UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

       (Mark One)
       [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2005

                                       OR

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

         For the transition period from ______________ to ______________

                        Commission File Number: 000-19992

                         REDWOOD MORTGAGE INVESTORS VII,
                        a California Limited Partnership
             (Exact name of registrant as specified in its charter)


               California                                      94-3094928
(State or other jurisdiction of incorporation              (I.R.S. Employer
           or organization)                               Identification No.)


900 Veterans Blvd., Suite 500, Redwood City, CA                94063-1743
   (Address of principal executive offices)                    (Zip Code)

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

                                 NOT APPLICABLE
             (Former name, former address and former fiscal year, if
                           changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes            XX             No
          --------------             -------------

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

Yes                           No          XX
          --------------             -------------


                                       1
<PAGE>

Part I - Item 1.    FINANCIAL STATEMENTS

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                 JUNE 30, 2005 and DECEMBER 31, 2004 (unaudited)


                                     ASSETS
<TABLE>
<S>  <C>                                                                     <C>               <C>
                                                                             June 30,          December 31,
                                                                               2005                2004
                                                                          ---------------    ---------------

     Cash and cash equivalents                                              $    744,852       $    346,393
                                                                          ---------------    ---------------

     Loans
        Loans, secured by deeds of trust                                       6,193,151          7,388,478
        Loans, unsecured, net discount of $96,690 and $107,433 for
          June 30, 2005 and December 31, 2004, respectively                      243,475            238,484
                                                                          ---------------    ---------------
                                                                               6,436,626          7,626,962
        Allowance for loan losses                                              (740,984)          (745,476)
                                                                          ---------------    ---------------
              Net loans                                                        5,695,642          6,881,486

     Interest and other receivables
        Accrued interest and late fees                                           122,701            190,105
        Advances on loans                                                            714              8,188
        Prepaid expenses                                                             527                  -
                                                                          ---------------    ---------------
              Total interest and other receivables                               123,942            198,293
                                                                          ---------------    ---------------

     Investment in limited liability company                                     876,940                  -
     Real estate held for sale, net                                            1,825,548          1,782,182
                                                                          ---------------    ---------------

              Total assets                                                  $  9,266,924       $  9,208,354
                                                                          ===============    ===============


                        LIABILITIES AND PARTNERS' CAPITAL

     Liabilities

       Accounts payable                                                     $        477       $      4,951
       Payable to affiliate                                                       73,636             74,987
                                                                          ---------------    ---------------
              Total liabilities                                                   74,113             79,938
                                                                          ---------------    ---------------

     Partners' capital
        Limited partners' capital, subject to redemption                       9,180,838          9,116,443
        General partners' capital                                                 11,973             11,973
                                                                          ---------------    ---------------
              Total partners' capital                                          9,192,811          9,128,416
                                                                          ---------------    ---------------

              Total liabilities and partners' capital                       $  9,266,924       $  9,208,354
                                                                          ===============    ===============
</TABLE>

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


                                       2
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                              STATEMENTS OF INCOME
      FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005 and 2004 (unaudited)

<TABLE>
<S>                                                            <C>            <C>                 <C>            <C>
                                                                THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                     JUNE 30,                           JUNE 30,
                                                          ------------------------------     ------------------------------

                                                               2005           2004                2005           2004
                                                            -----------    -----------         -----------    -----------
  Revenues
     Interest on loans                                        $148,797       $192,253            $320,055       $395,472
     Interest - interest bearing accounts                        1,040            463               1,235          1,806
     Late fees                                                   1,824          5,990               3,748         10,588
     Other                                                         558          8,698               1,670         17,192
                                                            -----------    -----------         -----------    -----------
                                                               152,219        207,404             326,708        425,058
                                                            -----------    -----------         -----------    -----------
  Expenses
     Mortgage servicing fees                                    14,259         19,631              31,963         39,762
     Interest expense                                                -            336                   -          1,068
     Clerical costs through Redwood Mortgage Corp.               2,943          4,598               6,786          9,416
     Asset management fees                                       8,599          8,498              17,182         16,987
     Provisions for (recovery of) losses on loans and
       real estate held for sale                              (28,002)         14,898            (37,865)         26,253
     Professional services                                      14,345          8,810              25,524         29,773
     Printing, supplies and postage                              2,875          1,996               4,431          4,286
     Other                                                       1,852         10,192               4,243         18,972
                                                            -----------    -----------         -----------    -----------
                                                                16,871         68,959              52,264        146,517
                                                            -----------    -----------         -----------    -----------
  Net income                                                  $135,348       $138,445            $274,444       $278,541
                                                            ===========    ===========         ===========    ===========

  Net income:    to general partners (1%)                        1,353          1,384               2,744          2,785
                 to limited partners (99%)                     133,995        137,061             271,700        275,756
                                                            -----------    -----------         -----------    -----------
                                                              $135,348       $138,445            $274,444       $278,541
                                                            ===========    ===========         ===========    ===========

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

        -where income is compounded and retained              $     15       $     15            $     30       $     34
                                                            ===========    ===========         ===========    ===========

        -where partner receives income in monthly
           distributions                                      $     15       $     15            $     30       $     34
                                                            ===========    ===========         ===========    ===========
</TABLE>



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


                                       3
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
           FOR THE SIX MONTHS ENDED JUNE 30, 2005 and 2004 (unaudited)

<TABLE>
<S>  <C>                                                                           <C>               <C>
                                                                                   SIX MONTHS ENDED JUNE 30,
                                                                            --------------------------------------

                                                                                   2005              2004
                                                                              ---------------    --------------
     Cash flows from operating activities
       Net income                                                               $    274,444       $   278,541
       Adjustments to reconcile net income to net cash provided
          by operating activities
             Provisions for (recovery of) losses on loans and real estate           (37,865)            26,253
             Early withdrawal penalty credited to income                             (1,404)           (1,061)
             Amortization of discount on unsecured loans                            (10,743)          (10,743)
             Change in operating assets and liabilities
               Accrued interest and advances on loans                                 14,405         (109,049)
               Accounts payable and other liabilities                                (5,825)            11,197
               Prepaid expenses                                                        (527)                 -
                                                                              ---------------    --------------

     Net cash provided by operating activities                                       232,485           195,138
                                                                              ---------------    --------------

     Cash flows from investing activities
       Principal collected on loans                                                2,754,099         1,628,777
       Loans originated                                                          (2,335,000)       (1,788,527)
       Payments on real estate held for sale                                         (9,994)            17,010
       Investment in limited liability company                                      (40,238)                 -
       Proceeds from (payments on) unsecured loans                                     5,752           (2,689)
                                                                              ---------------    --------------

     Net cash provided by (used in) investing activities                             374,619         (145,429)
                                                                              ---------------    --------------

     Cash flows from financing activities
       Net decrease in line of credit                                                      -           350,000
       Partners' withdrawals                                                       (208,645)         (244,792)
                                                                              ---------------    --------------
     Net cash provided by (used in) financing activities                           (208,645)           105,208
                                                                              ---------------    --------------

     Net increase in cash and cash equivalents                                       398,459           154,917

     Cash and cash equivalents - beginning of period                                 346,393           321,114
                                                                              ---------------    --------------

     Cash and cash equivalents - end of period                                       744,852           476,031
                                                                              ===============    ==============

     Cash payments for interest                                                 $          -       $     1,068
                                                                              ===============    ==============
</TABLE>



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


                                       4
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 1 - GENERAL

     In the  opinion of the  management  of the  Partnership,  the  accompanying
unaudited  financial  statements contain all adjustments,  consisting of normal,
recurring  adjustments,  necessary to present  fairly the financial  information
included therein.  These financial statements should be read in conjunction with
the audited financial statements included in the Partnership's Form 10-K for the
fiscal year ended  December  31,  2004 filed with the  Securities  and  Exchange
Commission.  The results of  operations  for the six month period ended June 30,
2005 are not necessarily  indicative of the operating results to be expected for
the full year.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Loans, secured by deeds of trust

     At June 30, 2005 and  December 31, 2004 there was one loan  categorized  as
impaired  by the  Partnership  in the  total  aggregate  amount of  $96,716.  In
addition,  the impaired loan had accrued  interest and advances  totaling $4,421
and $6,936 at June 30, 2005 and December 31, 2004, respectively.  In 2004 it was
determined  that a reduction  in carrying  value was no longer  required on this
loan. The average  recorded  investment in the impaired loan was $96,716 for the
six month period ended June 30, 2005 and the year ended December 31, 2004.

