                           Describe

Year Ended
12/31/00

Deducted from
Asset accounts:

Allowance for
Doubtful accts              $834,359             $510,579                  0                0       $1,344,938

Cumulative
write-down of
Real Estate
held for sale
(REO)                              0                    0                  0                0                0

                    ----------------- -------------------- ------------------ ---------------- ----------------
Totals                      $834,359             $510,579                  0                0       $1,344,938
                    ================= ==================== ================== ================ ================




</TABLE>

<PAGE>


SCHEDULE IV

                              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.      Int.      Final         Periodic       Prior Liens      Face Amt. of       Carrying        Principal     Type Geographic
            Rate     Maturity     Payment Terms                   Loans (original   amount of Loans    amount of     of     County
              %       Date                                            amount)                        Loans subject   Lien   Location
                                                                                                    to Delinquency,
                                                                                                     Principal or
                                                                                                        Interest
=========== ========= =========== ============== ================ ================= ================ =============== ====== ========
Comm           10.00   12/01/98       $1,689.33            $0.00       $192,500.00      $189,318.30      $38,854.59  1st    Alameda
Comm           12.00   02/01/99       $5,131.14            $0.00       $503,457.45      $503,457.45      $99,201.76  1st    S Clara
Comm           12.00   07/01/00       $1,387.44            $0.00       $130,000.00      $126,934.22           $0.00  1st    Fresno
Comm           12.00   03/01/01         $789.92            $0.00        $75,000.00       $71,805.07           $0.00  1st    Sn Mateo
Res            11.00   04/01/06       $1,039.81            $0.00       $105,000.00      $101,841.61           $0.00  1st    San Fran
Comm           12.00   03/01/01         $684.60       $74,754.00        $65,000.00       $62,603.42           $0.00  2nd    Sn Mateo
Comm           12.00   02/01/99         $186.00         $468,000        $18,000.00       $18,000.00       $5,169.25  2nd    S Clara
Comm           14.00   04/01/06      $12,160.05            $0.00       $700,000.00      $546,163.65           $0.00  1st    San Fran
Comm           10.75   04/01/00         $447.92      $121,264.00        $50,000.00       $50,000.00           $0.00  2nd    Rivrside
Comm           11.75   05/01/02       $3,828.76            $0.00       $370,000.00      $246,127.91           $0.00  1st    Sn Mateo
Res            12.00   06/01/99         $500.00      $262,342.00        $50,000.00       $50,000.00           $0.00  2nd    Alameda
Res            10.00   07/01/00       $5,068.88            $0.00       $579,300.00      $579,300.00           $0.00  1st    San Fran
Comm           12.00   10/01/02       $1,562.50            $0.00       $150,000.00       $96,397.88           $0.00  1st    San Fran
Res            11.00   04/01/99      $11,661.04      $579,300.00     $1,320,000.00    $1,320,000.00           $0.00  2nd    San Fran
