| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |
|-----|-------------------------------------------------------------------------------------|

| [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |
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| Delaware                                                      | 26-3541068                             |
|---------------------------------------------------------------|----------------------------------------|
| (State or other jurisdiction ofincorporation or organization) | (I.R.S. EmployerIdentification Number) |

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

| Securities registered pursuant to Section 12(b) of the Act: | None                          |
|-------------------------------------------------------------|-------------------------------|
| Securities registered pursuant to Section 12(g) of the Act: | Units of Membership Interests |

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| Large accelerated filer [   ]                                                     | Accelerated filer [   ] |
|----------------------------------------------------------------------------------------------------------|------------------------------------------------|
| Non-accelerated filer   [   ](Do not check if a smaller reporting company) | Smaller reporting company [X]                  |

| ·   | Part I – Item 1 - Business |
|--------------------|----------------------------------|

| ·   | Part III – Item 11 –Executive Compensation |
|--------------------|--------------------------------------------------------|

| ·   | Part III – Item 13 – Certain Relationships and Related Transactions, and Director Independence |
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|           | Part I                                                                                                    |      |   |
|----------------|----------------------------------------------------------------------------------------------------------------|-----------|--------|
|           |                                                                                                           | Page No.  |   |
| Item 1         | – Business                                                                                               | 4         |   |
| Item 1A        | – Risk Factors                                                                                           | 13        |   |
| Item 1B        | – Unresolved Staff Comments (Not applicable)                                                             |   32 |   |
| Item 2         | – Properties (Not included as company owns no properties)                                                | 32        |   |
| Item 3         | – Legal Proceedings                                                                                      | 33        |   |
| Item 4         | – Reserved                                                                                               | 33        |   |
|           |                                                                                                           |      |   |
|           | Part II                                                                                                        |      |   |
|           |                                                                                                           |      |   |
| Item 5         | – Market for the Registrant’s Units, Related Unitholder Matters and                                |      |   |
|           | Issuer Purchases of Equity Securities                                                                          | 33        |   |
| Item 6         | – Selected Consolidated Financial Data (Not included as smaller reporting company)                       | 34        |   |
| Item 7         | – Management Discussion and Analysis of Financial Condition and Results of Operations                    | 34        |   |
| Item 7A        | – Quantitative and Qualitative Disclosures About Market Risk (Not included as smaller reporting company) | 46        |   |
| Item 8         | – Consolidated Financial Statements and Supplementary Data                                               | 46        |   |
| Item 9         | – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                   | 70        |   |
| Item 9A(T)     | – Controls and Procedures                                                                                | 70        |   |
| Item 9B        | – Other Information                                                                                      | 70        |   |
|           |                                                                                                           |      |   |
|           | Part III                                                                                                       |      |   |
|           |                                                                                                           |      |   |
| Item 10        | – Directors, Executive Officers and Corporate Governance                                                 | 70        |   |
| Item 11        | – Executive Compensation                                                                                 | 72        |   |
| Item 12        | – Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters        | 73        |   |
| Item 13        | – Certain Relationships and Related Transactions, and Director Independence                              | 73        |   |
| Item 14        | – Principal Accountant Fees & Services                                                               | 73        |   |
|           |                                                                                                           |      |   |
|           | Part IV                                                                                                        |      |   |
|           |                                                                                                           |      |   |
| Item 15        | – Exhibits and Financial Statement Schedules                                                             | 74        |   |
|           |                                                                                                           |      |   |
| Signatures     | 75                                                                                                             |      |
|           |                                                                                                           |      |   |
| Certifications | 77                                                                                                             |      |

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| ·   | Yield a high rate of return from mortgage lending; |
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| ·   | Preserve and protect our capital; and |
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| ·   | Generate and distribute cash flow from operations to investors. |
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|                                                          |   | 2009   |      |
|---------------------------------------------------------------|--------|--------|-----------|
| Number of secured loans                                       |   |   | 8         |   |
| Secured loans-unpaid principal balance                        |   | $      | 1,253,742 |   |
|                                                          |   |   |      |   |
| Average secured loan                                          |   | $      | 156,718   |   |
| Average secured loan as percent of total secured loans        |   |   | 12.50     | % |
| Average secured loan as percent of members’ capital     |   |   | 13.94     | % |
|                                                          |   |   |      |   |
| Largest secured loan                                          |   | $      | 269,487   |   |
| Largest secured loan as percent of total secured loans        |   |   | 21.49     | % |
| Largest secured loan as percent of members’ capital     |   |   | 23.98     | % |
| Largest secured loan as percent of total assets               |   |   | 15.78     | % |
|                                                          |   |   |      |   |
| Smallest secured loan                                         |   | $      | 98,766    |   |
| Smallest secured loan as percent of total secured loans       |   |   | 7.88      | % |
| Smallest secured loan as percent of members’ capital    |   |   | 8.79      | % |
| Smallest secured loan as percent of total assets              |   |   | 5.78      | % |
|                                                          |   |   |      |   |
| Number of counties where security is located (all California) |   |   | 6         |   |
| Largest percentage of secured loans in one county             |   |   | 29.37     | % |
|                                                          |   |   |      |   |
| Number of secured loans in foreclosure                        |   |   | —   |   |
| Secured loans in foreclosure – unpaid principal balance |   |   | —   |   |
|                                                          |   |   |      |   |
| Number of secured loans with an interest reserve              |   |   | —   |   |
| Interest reserves                                             |   | $      | —   |   |