     As of June 30,  2005 the  Partnership  had a combined  total of three loans
with  outstanding  principal  balances of $161,511  that were either past due 90
days or more in  interest  payments  and/or  past  maturity.  These  three loans
included  two  loans  totaling  $64,795  that were  past  maturity  and one loan
totaling  $96,716 that was past due 90 days or more in interest  payments.  This
compares to a combined total of five loans totaling  $1,049,730 that were either
past  due 90 days or  more in  interest  payments  and/or  past  maturity  as of
December 31, 2004.  These five loans  included two loans  totaling  $64,850 that
were past maturity and three loans totaling  $984,880 that were past due 90 days
or more in  interest  payments.  A past  maturity  loan is a loan in  which  the
principal and/or any accrued  interest is due and payable,  but the borrower has
failed  to  make  such  payment  of  principal  and/or  accrued  interest.   The
Partnership  considers  the June 30,  2005  past due 90 days or more  loan to be
impaired.  In the opinion of management,  the remaining  delinquent  and/or past
maturity loans have sufficient collateral to cover the amount outstanding to the
Partnership and are still accruing interest on these loans.

Allowance for loan losses

     The  composition  of the  allowance for loan losses as of June 30, 2005 and
December 31, 2004 was as follows:

                                              June 30,          December 31,
                                                2005                2004
                                          ----------------    ----------------

      Specified loans                       $     290,464       $     290,464
      General                                     221,580             231,443
      Unsecured loans                             228,940             223,569
                                          ----------------    ----------------
                                            $     740,984       $     745,476
                                          ================    ================


                                       5
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

     Activity in the  allowance  for loan losses is as follows for the six month
period ended June 30, 2005 and the year ended December 31, 2004:

                                               June 30,          December 31,
                                                 2005               2004
                                            ---------------    ---------------

      Beginning balance                       $    745,476       $    680,469
      Provision for loan losses                          -             65,007
      Recoveries                                   (4,492)                  -
                                            ---------------    ---------------
                                              $    740,984       $    745,476
                                            ===============    ===============

Investment in limited liability company

     Investment in limited  liability company ("LLC") is accounted for using the
equity  method as one of the  Partnership's  general  partners  is the  managing
member of the LLC. In February,  2005 the Partnership acquired an 8% interest in
Larkin Property Company, LLC (see note 5).

Income taxes

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

Reclassifications

     Certain reclassifications,  not affecting previously reported net income or
total  partners'  capital,  have been made to the  previously  issued  financial
statements to conform to the current year classification.

Profits and losses

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

Management estimates

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


                                       6
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES

     The following are commissions  and fees,  which will be paid to the general
partners.

Mortgage brokerage commissions

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

Mortgage servicing fees

     Monthly  mortgage  servicing  fees of up to 1/8 of 1% (1.5%  annual) of the
unpaid  principal  are paid to  Redwood  Mortgage  Corp.,  based  on the  unpaid
principal balance of the loan portfolio,  or such lesser amount as is reasonable
and customary in the geographic area where the property securing the mortgage is
located. Once a loan is categorized as impaired,  mortgage servicing fees are no
longer  accrued.  Additional  service fees are recorded  upon the receipt of any
subsequent payments on impaired loans.

Asset management fees

     The general  partners  receive monthly fees for managing the  Partnership's
loan  portfolio and operations of up to 1/32 of 1% of the "net asset value" (3/8
of 1% annually).

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.

Operating expenses

     Redwood Mortgage Corp., an affiliate of the general partners, is reimbursed
by the Partnership for all operating  expenses actually incurred by it on behalf
of the Partnership,  including  without  limitation,  out-of-pocket  general and
administration  expenses of the  Partnership,  accounting and audit fees,  legal
fees and  expenses,  postage  and  preparation  of reports to limited  partners.
Redwood Mortgage Corp. waived  reimbursement of approximately  $755 in operating
expenses during the second quarter of 2005.


NOTE 4 - REAL ESTATE HELD FOR SALE

     In 1993 the  Partnership,  together  with two  other  affiliates,  acquired
through  foreclosure a parcel of land located in East Palo Alto, CA, which is on
the market for sale.  The general  partners  believe that this property is worth
considerably more than its carrying value, but it may take a considerable amount
of  additional  time to sell the  property and realize its full  potential.  The
property is unique in that it may only be utilized for  commercial or industrial
uses. Until recently,  land sales activity has been slow. Interest in land sales
for commercial sites has been improving.  As of June 30, 2005 the  Partnership's
investment in this property was $62,720.


                                       7
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 4 - REAL ESTATE HELD FOR SALE (continued)

     In December  2004, the  Partnership  acquired  undeveloped  parcels of land
through a deed in lieu of foreclosure. The land is located in Stanislaus County,
California. It is comprised of three separate lots, which total approximately 14
acres.  The parcels are  currently for sale and are in contract with a potential
buyer. As of June 30, 2005 the Partnership's investment in this property totaled
$1,762,828,  including  accrued  interest  and  advances,  as of the date of the
acquisition.  Management believes that the full value of this investment will be
recovered from the eventual sale of the property based upon its current estimate
of the fair value of the property  and the pending  contract  sales price.  This
property is jointly owned by two other affiliated partnerships.

     In  February,  2005  the  Partnership  acquired  another  property  through
foreclosure (see Note 5).

     The following  schedule  reflects the costs of real estate acquired through
foreclosure  and the recorded  reductions  to estimated  fair values,  including
estimated costs to sell as of June 30, 2005 and December 31, 2004:

                                               June 30,          December 31,
                                                2005                2004
                                           ----------------    ---------------
    Costs of properties                      $   1,825,548       $  1,815,555
    Reduction in value                                   -           (33,373)
                                           ----------------    ---------------
       Real estate held for sale, net        $   1,825,548       $  1,782,182
                                           ================    ===============


NOTE 5 - INVESTMENT IN LIMITED LIABILITY COMPANY

     In February,  2005, the Partnership  acquired a multi-unit property through
foreclosure.  This  property  is  located  in an  upscale  neighborhood  in  San
Francisco.  At the time the  Partnership  took  ownership of the  property,  the
Partnership's   investment  totaled  $836,702  including  accrued  interest  and
advances. This property is jointly owned by three other affiliated Partnerships.
Upon acquisition the Partnership  transferred its interest (principally land and
building) to a limited liability company ("LLC"),  Larkin Property Company,  LLC
("Larkin"),  which is 8% owned by the Partnership,  and 92% owned by three other
affiliates. No allowance for loss has been set aside as management believes that
the fair value of the property exceeds the combined Partnerships'  investment in
the property.  The Partnership intends to undertake  additional  improvements to
the property. As of June 30, 2005 the Partnership has capitalized  approximately
$40,238 in costs related to this property.