Comm           11.00   10/01/07       $6,190.11            $0.00       $650,000.00      $639,520.54           $0.00  1st    San Fran
Res             8.00   11/01/27       $1,834.42            $0.00       $250,000.00      $242,349.29           $0.00  1st    Sn Mateo
Land           11.00   09/01/99       $3,354.17            $0.00       $350,000.00      $350,000.00           $0.00  1st    Stanisls
Land           11.00   12/01/00      $10,273.34            $0.00     $1,072,000.00      $573,927.16           $0.00  1st    Stanisls
Res            11.00   03/01/00       $1,126.59      $579,300.00       $950,700.00      $702,243.35           $0.00  2nd    San Fran
Res            11.00   05/01/00       $8,720.83            $0.00       $910,000.00      $910,000.00           $0.00  1st    San Fran
Res            11.00   05/01/00       $9,132.92      $910,000.00       $953,000.00    $2,330,575.84           $0.00  2nd    San Fran
Comm           11.00   12/01/00      $16,500.00            $0.00     $1,800,000.00    $1,800,000.00           $0.00  1st    S Clara
Res            12.00   03/01/01      $12,336.18            $0.00     $1,210,000.00    $1,198,968.08     $161,061.42  1st    Marin
Comm           10.50   03/01/01      $17,937.50    $3,753,523.00     $2,050,000.00    $2,800,000.00           $0.00  2nd    Sn Mateo
Comm           12.00   06/01/01       $8,500.00            $0.00       $850,000.00      $850,000.00           $0.00  1st    San Fran
Land           11.00   01/01/01      $16,500.00      $363,035.00     $1,800,000.00    $1,440,202.18           $0.00  2nd    Stanisls
Land           11.00   07/01/01      $23,833.33      $358,116.00     $2,600,000.00    $2,600,000.00           $0.00  2nd    Stanisls
Res           10.875   02/01/01       $2,670.05      $264,025.00       $950,000.00      $950,000.00           $0.00  2nd    Sn Mateo
Comm           12.00   06/01/01       $6,742.08      $850,000.00     $1,028,095.22    $1,027,918.23           $0.00  2nd    San Fran
Res            10.50   09/01/01       $6,453.13      $454,885.00       $737,500.00      $737,500.00           $0.00  2nd    Lake
Res.           10.25   09/01/09       $7,616.86      $668,433.00       $850,000.00      $844,321.50           $0.00  2nd    S Clara
Comm           13.75   11/01/99       $2,044.77      $156,750.00       $175,500.00      $164,542.39           $0.00  2nd    Alameda
Apts            12.5   03/14/00         $435.55        $5,733.00        $38,727.14       $37,976.86           $0.00  2nd    Con Cost
Res            12.00   05/01/01      $11,469.28    $2,968,393.00     $3,297,500.00    $3,044,045.72           $0.00  1st    Placer
Land           11.00   11/01/01       $2,034.55                0       $221,951.22      $190,243.90           $0.00  3rd    Stanisls
Comm           10.25   12/01/01      $13,158.44            $0.00     $1,185,000.00    $1,540,500.00           $0.00  1st    Con Cost
Comm           11.00   01/01/02       $5,041.67      $495,031.00       $550,000.00      $549,081.32           $0.00  2nd    San Fran
Comm           11.50   02/01/05       $4,065.88      $492,978.13       $400,000.00      $397,308.35           $0.00  2nd    San Fran
Res            11.50   09/01/01       $7,272.16      $539,843.20     $1,292,800.00      $828,526.35           $0.00  2nd    Sn Mateo
Comm           11.50   03/01/02      $12,496.45            $0.00     $1,303,977.27    $1,303,977.27           $0.00  1st    San Fran