NOTE 6 - BANK LINE OF CREDIT

     The  Partnership has a bank line of credit secured by its loan portfolio of
up to $2,500,000 at .25% over prime.  There were no balances  outstanding  as of
June 30, 2005 and December 31, 2004 and the interest rate was 6.50% (6.25% prime
plus  .25%) at June 30,  2005.  This line of credit  expires  December  2007 and
requires the Partnership to meet certain financial covenants. To the best of its
knowledge, the Partnership was in compliance with all loan covenants for the six
month period ended June 30, 2005 and for the year ended  December 31, 2004.  The
Partnership anticipates that the line of credit will be renewed at its maturity.
In the event that a renewal is not  forthcoming,  the Partnership has the option
to convert  the line of credit to a three year term loan  beginning  December of
2007.


                                       8
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 7 - NON-CASH TRANSACTIONS

     During the six month period ended June 30, 2005 the Partnership  foreclosed
on a property  (see Note 5),  which  resulted in an increase  in  investment  in
limited  liability  company  of  $836,702  and a decrease  in loans  receivable,
accrued interest,  advances,  and late charge  receivable of $776,228,  $51,598,
$5,876 and $3,000, respectively.


NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following  methods and assumptions were used to estimate the fair value
of financial instruments:

     Secured loans had a carrying value of $6,193,151 and $7,388,478 at June 30,
2005 and  December  31,  2004,  respectively.  The fair value of these  loans of
$6,318,437 and $7,531,668, respectively, was estimated based upon projected cash
flows discounted at the estimated  current interest rates at which similar loans
would be made. The applicable amount of the allowance for loan losses along with
accrued  interest and advances  related  thereto  should also be  considered  in
evaluating the fair value versus the carrying value.


NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS

     Most loans are  secured by  recorded  deeds of trust.  At June 30, 2005 and
December 31, 2004 there were 26 and 28 secured loans outstanding,  respectively,
with the following characteristics:
<TABLE>
<S> <C>                                                                       <C>               <C>
                                                                              June 30,          December 31,
                                                                                2005               2004
                                                                          ----------------    ---------------
    Number of secured loans outstanding                                                26                 28
    Total secured loans outstanding                                         $   6,193,151       $  7,388,478

    Average secured loan outstanding                                        $     238,198       $    263,874
    Average secured loan as percent of total secured loans                          3.85%              3.57%
    Average secured loan as percent of partners' capital                            2.59%              2.89%

    Largest secured loan outstanding                                        $     725,000       $    800,000
    Largest secured loan as percent of total secured loans                         11.71%             10.83%
    Largest secured loan as percent of partners' capital                            7.89%              8.76%
    Largest secured loan as percent of total assets                                 7.82%              8.69%

    Number of counties where security is located (all California)                      13                 13

    Largest percentage of loans in one county                                      20.14%             24.64%

    Average secured loan to appraised value of security based on
        appraised values and prior liens at time loan was consummated              69.19%             71.30%

    Number of secured loans in foreclosure status                                    None                  1
    Amount of secured loans in foreclosure status                                    None       $    776,228
</TABLE>

     Over  time,  loans  may  exceed  10%  of  the  secured  loan  portfolio  or
Partnership assets as the loan portfolio and assets of the Partnership  decrease
due to limited partner withdrawals and/or loan payoffs.


                                       9
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS (continued)

     The  following  categories  of secured loans were held at June 30, 2005 and
December 31, 2004:
<TABLE>
<S> <C>                                                                         <C>              <C>
                                                                                June 30,         December 31,
                                                                                  2005               2004
                                                                             ---------------    ---------------

    First trust deeds                                                          $  5,297,585       $  5,937,736
    Second trust deeds                                                              745,961          1,450,742
    Third trust deeds                                                               149,605                  -
                                                                             ---------------    ---------------
           Total loans                                                            6,193,151          7,388,478
    Prior liens due other lenders at time of loan                                 2,765,378          1,944,172
                                                                             ---------------    ---------------

           Total debt                                                          $  8,958,529       $  9,332,650
                                                                             ===============    ===============

    Appraised property value at time of loan                                   $ 12,947,744       $ 13,089,113
                                                                             ---------------    ---------------

    Total secured loans as percent of appraisals based on appraised
      values and prior liens at time loan was consummated                            69.19%             71.30%
                                                                             ---------------    ---------------

    Secured loans by type of property
        Owner occupied homes                                                   $  2,700,373       $  2,532,045
        Non-owner occupied homes                                                    359,543          1,961,474
        Apartments                                                                  821,716            971,864
        Commercial                                                                2,311,519          1,923,095
                                                                             ---------------    ---------------
                                                                               $  6,193,151       $  7,388,478
                                                                             ===============    ===============
</TABLE>

     Scheduled  maturity  dates of  secured  loans  as of June  30,  2005 are as
follows:

             Year Ending December 31,
           ----------------------------

                       2005                      $     64,795
                       2006                           346,716
                       2007                         1,971,754
                       2008                                 -
                       2009                         2,316,611
                    Thereafter                      1,493,275
                                               ---------------

                       Total                     $  6,193,151
                                               ===============

     The scheduled  maturities for 2005 above include  approximately  $64,795 in
two loans, which were past maturity at June 30, 2005.  Interest payments on both
of these loans were current as of June 30, 2005.


                                       10
<PAGE>

                         REDWOOD MORTGAGE INVESTORS VII
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 2005 (unaudited)


NOTE 9 - ASSET CONCENTRATIONS AND CHARACTERISTICS (continued)

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

     The Partnership has a substantial amount of its loan receivable balance due
on two loans from one borrower. This borrower accounted for approximately 20.13%
of the loan  balance and  approximately  17.53% of interest  revenue for the six
month period ended June 30, 2005.  The value of collateral  securing these loans
was less than the principal balance due under the loans.  Redwood Mortgage Corp.
has provided an indemnity to the Partnership  whereby it has agreed to indemnify
and hold harmless,  the Partnership  from any expenses or losses incurred by the
Partnership  by reason of the  Partnership's  inability to collect all principal
due under the loans after the  Partnership  has exhausted all reserves set aside
for these loans and all remedies  available to it including  foreclosure  of the
underlying collateral. Therefore, these loans are not considered impaired solely
because  the  value  of the  collateral  securing  the  loans  is less  than the
principal balance due to the Partnership.  Neither of these loans is past due 90
days or more on interest payments nor are they past maturity.


NOTE 10 - COMMITMENTS AND CONTINGENCIES

Workout agreements

     The  Partnership  has negotiated a contractual  workout  agreement with one
borrower who is  delinquent in making  payments.  Under the terms of the workout
agreement  the  Partnership  is not  obligated to make any  additional  monetary
advances for the maintenance or repair of the collateral securing the loan as of
June 30, 2005.  As of June 30, 2005 the  Partnership  had one loan under workout
agreement totaling $96,716.

Construction loans

     The Partnership makes construction and  rehabilitation  loans which are not
fully disbursed at loan inception.  The Partnership approves the borrowers up to
a maximum loan balance;  however,  disbursements  are made  periodically  during
completion  phases of the construction or  rehabilitation or at such other times
as  required  under  the  loan  documents.  At  June  30,  2005,  there  were no
undisbursed  loan  funds.  The  Partnership  does not  maintain a separate  cash
reserve to hold the undisbursed obligations, which are intended to be funded.

Legal proceedings

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


                                       11
<PAGE>

Part I - Item 2.

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE PARTNERSHIP

Critical Accounting Policies.

     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 dates and income and  expenses
during  the  reporting  periods.   Such  estimates  relate  principally  to  the
determination of (1) the allowance for loan losses (i.e. the amount of allowance
established  against loans  receivable as an estimate of potential  loan losses)
including   the  accrued   interest  and  advances  that  are  estimated  to  be
unrecoverable  based on estimates of amounts to be collected  plus  estimates of
the value of the  property as  collateral  and (2) the  valuation of real estate
acquired  through  foreclosure.  At June 30, 2005,  the  partnership  owned five
pieces of real property.

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

     If the probable  ultimate  recovery of the carrying  amount of a loan, with
due  consideration  for the fair value of  collateral,  is less than amounts due
according to the  contractual  terms of the loan  agreement and the shortfall in
the amounts due are not  insignificant,  the carrying  amount of the  investment
shall be reduced to the  present  value of future cash flows  discounted  at the
loan's effective interest rate. If a loan is collateral dependent,  it is valued
at the estimated fair value of the related collateral.  If events and or changes
in  circumstances  cause  management  to have  serious  doubts about the further
collectibility  of the  contractual  payments,  a loan  may  be  categorized  as
impaired and interest is no longer accrued.  Any subsequent payments on impaired
loans are applied to reduce the  outstanding  loan  balances  including  accrued
interest and advances.

     Recent  trends in the  economy  have been taken into  consideration  in the
aforementioned  process of arriving at the  allowance  for loan  losses.  Actual
results could vary from the aforementioned provisions for losses.

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

     The Partnership  periodically compares the carrying value of real estate to
expected  undiscounted  future  cash  flows for the  purpose  of  assessing  the
recoverability  of the recorded  amounts.  If the carrying  value exceeds future
undiscounted cash flows, the assets are reduced to estimated fair value.

Forward Looking Statements.

     Certain  statements  in this  Report on Form 10-Q which are not  historical
facts may be considered forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
and  Exchange  Act of 1934,  as  amended,  including  statements  regarding  the
Partnership's expectations,  hopes, intentions, beliefs and strategies regarding
the future.  Forward-looking  statements  include  statements  regarding  future
interest rates and economic  conditions and their effect on the  Partnership and
its assets,  future sales of properties held by the Partnership and the proceeds
from such sales,  trends in the California  real estate market,  estimates as to
the allowance for loan losses,  estimates of future limited partner  withdrawals
and 2005 annualized yield estimates.  Actual results may be materially different
from what is projected by such  forward-looking  statements.  Factors that might
cause such a difference include  unexpected  changes in economic  conditions and
interest rates, the impact of competition and competitive  pricing and downturns
in the real  estate  markets  in which  the  Partnership  has  made  loans.  All
forward-looking  statements and reasons why results may differ  included in this
Form 10-Q are made as of the date hereof,  and we assume no obligation to update
any such forward-looking statement or reason why actual results may differ.


                                       12
<PAGE>

Related Parties.

     The general  partners of the Partnership are Gymno  Corporation and Michael
R. Burwell.  Most  Partnership  business is conducted  through Redwood  Mortgage
Corp.,  an affiliate  of the general  partner,  which  arranges,  services,  and
maintains  the loan  portfolio  for the benefit of the  Partnership.  Michael R.
Burwell  is  President  and Chief  Financial  Officer of Gymno  Corporation  and
Redwood  Mortgage  Corp.  The fees  received  by the  affiliate  to the  general
partners are paid pursuant to the  Partnership  Agreement and are  determined at
the sole  discretion of the affiliate to the general  partner.  In the past, the
affiliate  to  the  general  partners  has  elected  not  to  take  the  maximum
compensation.  The  following is a list of various  Partnership  activities  for
which related parties are compensated.

     o Mortgage  Brokerage  Commissions  For fees in connection with the review,
selection,  evaluation,  negotiation  and extension of loans,  Redwood  Mortgage
Corp.  may  collect an amount  equivalent  to 12% of the loaned  amount  until 6
months  after  the  termination  date  of the  offering.  Thereafter,  the  loan
brokerage  commissions (points) will be limited to an amount not to exceed 4% of
the total Partnership  assets per year. The loan brokerage  commissions are paid
by the  borrowers,  and  thus,  are  not an  expense  of the  Partnership.  Loan
brokerage commissions paid by the borrowers were $53,650 and $49,528 for the six
month  periods  ended June 30,  2005 and 2004,  and  $23,300 and $31,894 for the
three month periods ended June 30, 2005 and 2004, respectively.

     o Mortgage  Servicing Fees Monthly mortgage  servicing fees of up to 1/8 of
1% (1.5% on an annual basis) of the unpaid principal of the Partnership's  loans
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 $31,963 and $39,762 were incurred for the
six month  periods  ended June 30, 2005 and 2004,  and $14,259 and $19,631  were
incurred for the three month periods ended June 30, 2005 and 2004, respectively.

     o Asset  Management  Fees The general  partners  receive  monthly  fees for
managing the Partnership's portfolio and operations up to 1/32 of 1% of the `net
asset  value'  (3/8 of 1% on an annual  basis).  Management  fees to the general
partners of $17,182 and $16,987  were  incurred by the  Partnership  for the six
month periods ended June 30, 2005 and 2004,  and $8,599 and $8,498 were incurred
for the three month periods ended June 30, 2005 and 2004, respectively.

     o Other Fees The Partnership  Agreement  provides that the general partners
may receive other fees such as  processing  and escrow,  reconveyance,  mortgage
assumption and mortgage  extension fees. Such fees are incurred by the borrowers
and are paid to the general partners. Such fees aggregated $4,155 and $5,700 for
the six month  periods  ended June 30, 2005 and 2004,  and $1,121 and $2,309 for
the three month periods ended June 30, 2005 and 2004, respectively.

     o Income and Losses  All  income  and  losses  are  credited  or charged to
partners in relation to their respective Partnership  interests.  The allocation
to the general partners  (combined) shall be a total of 1%, which was $2,744 and
$2,785 for the six month  periods  ended June 30, 2005 and 2004,  and $1,353 and
$1,384 for the three month periods ended June 30, 2005 and 2004, respectively.

     o Operating  Expenses An affiliate  of the  Partnership,  Redwood  Mortgage
Corp.,  is reimbursed by the  Partnership  for all operating  expenses  actually
incurred  by it on  behalf of the  Partnership,  including  without  limitation,
out-of-pocket general and administration expenses of the Partnership, accounting
and audit fees,  legal fees and expenses,  postage and preparation of reports to
limited  partners.   Such  reimbursements  are  reflected  as  expenses  in  the
statements of income.  Operating expenses totaling $6,786 and $9,416 for the six
month periods ended June 30, 2005 and 2004,  and $2,943 and $4,598 for the three
month periods  ended June 30, 2005 and 2004,  respectively,  were  reimbursed to
Redwood Mortgage Corp. In June, 2005, Redwood Mortgage Corp waived approximately
$755 of this cost.

     o  Contributed   Capital  The  general   partners   jointly  and  severally
contributed 1/10 of 1% in cash contributions as proceeds from the offerings were
received  from the limited  partners.  As of June 30,  2005 and 2004,  a general
partner,  Gymno  Corporation,  had contributed  $11,973 as capital in accordance
with Section 4.02(a) of the Partnership Agreement.