</TABLE>

<PAGE>



SCHEDULE IV    CONT'D

                              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.      Int.     Final         Periodic      Prior Liens       Face Amt. of       Carrying       Principal    Type    Geographic
             Rate    Maturity      Payment                       Loans (original   amount of Loans     amt of     of      County
               %     Date           Terms                            amount)                           Loans       Lien   Location
                                                                                                     subject to
                                                                                                    Delinquency
                                                                                                    Principal or
                                                                                                      Interest
=========== ======== =========== ============= ================= ================= ================ ============= ======= ==========

Comm         11.50   03/01/02      $12,468.09     $1,303,977.00     $1,696,022.72    $1,325,982.85         $0.00   2nd      San Fran
Land         11.50   07/01/01       $4,557.93     $2,600,000.00       $475,609.76      $475,609.76         $0.00   2nd      Stanisls
Comm         12.50   04/01/02      $30,208.33             $0.00     $2,900,000.00    $2,900,000.00         $0.00   1st      Sn Mateo
Res          12.00   05/01/01       $4,099.50     $3,297,500.00       $409,949.98      $409,949.98         $0.00   2nd      Placer
Res          12.00   11/01/01       $7,012.55             $0.00       $800,000.00      $208,267.68         $0.00   1st      San Fran
Comm         11.50   04/01/02      $21,083.33             $0.00     $2,200,000.00    $2,200,000.00         $0.00   2nd      San Fran
Apts         12.00   05/01/01      $38,558.51             $0.00     $3,939,310.37    $3,909,456.52         $0.00   1st      San Fran
Res          12.00   11/01/01       $7,850.52       $823,674.00       $912,000.00      $839,556.18         $0.00   2nd      Marin
Apts         11.50   06/01/02       $3,354.17     $2,218,285.00       $350,000.00      $350,000.00         $0.00   3rd      San Fran
Comm         12.00   12/01/01      $28,031.03             $0.00     $4,970,000.00    $3,017,567.51         $0.00   1st      L Angels
Comm         12.00   12/01/01      $25,500.00             $0.00     $2,550,000.00    $1,147,500.00         $0.00   1st      Con Cost
Comm         10.50   06/01/06       $7,089.23             $0.00       $775,000.00      $773,111.23         $0.00   1st      Sn Mateo
Res          10.50   07/01/05      $11,891.61       $771,550.00     $1,300,000.00    $1,297,371.35         $0.00   2nd      S Clara
Comm         11.00   07/01/01       $5,500.00             $0.00       $600,000.00      $600,000.00         $0.00   1st      San Fran
Res          11.00   02/01/02       $7,376.67       $730,284.00     $1,661,035.00      $927,603.93         $0.00   2nd      Sn Mateo
Apts         12.00   08/01/03      $40,000.00             $0.00     $4,000,000.00    $4,000,000.00         $0.00   1st      San Fran
Comm         12.00   04/01/02      $18,966.90     $2,200,000.00     $3,300,000.00    $2,129,931.40         $0.00   2nd      San Fran
Res          11.00   09/01/04      $12,799.48             $0.00     $2,175,000.00    $1,497,494.68         $0.00   1st      Sn Mateo
Res          11.50   09/01/02      $13,886.25       $260,792.00     $1,449,000.00    $1,449,000.00         $0.00   2nd      Sn Mateo
Res          12.00   03/01/01      $13,250.00             $0.00     $1,325,000.00    $1,325,000.00         $0.00   1st      Marin
Land         12.00   09/01/01       $7,500.00             $0.00       $750,000.00      $750,000.00         $0.00   1st      S Clara
Res          12.00   11/01/01      $20,950.64     $1,320,000.00     $3,680,000.00    $2,308,285.94         $0.00   2nd      San Fran
Res          12.00   10/01/03      $13,000.00       $785,819.00     $1,300,000.00    $1,300,000.00         $0.00   2nd      Sn Mateo
Apts         12.50   04/01/02       $1,089.38     $4,000,000.00       $289,855.07      $161,176.74         $0.00   2nd      San Fran
Comm         13.00   11/01/02       $2,220.84       $310,381.00       $205,000.00      $205,000.00         $0.00   2nd      Alameda
Comm         12.50   01/01/04         $246.95       $845,350.00       $692,000.00       $59,267.00         $0.00   2nd      San Fran
Res          12.50   11/01/01       $5,447.92     $1,751,599.00       $523,000.00      $425,181.52         $0.00   3rd      Marin
Land         14.00   01/01/02         $875.78             $0.00     $5,000,000.00      $563,000.00         $0.00   1st      Alameda
                                 ------------- ----------------- ----------------- ---------------- ------------- ------  ----------
                     TOTALS        628,693.26     37,584,916.33     82,012,791.20    68,570,992.11    304,287.02
                                 ============= ================= ================= ================ =============
</TABLE>

Notes:

o        None of the above loans are considered "impaired". Therefore, none
         of them  have  been  written  down.  The  allowance  for  doubtful
         accounts  includes  $1,291,151  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,
                            ----------------------------------------------------

                                          2000             1999          1998
                                      ----------        ---------     ----------

Balance at beginning of year         $35,693,148      $31,905,958    $25,304,989
                                   ---------------    ------------  ------------
Additions during period:
  New loans                           49,289,289       24,030,920     20,863,807
  Other                                        0                0              0
                                   ---------------    ------------  ------------
         Total Addi                    49,289,28       24,030,920     20,863,807
                                   ---------------    ------------  ------------