                                       13
<PAGE>

     Results of  Operations  - For the six and three  months ended June 30, 2005
and 2004

     Changes in the Partnership's  operating results for the six and three month
periods ended June 30, 2005 versus 2004 are discussed below:
<TABLE>
<S>  <C>                                                      <C>                         <C>
                                                              Changes during the          Changes during the
                                                               six months ended           three months ended
                                                                June 30, 2005                June 30, 2005
                                                                 versus 2004                  versus 2004
                                                             --------------------        --------------------

     Net income increase/(decrease)                               $   (4,097)                 $    (3,097)
                                                                ==============              ===============

       Revenue
          Interest on loans                                       $  (75,417)                 $   (43,456)
          Interest - interest bearing accounts                          (571)                          577
          Late fees                                                   (6,840)                      (4,166)
          Other income                                               (15,522)                      (8,140)
                                                                --------------              ---------------
                                                                  $  (98,350)                 $   (55,185)
                                                                --------------              ---------------

       Expenses
          Mortgage servicing fees                                 $   (7,799)                 $    (5,372)
          Interest expense                                            (1,068)                        (336)
          Clerical costs through Redwood Mortgage Corp.               (2,630)                      (1,655)
          Asset management fees                                           195                          101
          Provisions for losses on loans and real estate             (64,118)                     (42,900)
          Professional services                                       (4,249)                        5,535
          Printing, supplies and postage                                  145                          879
          Other                                                      (14,729)                      (8,340)
                                                                --------------              ---------------
                                                                  $  (94,253)                 $   (52,088)
                                                                --------------              ---------------

                Net income increase/(decrease)                    $   (4,097)                 $    (3,097)
                                                                ==============              ===============
</TABLE>

     The  decrease in interest  on loans of $75,417  (19.07%)  for the six month
period and  $43,456  (22.60%)  for the three  month  period  ended June 30, 2005
versus  June 30,  2004 was  primarily  due to a decrease  in the loan  portfolio
outstanding  to  $6,193,151  as of June 30, 2005 from  $8,451,319 as of June 30,
2004.  Average  loan  portfolio  balance for the six month period ended June 30,
2005 and 2004 was  $6,790,815  and  $8,366,072,  respectively.  The  decrease in
interest is also  attributed to a decrease in the average  interest rate,  which
stood at 9.16% as of June 30, 2005 versus 9.67% as of June 30, 2004.

     The decrease in other  income of $15,522  (90.29%) for the six month period
and $8,140  (93.58%)  for the three month period ended June 30, 2005 versus June
30, 2004 was primarily due to the Partnership no longer receiving non-refundable
option  payments on a property sold in October,  2004.  During the first half of
2004 these option  payments  totaled  $15,429.  The property  against  which the
payments were being made was sold in October, 2004.

     The  decrease in late  charges of $6,840  (64.60%) for the six month period
and $4,166  (69.55%)  for the three month period ended June 30, 2005 versus June
30, 2004 was primarily due to a reduction in delinquent loans to none as of June
30, 2005 from four totaling $1,985,459 as of June 30, 2004.

     The  decrease in interest  bearing  accounts of $571  (31.62%)  for the six
month  period  ended June 30, 2005 versus June 30, 2004 was  primarily  due to a
lower  average  monthly bank  balance of $368,669  during the first half of 2005
versus  $530,232  during the first half of 2004.  The increase of $577 (124.62%)
for the  three  month  period  ended  June 30,  2005  versus  June 30,  2004 was
primarily due to a higher  average  monthly bank balance of $606,896  during the
second quarter of 2005 versus $296,574 during the second quarter of 2004.


                                       14
<PAGE>

     The  decrease in mortgage  servicing  fees of $7,799  (19.61%)  for the six
month period and $5,372  (27.36%) for the three month period ended June 30, 2005
versus June 30,  2004,  was  primarily  due to a decrease in the loan  portfolio
balance to $6,193,151 as of June 30, 2005 from a portfolio balance of $8,451,319
as of June 30, 2004.  Average loan  portfolio  balance for the six month periods
ended June 30, 2005 and 2004 was $6,790,815 and $8,366,072, respectively.

     The  decrease  in  provisions  for losses on loans and real estate held for
sale of $64,118 (244.23%) for the six month period and $42,900 (287.96%) for the
three  month  period  ended  June  30,  2005  versus  June  30,  2004  is due to
management's  determination that the allowance for loan losses of $740,984 as of
June 30, 2005 was adequate to offset  potential  losses on loans.  There were no
foreclosures  as of June  30,  2005 and none  are  expected  in the  foreseeable
future.

     The  decrease in  professional  fees of $4,249  (14.27%)  for the six month
period and increase of $5,535 (62.83%) for the three month period ended June 30,
2005  versus  June 30,  2004 is  primarily  due to  timing of  billings  in 2005
compared to 2004.

     Partnership  capital  increased  by $64,395  during the first six months of
2005 as both earnings  distributions and capital liquidations declined below the
net income  level of the  Partnership.  For the six month  period ended June 30,
2005 limited partners' net income was $271,700 versus earnings  distributions of
$90,284 and  capital  liquidations  of  $117,020,  which  totaled  $207,304,  as
compared  to  limited   partners'  net  income  of  $275,756   versus   earnings
distributions  of $95,247 and capital  liquidations  of $147,820,  which totaled
$243,067 for the corresponding period in 2004. During the second quarter of 2005
limited  partners'  net income was $133,995  versus  earnings  distributions  of
$45,025 and capital liquidations of $42,791,  which totaled $87,816, as compared
to limited  partners' net income of $137,061  versus earnings  distributions  of
$47,050 and capital  liquidations  of $80,212,  which  totaled  $127,262 for the
corresponding  period in 2004. Earnings and capital liquidations are a factor of
limited partner elections and currently limited partners seeking liquidations of
earnings or their capital account continues to decline.  Limited partner income,
which has  continued  to be  higher  than  earnings  distributions  and  capital
liquidations  for the past  several  quarters,  has grown the limited  partners'
capital.

     The decrease in clerical costs of $2,630  (27.93%) for the six month period
and $1,655  (35.99%)  for the three month period ended June 30, 2005 versus June
30, 2004 is primarily due to lower clerical costs  servicing the Partnership and
partial  costs,  approximately  $755,  for June,  2005  being  waived by Redwood
Mortgage Corp.

     The decrease in interest  expense of $1,068 (100%) for the six month period
and $336 (100%) for the three month  period  ended June 30, 2005 versus June 30,
2004,  is due to non-usage of the line of credit  during the first half of 2005.
Average line of credit usage during the six and three month  periods  ended June
30, 2005 was $0 and $0 versus an average  use of $50,258 and $31,624  during the
six and three month periods ended June 30, 2004, respectively.

     The decrease in other expense of $14,729  (77.64%) for the six month period
and $8,340  (81.83%)  for the three month period ended June 30, 2005 versus June
30, 2004 was  primarily  due to a reduction  in upkeep costs for the real estate
held for sale properties. The Partnership spent $1,629 during the first half and
$391 during the second  quarter of 2005 versus $15,486 during the first half and
$8,141 during the second quarter of 2004. The real estate held for sale property
that incurred most of the upkeep costs was sold in October, 2004.

     At June 30,  2005 there  were no  outstanding  loans with filed  notices of
default.

     Redwood  Mortgage  Corp.,  an affiliate of the general  partners,  received
mortgage  brokerage  commissions  from loan borrowers of $53,650 and $23,300 for
the six and three month  periods  ended June 30, 2005 as compared to $49,528 and
$31,894 for the six and three month periods ended June 30, 2004. The increase of
$4,122 for the six month  period ended June 30, 2005 versus June 30, 2004 is due
to more loans that were funded totaling $2,335,000 and $1,788,527, respectively.
The  decrease  of $8,594 for the three month  period  ended June 30, 2005 versus
June 30,  2004 is  primarily  due to lower fees  charged on loans of  $1,190,000
versus $1,123,750, respectively.


                                       15
<PAGE>

Allowance for Losses.

     The general  partners  regularly  review the loan portfolio,  examining the
status  of  delinquencies,  the  underlying  collateral  securing  these  loans,
borrowers' payment records, etc. Based upon this information and other data, the
allowance for loan losses is increased or decreased. Borrower foreclosures are a
normal aspect of Partnership  operations.  The Partnership is not a credit based
lender and hence  while it reviews the credit  history and income of  borrowers,
and if  applicable,  the income from income  producing  properties,  the general
partners expect that we will on occasion take back real estate security.  During
2002 and 2003, the California economy stabilized.  During 2004 and continuing in
2005  the  economy  and  the  Northern   California   Real  Estate   Market  has
strengthened.  At June 30, 2005 the Partnership had one loan past due 90 days or
more in interest  payments  totaling $96,716 with no loans in foreclosure.  This
loan was also  categorized  as  impaired.  In  addition,  two loans  with  total
principal  balance of $64,795  were  current in interest  payments but were past
maturity as of June 30, 2005.

     Periodically, the Partnership enters into workout agreements with borrowers
who are past maturity or delinquent in their regular  payments.  The Partnership
has one impaired loan totaling $96,716 in a workout agreement with the borrower.
Typically,  a workout  agreement allows the borrower to extend the maturity date
of the  balloon  payment  and/or  allows the  borrower to make  current  monthly
payments  while  deferring  for periods of time,  past due  payments and balloon
payments  and  allows  time to pay the  loan in  full.  Workout  agreements  and
foreclosures  generally  exist  within our loan  portfolio  to greater or lesser
degrees,  depending  primarily  on the  health  of the  economy.  The  number of
foreclosures  and  workout  agreements  will  generally  rise  during  difficult
economic times and conversely  fall during good economic  times.  The number and
amount of workout agreements existing at June 30, 2005, in management's opinion,
does not have a material  effect on our  results  of  operations  or  liquidity.
Workout  agreements are  considered  when  management  arrives at an appropriate
allowance for loan losses,  and based on our experience;  they are reflective of
our  loan  marketplace  segment.  In the  remainder  of  2005,  we may  initiate
foreclosure  by filing  notices of default on delinquent  borrowers or borrowers
who become delinquent during the year. Borrower foreclosures are a normal aspect
of Partnership operations and the general partners anticipate that they will not
have a  material  effect on  liquidity.  As a prudent  guard  against  potential
losses,  the general  partners have made provisions for losses on loans and real
estate held for sale through  foreclosure  of $740,984 at June 30,  2005.  These
provisions for losses were made to guard against  collection  losses.  The total
provision for losses as of June 30, 2005 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. Total provision for losses on loans of $740,984 as
of June 30, 2005 is considered to be reasonable.

     As of June 30,  2005,  the  Partnership  had an average loan to value ratio
computed  based on appraised  values and prior liens as of the date the loan was
made of 69.19%.  This percentage does not account for any increases or decreases
in  property  values  since the date the loan was made,  nor does it include any
reductions  in principal  through  amortization  of payments  after the loan was
made.  This low loan to value ratio will assist the  Partnership  in  weathering
loan delinquencies and foreclosures should they eventuate.


PORTFOLIO REVIEW - For the six months ended June 30, 2005 and 2004

Loan Portfolio

     The Partnership's  loan portfolio  consists primarily of short-term (one to
five years),  fixed rate loans  secured by real estate.  As of June 30, 2005 and
2004 the Partnership's  loans secured by real property collateral in the six San
Francisco Bay Area counties (San  Francisco,  San Mateo,  Santa Clara,  Alameda,
Contra Costa, and Marin) represented $4,318,061 (69.72%) and $5,424,371 (64.18%)
of the  outstanding  secured loan  portfolio.  The  remainder  of the  portfolio
represented   loans  secured  by  real  estate  located  primarily  in  Northern
California.


                                       16
<PAGE>

     As of June  30,  2005  and  2004,  the  Partnership  held  26 and 29  loans
respectively in the following categories:
<TABLE>
<S>                                                    <C>                   <C>          <C>                   <C>
                                                             June 30, 2005                      June 30, 2004
                                                     -------------------------------    -------------------------------

Single Family Homes (1-4 units)                        $ 3,059,916           49.41%       $ 3,118,197           36.90%
Apartments (5+ units)                                      821,716           13.27%         1,011,594           11.97%
Commercial                                               2,311,519           37.32%         2,276,953           26.94%
Land                                                             -                -         2,044,575           24.19%
                                                     --------------    -------------    --------------    -------------

   Total                                               $ 6,193,151             100%       $ 8,451,319             100%
                                                     ==============    =============    ==============    =============
</TABLE>

     As of June 30,  2005,  the  Partnership  held 26 loans  secured by deeds of
trust. The following table sets forth the priorities,  asset  concentrations and
maturities of the loans held by the Partnership as of June 30, 2005:

            PRIORITIES, ASSET CONCENTRATIONS AND MATURITIES OF LOANS
                               As of June 30, 2005
<TABLE>
<S> <C>                                                          <C>                 <C>              <C>
                                                                 # of Loans          Amount           Percent
                                                                -------------    ---------------    -------------

    1st Mortgages                                                         19       $  5,297,585              86%
    2nd Mortgages                                                          6            745,961              12%
    3rd Mortgages                                                          1            149,605               2%
                                                                =============    ===============    =============
           Total                                                          26       $  6,193,151             100%

    Maturing 12/31/05 and prior                                            2       $     64,795               1%
    Maturing prior to 12/31/06                                             2            346,716               6%
    Maturing prior to 12/31/07                                             3          1,971,754              32%
    Maturing after 12/31/07                                               19          3,809,886              61%
                                                                =============    ===============    =============
           Total                                                          26       $  6,193,151             100%

    Average Secured Loan                                                           $    238,198               4%
    Largest Secured Loan                                                                725,000              12%
    Smallest Secured Loan                                                                11,566            0.19%
    Average Loan-to-Value based upon appraisals and prior
        liens at time of loan                                                                             69.19%
</TABLE>

     The  Partnership's  largest  loan  in  the  principal  amount  of  $725,000
represents 11.71% of outstanding  secured loans and 7.82% of Partnership assets.
Over  time,  loans may  increase  above 10% of the  secured  loan  portfolio  or
Partnership assets as the loan portfolio and assets of the Partnership  decrease
due to limited partner withdrawals and/or loan payoffs.

Liquidity and Capital Resources.

     At the time of subscription  to the  Partnership,  limited  partners made a
decision to either take distributions of earnings monthly, quarterly or annually
or to compound  earnings in their capital  account.  For the six and three month
periods ended June 30, 2005 and 2004,  the  Partnership  made  distributions  of
earnings to limited  partners  of $90,284  and  $95,247 for the six months,  and
$45,025 and $47,050 for the three months, respectively. Distribution of earnings
to  limited  partners,  which  were not  withdrawn  for the six and three  month
periods  ended June 30, 2005 and 2004 were  $181,416  and  $180,509  for the six
months, and $88,970 and $90,011 for the three months,  respectively.  As of June
30, 2005 and 2004,  limited partners electing to withdraw  earnings  represented
34% and 34% of the limited partners' capital.

     The Partnership  also allows the limited partners to withdraw their capital
account  subject to certain  limitations.  For the six and three  month  periods
ended June 30, 2005 and 2004, $17,556 and $13,263 for the six months, and $5,552
and $8,513 for the three months,  respectively,  were liquidated  subject to the
10% penalty for early  withdrawal.  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,


                                       17
<PAGE>

the general  partners wanted to provide limited  partners  needing their capital
returned a degree of liquidity. Generally, limited partners electing to withdraw
over one year need to liquidate  their  investment to raise cash.  The trend the
Partnership is  experiencing in withdrawals by limited  partners  electing a one
year  liquidation  program  represents  a small  percentage  of limited  partner
capital as of June 30, 2005 and 2004.

     Additionally,  for the six and three month  periods ended June 30, 2005 and
2004,  $99,465 and $134,557 for the six months,  and $37,239 and $71,699 for the
three months, respectively, were liquidated by limited partners who have elected
a  liquidation  program  over a period of five years or longer.  This ability to
withdraw  after  five  years by limited  partners  has the  effect of  providing
limited partner liquidity.  The general partners expect a portion of the limited
partners to take advantage of this provision. This has the anticipated effect of
the Partnership growing, primarily through reinvestment of earnings in years one
through five. The general  partners expect to see increasing  numbers of limited
partner  withdrawals in years five through eleven,  after which time the bulk of
those limited partners who have sought  withdrawal have been  liquidated.  After
year eleven, liquidation generally subsides.

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

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

Current Economic Conditions.