Deductions during period:
  Collections of principal            16,411,445       20,243,730     14,262,838
  Foreclosures                                 0                0              0
  Cost of loans sold                           0                0              0
  Amortization of Premium                      0                0              0
  Other                                        0                0              0
                                   ---------------    ------------- ------------
         Total Deductions             16,411,445       20,243,730     14,262,838
                                   ---------------    ------------- ------------

Balance at close o                   $68,570,992      $35,693,14     $31,905,958
                                   ===============    ==========    ============



<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 16 years through the following CPA firms: 1993-1998 - Parodi
& Cropper,  CPA's; 1999 - Caporicci,  Cropper & Larson,  LLP and 2000 - 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. The Croppers continue to perform audit and
accounting  services  to the  General  Partners  of the  partnership  and  their
affiliates.

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 principals,  practices or
financial status disclosures.



<PAGE>


                                    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 four General Partners of which two individuals are D.
Russell Burwell and 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.  The Burwell's are 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, a General Partner of the Partnership.

Effective February 7, 2000, Redwood  Mortgage Corp., an affiliate of the General
Partners   has  been  admitted,  pursuant to  Paragraph  12.4 (d) of the Limited
Partnership  agreement, as  an  additional  General  Partner of the Partnership.
Redwood Mortgage  Corp is a licensed  real  estate  broker  incorporated in 1978
under the laws of the State of California, and is engaged  primarily in the bus-
iness of arranging and servicing mortgage loans.

After 25 years of active  participation  in the  mortgage  business,  D. Russell
Burwell,  our founder and a General  Partner of the  Partnership  has decided to
retire  effective  September 30, 2001.  "Russ" has enjoyed a long and successful
career.  His original  business model, upon which our Partnership has its roots,
has withstood the test of time through varying  economic  cycles.  Collectively,
the various Redwood Mortgage Investors  Partnerships (I-VIII) have grown from an
idea to over  $110,000,000  in assets and  produced  excellent  results  for the
Limited Partners. Through December 31, 2000 and under Russ' stewardship, Redwood
Mortgage   Investor's  VIII  raised   $49,983,150  in  Limited  Partner  Capital
contributions  and at December 31, 2000 had  $53,180,209  in  remaining  Limited
Partner Capital.

Over  the  last  few  years,   Russ  has  been  passing  along  his  duties  and
responsibilities  to the  remaining  General  Partners.  The  remaining  General
Partners are Mr. Michael Burwell,  Gymno Corporation and Redwood Mortgage Corp.,
both California Corporations.  Mr. Michael Burwell has been a General Partner of
Redwood  Mortgage  Investors  VIII since its  inception and has been employed by
Redwood  Mortgage  Corp,  an  affiliate  of the  Partnership,  since  1979.  The
Partnership  through the  remaining  General  Partners and the  employees of its
affiliate Redwood Mortgage Corp., are well prepared for Russ' departure and look
forward to emulating  the steady  consistent  returns that the Limited  Partners
have enjoyed during Russ' tenure.

Mr. D. Russell  Burwell  is  providing  this  notification pursuant to Article 8
Section  8.02  of the  Limited  Partnership  Agreement.  The  remaining  General
Partners have elected to continue the business of the  Partnership  as described
in Article 9 Section 9.01(d) of the Limited Partnership Agreement.


<PAGE>


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,  pages 6-7, under the section  "Compensation of the General Partners
and the Affiliates",  which is incorporated by reference.  Such  compensation is
summarized below.

The following  compensation has been paid to the General Partners and Affiliates
for  services  rendered  during  the year  ended  December  31,  2000.  All such
compensation  is in compliance  with the guidelines and limitations set forth in
the Prospectus.