     From July 1, 2004 through June 30, 2005, the Federal Reserve  increased the
Federal  Funds  Rate to 3.25% from  1.00%.  The recent  upward  movement  in the
Federal Funds Rate during 2004 and 2005 has raised  short-term rates but has not
yet raised long-term interest rates significantly.  New loans will be originated
at then existing  interest rates. In the future the general partners  anticipate
that interest  rates likely will change from their current  levels.  The general
partners cannot, at this time,  predict at what levels interest rates will be in
the future. The general partners anticipate that new loans will be placed during
2005 at rates slightly above those that prevailed in 2004. The recent  increases
in short term interest rates and to a lesser extent long term interest rates has
encouraged  those borrowers with interest rates above the current going rates to
refinance their  indebtedness so as to lock in these  historically  low interest
rates  should  they move  higher in the  future  However,  demand for loans from
qualified borrowers continues to be strong and as prepayments occur, the general
partners  expect to replace paid off loans with loans at somewhat lower interest
rates.  At this  time,  the  general  partners  believe  that the  average  loan
portfolio  interest rate will remain relatively stable over the year 2005. Based
upon the rates payable in connection  with the existing  loans,  and anticipated
interest  rates to be  charged  by the  partnership  and the  general  partners'
experience, the general partners anticipate that the annualized yield will range
between 5.75% and 6.50% in 2005.


                                       18
<PAGE>

     The Partnership  makes loans primarily in Northern  California.  As of June
30, 2005,  approximately  69.72%,  ($4,318,061) of the secured loans held by the
Partnership  were in six San Francisco Bay Area  Counties.  The remainder of the
loans held was secured  primarily by Northern  California real estate outside of
the San Francisco Bay Area.

     The national and Northern  California  economies continue to improve.  Both
are exhibiting steady economic growth, low inflation, and improving unemployment
numbers.  The  increases  in the  price  of oil  and the  pace  of  real  estate
appreciation  remain  a  concern.  During  July of  2005  the  Mortgage  Bankers
Association issued their long term economic forecast through 2007 which included
predictions  of a 3.5% economic  growth rate, a core  inflation rate of 1.5% for
the next  several  years,  relatively  low  long-term  interest  rates rising to
perhaps 6.25% for 30-year mortgages,  declining unemployment to 4.9%, job growth
of about 180,000 jobs per month and a slowdown in residential  appreciation to a
more sustainable 4.5% per year.  These  predictions  indicate an economy that is
continuing to grow and improve,  which is good for both mortgage  businesses and
the real estate industry as a whole.

     The Northern California residential real estate market continued to exhibit
strong  appreciation  during the second quarter of 2005. Values of single family
homes in the six  county  San  Francisco  Bay Area  rose on a June  year to year
comparison by 18.2%.  These price  increases are significant but the real estate
market may be beginning to slow as sales volumes of homes declined by an average
of 9.4% as compared to 2004. The partnership invests a significant amount of its
portfolio in residential  mortgages and a strong  appreciating market assists in
creating loan demand and enhancing loan security.

     The Northern  California  commercial  real estate  market  continued  eight
consecutive quarters of positive numbers.  Space absorption in the office sector
continued  throughout the Bay Area, while San Francisco was typical.  Absorption
as reported by Grubb and Ellis was  507,871  square feet for the second  quarter
and 689,942 for the year to date while Cushman  Wakefield  reported  447,646 for
the second  quarter  and  860,827  for the year to date.  This  steady  positive
absorption  continues  the  progress  of  whittling  down the  available  office
inventory  which stood at  approximately  22% in San  Francisco  as little a two
years ago. Cushman Wakefield  reports overall San Francisco  vacancies of 17.6%.
Despite the high vacancy rate, rents have begun to increase.  C.B. Richard Ellis
reported that San Francisco  rents averaged $27.18 per square foot while Cushman
Wakefield  reported  that rents  averaged  $30.24 per  square  foot.  Little new
construction  is likely to occur as new  construction  costs run $525 per square
foot and top sales prices  average $320 per square foot.  The three  highest per
square foot sales transactions in 2005 were $495, $467 and $434 per square foot.
Over $2 billion in  property  has sold in the first half of 2005,  which is only
$700 million  short of the total sales  volume in 2004.  While 2004 was a record
breaking  year,  it is likely  that  2005  will  surpass  the 2004  record.  The
continued  improvement of the  commercial  market assists owners in making their
debt payments. Increased occupancies and increasing rents assist by adding value
to the real estate security of our commercial loans.

     For  Partnership  secured  loans  outstanding  as of  June  30,  2005,  the
Partnership  had an average  loan to value  ratio of 69.19%,  computed  based on
appraised  values  and  senior  liens as of the date  the  loan was  made.  This
percentage  does not account for any  increases or decreases in property  values
since  the date the  loan was  made,  nor  does it  include  any  reductions  in
principal on senior indebtedness through amortization of payments after the loan
was made. This low loan to value ratio will assist the Partnership in weathering
loan delinquencies and foreclosures should they eventuate.

     Contractual  Obligations Table. None - There were no amounts outstanding on
the line of credit at June 30, 2005. The maximum  amounts  available on the line
are $2,500,000, which expires in December 2007.


                                       19
<PAGE>

Part I - Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     The  following  table  contains  information  about  the cash held in money
market  accounts,  loans held in the  Partnership's  portfolio  and loans to the
partnership   pursuant  to  its  line  of  credit  as  of  June  30,  2005.  The
presentation,  for each  category  of  information,  aggregates  the  assets and
liabilities  by their  maturity  dates for  maturities  occurring in each of the
years 2005  through  2009 and  separately  aggregates  the  information  for all
maturities  arising  after  2009.  The  carrying  values  of  these  assets  and
liabilities approximate their fair market values as of June 30, 2005:
<TABLE>
<S>                                 <C>        <C>         <C>          <C>          <C>        <C>             <C>
                                    2005       2006        2007         2008         2009       Thereafter      Total
                                ----------------------------------------------------------------------------------------
Interest earning assets:
Money market accounts            $ 708,746                                                                    $  708,746
Average interest rate                0.67%                                                                         0.67%
Unsecured loans                                                       $ 243,475                               $  243,475
Average interest rate                                                        0%                                       0%
Loans secured by deeds
   of trust                      $  64,795    346,716    1,971,754            -     2,316,611    1,493,275    $6,193,151
Average interest rate               10.00%      7.94%        9.18%            -         9.18%        9.35%         9.16%
Interest bearing liabilities:
Line of credit                   $       -                                                                    $        -
Average interest rate                6.50%                                                                         6.50%
</TABLE>

Market Risk.

     The Partnership's line of credit bears interest at a variable rate, tied to
the prime rate. As a result, the Partnership's primary market risk exposure with
respect to its  obligations is to changes in interest  rates,  which will affect
the interest cost of outstanding  amounts on the line of credit. The Partnership
may also suffer market risk tied to general trends  affecting real estate values
that may impact the Partnership's security for its loans.

     The Partnership's  primary market risk in terms of its profitability is the
exposure to  fluctuations  in earnings  resulting from  fluctuations  in general
interest rates. The majority of the  Partnership's  mortgage loans earn interest
at fixed  rates.  Changes  in  interest  rates may also  affect the value of the
Partnership's   investment  in  mortgage  loans  and  the  rates  at  which  the
Partnership  reinvests  funds  obtained  from loan  repayments  and new  capital
contributions  from limited partners.  If interest rates increase,  the interest
rates the Partnership obtains from reinvested funds will generally increase, but
the value of the Partnership's existing loans at fixed rates will generally tend
to decrease.  The risk is mitigated  by the fact that the  Partnership  does not
intend to sell its loan  portfolio,  rather  such  loans are held until they are
paid off. If interest  rates  decrease,  the amounts  becoming  available to the
Partnership  for  investment  due  to  repayment  of  Partnership  loans  may be
reinvested at lower rates than the  Partnership had been able to obtain in prior
investments,  or than the rates on the repaid loans. In addition,  interest rate
decreases may encourage  borrowers to refinance their loans with the Partnership
at a time where the  Partnership  is unable to reinvest  in loans of  comparable
value.

     The  Partnership  does not hedge or otherwise seek to manage  interest rate
risk. The Partnership does not enter into risk sensitive instruments for trading
purposes.


ASSET QUALITY

     A consequence  of lending  activities is that  occasionally  losses will be
experienced  and that the  amount  of such  losses  will vary from time to time,
depending  upon the risk  characteristics  of the loan  portfolio as affected by
economic  conditions and the financial  experiences of borrowers.  Many of these
factors  are beyond the  control of the  general  partners.  There is no precise
method of predicting  specific  losses or amounts that ultimately may be charged
off on  particular  segments of the loan  portfolio,  especially in light of the
current economic environment.


                                       20
<PAGE>

     The conclusion that a loan may become  uncollectible,  in whole or in part,
is  a  matter  of  judgment.  Although  institutional  lenders  are  subject  to
requirements and regulations  that, among other things,  require them to perform
ongoing analyses of their portfolios,  loan-to-value ratios, reserves, etc., and
to obtain and maintain  current  information  regarding  their borrowers and the
securing properties, the Partnership is not subject to these regulations and has
not  adopted  certain of these  practices.  Rather,  the  general  partners,  in
connection  with  the  periodic  closing  of  the  accounting   records  of  the
Partnership and the preparation of the financial  statements,  determine whether
the allowance for loan losses is adequate to cover  potential loan losses of the
Partnership.  As of June 30, 2005 the general  partners have determined that the
allowance  for loan  losses of  $740,984  (8.06% of net  assets) is  adequate in
amount. 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.  As of June 30,  2005,  one loan  totaling  $96,716  was
delinquent 90 days or more in interest payments.  This loan was also categorized
as impaired.  Management  believes that there is sufficient  collateral to cover
the amount  outstanding to the  Partnership on this loan. The allowance for loan
losses  of  $740,984  as of June 30,  2005 is  considered  reasonable  to offset
potential loss in loan collections in the future.


Part I - Item 4.    CONTROLS AND PROCEDURES

     As of June 30, 2005, the Partnership  carried out an evaluation,  under the
supervision  and  with  the   participation  of  the  general  partners  of  the
effectiveness  of the  design  and  operation  of the  Partnership's  disclosure
controls and procedures  pursuant to Rule 13a-15 of the Securities  Exchange Act
of 1934, as amended. Based upon that evaluation,  the general partners concluded
that the  Partnership's  disclosure  controls and  procedures  are  effective in
timely  alerting the general  partners to material  information  relating to the
Partnership  that is required to be included in our  periodic  filings  with the
Securities and Exchange  Commission.  There were no  significant  changes in the
Partnership's internal control over financial reporting during the Partnership's
second fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.








                                       21
<PAGE>

PART II - OTHER INFORMATION


      Item 1.     Legal Proceedings

                  The Partnership periodically is a defendant in various legal
                  actions. Please refer to Note 10 of the Financial Statements.


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

                  Not Applicable


      Item 3.     Defaults upon Senior Securities

                  Not Applicable


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

                  Not Applicable


      Item 5.     Other Information

                  Not Applicable


      Item 6.     Exhibits

                  31.1 Certification of General Partner pursuant to Section 302
                       of the Sarbanes-Oxley Act of 2002
                  31.2 Certification of General Partner pursuant to Section 302
                       of the Sarbanes-Oxley Act of 2002
                  32.1 Certification of General Partner pursuant to Section 906
                       of the Sarbanes-Oxley Act of 2002
                  32.2 Certification of General Partner pursuant to Section 906
                       of the Sarbanes-Oxley Act of 2002






                                       22
<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 15th day of August
2005.


REDWOOD MORTGAGE INVESTORS VII


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


By: Gymno Corporation, General Partner


    By:   /S/ Michael R. Burwell
         ----------------------------------------------
          Michael R. Burwell, President,
          Secretary/Treasurer & Chief Financial Officer












                                       23
<PAGE>
                                                                   Exhibit 31.1

                          GENERAL PARTNER CERTIFICATION

I, Michael R. Burwell, General Partner, certify that:

     1. I have reviewed this quarterly  report on Form 10-Q of Redwood  Mortgage
Investors VII, a California Limited Partnership (the "Registrant");

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

     4. The  Registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  Registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;

     (b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     (c)  disclosed  in this  report  any  change in the  Registrant's  internal
control over financial  reporting  that occurred  during the  Registrant's  most
recent fiscal quarter (the Registrant's  fourth fiscal quarter in the case of an
annual  report)  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the Registrant's  internal control over financial  reporting;
and

     5. The Registrant's other certifying  officers and I have disclosed,  based
on our most recent evaluation of internal control over financial  reporting,  to
the  Registrant's  auditors  and the audit  committee of  Registrant's  board of
directors (or persons performing the equivalent function):

     (a) all significant  deficiencies and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  Registrant's  ability  to  record,  process,
summarize and report financial data; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the Registrant's  internal control over
financial reporting.




/s/ Michael R. Burwell
-----------------------------------
Michael R. Burwell, General Partner
August 15, 2005


                                       24
<PAGE>
                                                                   Exhibit 31.2

               PRESIDENT AND CHIEF FINANCIAL OFFICER CERTIFICATION

     I,  Michael R.  Burwell,  President  and Chief  Financial  Officer of Gymno
Corporation, General Partner, certify that:

     1. I have reviewed this quarterly  report on Form 10-Q of Redwood  Mortgage
Investors VII, a California Limited Partnership (the "Registrant");

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

     4. The  Registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  Registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;

     (b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     (c)  disclosed  in this  report  any  change in the  Registrant's  internal
control over financial  reporting  that occurred  during the  Registrant's  most
recent fiscal quarter (the Registrant's  fourth fiscal quarter in the case of an
annual  report)  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the Registrant's  internal control over financial  reporting;
and

     5. The Registrant's other certifying  officers and I have disclosed,  based
on our most recent evaluation of internal control over financial  reporting,  to
the  Registrant's  auditors  and the audit  committee of  Registrant's  board of
directors (or persons performing the equivalent function):

     (a) all significant  deficiencies and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  Registrant's  ability  to  record,  process,
summarize and report financial data; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the Registrant's  internal control over
financial reporting.




/s/ Michael R. Burwell
---------------------------------
Michael R. Burwell, President and
Chief Financial Officer of Gymno
Corporation, General Partner
August 15, 2005


                                       25
<PAGE>
                                                                   Exhibit 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Quarterly Report of Redwood  Mortgage  Investors VII
(the  "Partnership")  on Form 10-Q for the period  ending June 30, 2005 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002,  I,  Michael  R.  Burwell,  General  Partner of the
Partnership, certify, that to the best of my knowledge:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership at the dates and for the periods indicated.




/s/ Michael R. Burwell
-----------------------------------
Michael R. Burwell, General Partner
August 15, 2005









                                       26
<PAGE>
                                                                   Exhibit 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Quarterly Report of Redwood  Mortgage  Investors VII
(the  "Partnership")  on Form 10-Q for the period  ending June 30, 2005 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley    Act   of   2002,   I,   Michael   R.    Burwell,    President,
Secretary/Treasurer  & Chief  Financial  Officer of Gymno  Corporation,  General
Partner of the Partnership, certify that to the best of my knowledge:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership at the dates and for the periods indicated.




/s/ Michael R. Burwell
-------------------------------------
Michael R. Burwell, President,
Secretary/Treasurer & Chief Financial
Officer of Gymno Corporation, General Partner
August 15, 2005











                                       27