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

I. Redwood Mortgage          Mortgage Servicing Fee for
   Corp.                     servicing loans                           $505,823

General Partners             Asset Management Fee
&/or Affiliates              for managing assets                        $60,595

General Partners             1% interest in profits                     $42,875
                             Less allocation of syndication costs        $2,509
                                                                   -------------
                                                                        $40,366

General Partners             Portion of early withdrawal penalties
 &/or Affiliates             applied to reduce Formation Loan           $19,883


II. FEES PAID BY BORROWERS ON MORTGAGE  LOANS PLACED BY COMPANIES  RELATED
    TO THE GENERAL  PARTNERS WITH THE  PARTNERSHIP  (EXPENSES OF BORROWERS
    NOT OF THE PARTNERSHIP)

Redwood Mortgage         Mortgage  Brokerage  Commissions  for services in
Corp.                    connection with the review, selection, evaluation,
                         negotiation, and extension of the loans paid by the
                         borrowers and not by the Partnership        $1,877,921

Redwood Mortgage         Processing and Escrow Fees for services in connection
Corp.                    with notary, document preparation,credit investigation,
                         and escrow fees payable by the borrowers and not
                         by the Partnership                             $28,452

Gymno Corporation,       Reconveyance Fee                                $1,011
Inc.

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.                                       $113,580




<PAGE>


Item 12 - Security Ownership of Certain Beneficial Owners and Management

The  General  Partners  are to 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".


                                     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.

B.       No reports on From 8-K were filed during the last quarter of the
         period for which this report is filed.


<PAGE>



3.  Exhibits.

   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  Commercial  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
        24.1              Consent of Armanino McKenna, LLP
        24.3              Consent of McCutchen, Doyle, Brown & Enersen, LLP



All of these  exhibits  were  previously  filed as the exhibits to  Registrant's
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 7, 2000
         relating  to a change  in  accounting  firms and the  admittance  of an
         additional General Partner.  Another Form 8-K was filed on February 13,
         2001,  relating to the subsequent change in accounting firms. (see Item
         9 and 10 above, respectively)

C.       See A (3) above.

D.       See A (2) above.   Additional  reference  is  made  to  the  Prospectus
         (filed as part of the  S-11)dated   August 31, 2000 for financial  data
         related to Gymno Corporation, and Redwood  Mortgage Corp., The  GeneraL
         Partners.



<PAGE>


                                   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,
2001.


REDWOOD MORTGAGE INVESTORS VIII


By:       /S/ D. Russell Burwell
          -----------------------------------
          D. Russell Burwell, General Partner


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


By:       Gymno Corporation, General Partner


          By:     /S/ D. Russell Burwell
                  -----------------------------
                  D. Russell Burwell, President


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


By:       Redwood Mortgage Corp.


          By:     /S/ D. Russell Burwell
                  ----------------------------
                  D. Russell Burwell, President


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


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacity indicated on the 26th day of March, 2001.


Signature                                 Title                        Date


/S/ D. Russell Burwell
----------------------
D. Russell Burwell                    General Partner            March 26, 2001


/S/ Michael R. Burwell
----------------------
Michael R. Burwell                    General Partner            March 26, 2001



/S/ D. Russell Burwell
----------------------
D. Russell Burwell         President of Gymno Corporation,       March 26, 2001
                           (Principal Executive Officer);
                           Director of Gymno Corporation


/S/ Michael R. Burwell
----------------------
Michael R. Burwell         Secretary/Treasurer of Gymno          March 26, 2001
                           Corporation (Principal Financial
                                    and Accounting Officer);
                           Director of Gymno Corporation



/S/ D. Russell Burwell
----------------------
D. Russell Burwell         President of Redwood Mortgage         March 26, 2001
                           Corp., (Principal Executive
                           Officer); Director of Redwood
                                 Mortgage Corp.


/S/ Michael R. Burwell
----------------------
Michael R. Burwell         Secretary/Treasurer of Redwood        March 26, 2001
                           Mortgage Corp. (Principal
                           Financial and Accounting
                                   Officer);
                           Director of Redwood Mortgage Corp.