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|                                     | 2009    |   |
|------------------------------------------|---------|--------|
| Lien position                            | Loans   |   | Principal |   | Percent |   |
| First trust deeds                        | 5       |   | $ | 833,817 |   | 67 | % |
| Second trust deeds                       | 3       |   |   | 419,925 |   | 33 |   |
| Third trust deeds                        | — |   |   | — |   | — |   |
| Total secured loans                      | 8       |   |   | 1,253,742 |   | 100 | % |
| Liens due other lenders at loan closing  |    |   |   | 707,893 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Total debt                               |    |   | $ | 1,961,635 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Appraised property value at loan closing |    |   | $ | 4,442,021 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Percent of total debt to appraised       |    |   |   |   |   |   |   |
| values (LTV) at loan closing (1)         |    |   |   | 44.16 | % |   |   |

|   | (1) Based on appraised values and liens due other lenders at loan closing.  The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                | 2009    |   |
|---------------------|---------|--------|
| Property type       | Loans   |   | Principal |   | Percent |   |
| Single family       | 8       |   | $ | 1,253,742 |   | 100 | % |
| Apartments          | — |   |   | — |   | — |   |
| Commercial          | — |   |   | — |   | — |   |
| Land                | — |   |   | — |   | — |   |
| Total secured loans | 8       |   | $ | 1,253,742 |   | 100 | % |

|                         | 2009    |   |
|------------------------------|---------|--------|
| Maturities                   | Loans   |   | Principal |   | Percent |   |
| 2010                         | — |   | $ | — |   | — | % |
| 2011                         | — |   |   | — |   | — |   |
| 2012                         | — |   |   | — |   | — |   |
| 2013                         | 1       |   |   | 98,766 |   | 8 |   |
| 2014                         | 3       |   |   | 335,489 |   | 27 |   |
| Thereafter                   | 4       |   |   | 819,487 |   | 65 |   |
| Total future maturities      | 8       |   |   | 1,253,742 |   | 100 |   |
| Matured at December 31, 2009 | — |   |   | — |   | — |   |
| Total secured loans          | 8       |   | $ | 1,253,742 |   | 100 | % |

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|                            |   | Total         |      |   |    |   |
|---------------------------------|--------|---------------|-----------|--------|---------|--------|
| California County               |   | Secured Loans |      |   | Percent |   |
|                            |   |          |      |   |    |   |
| San Francisco Bay Area Counties |   |          |      |   |    |   |
| San Francisco                   |   | $             | 150,000   |   |    |   | 11.96 | % |
| Alameda                         |   |          | 119,925   |   |    |   | 9.57 |   |
| San Mateo                       |   |          | 150,000   |   |    |   | 11.96 |   |
| Marin                           |   |          | 250,000   |   |    |   | 19.94 |   |
|                            |   |          | 669,925   |   |    |   | 53.43 | % |
|                            |   |          |      |   |    |   |   |   |
| Southern California Counties    |   |          |      |   |    |   |   |   |
| Los Angeles                     |   |          | 368,253   |   |    |   | 29.37 | % |
| Riverside                       |   |          | 215,564   |   |    |   | 17.20 |   |
|                            |   |          | 583,817   |   |    |   | 46.57 | % |
| Total                           |   |          |      |   |    |   |   |   |
|                            |   | $             | 1,253,742 |   |    |   | 100.00 | % |

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| ·   | real estate settlement procedures; |
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| ·   | fair lending; |
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| ·   | truth in lending; |
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| ·   | compliance with federal and state disclosure requirements; |
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| ·   | the establishment of maximum interest rates, finance charges and other charges; |
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| ·   | secured transactions and foreclosure proceedings; and |
|--------------------|-------------------------------------------------------|

| ·   | privacy regulations providing for the use and safeguarding of non-public personal financial information of borrowers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | Real Estate Settlement Procedures Act (RESPA).  RESPA primarily regulates settlement procedures for real estate purchase and refinance transactions on residential (1-4 unit) properties.  It prohibits lenders from requiring the use of specified third party providers for various settlement services, such as appraisal or escrow services.  RESPA also governs the format of the good faith estimate of loan transaction charges and the HUD-1 escrow settlement statement. |
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| ·   | Truth in Lending Act.  This federal act was enacted in 1968 for the purpose of regulating consumer financing and is implemented by the Federal Reserve Board.  For real estate lenders, this act requires, among other things, advance disclosure of certain loan terms, calculation of the costs of the loan as demonstrated through an annual percentage rate (APR), and the right of a consumer in a refinance transaction on their primary residence to rescind their loan within three days following signing. |
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| · | Home Ownership and Equity Protection Act (HOEPA) and California Bill 489.  HOEPA was passed in 1994 to provide additional disclosures for certain closed-end home mortgages.  In 1995, the Federal Reserve Board issued final regulations governing “high cost” closed-end home mortgages with interest rates and fees in excess of certain percentage or amount thresholds.  These regulations primarily focus on additional disclosure with respect to the terms of the loan to the borrower, the timing of such disclosures, and the prohibition of certain loan terms, including balloon payments and negative amortization.  The failure to comply with the regulations will render the loan rescindable for up to three years. Lenders can also be held liable for attorneys’ fees, finance charges and fees paid by the borrower and certain other money damages.  Similarly in California, Assembly Bill 489, which was signed into law in 2001 and became effective as of July 1, 2002, provides for state regulation of “high cost” residential mortgage and consumer loans secured by liens on real property, which equal or exceed the Fannie Mae/Freddie Mac conforming loan limits or less, with interest rates and fees exceeding a certain percentage or amount threshold.  The law prohibits certain lending practices with respect to high cost loans, including the making of a loan without regard to the borrower’s income or obligations.  When making such loans, lenders must provide borrowers with a consumer disclosure, and provide for an additional rescission period prior to closing the loan. |
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| ·   | Mortgage Disclosure Improvement Act.  Enacted in 2008, this act amended the Truth in Lending Act regulating the timing and delivery of loan disclosures for all mortgage loan transactions governed under RESPA. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Home Mortgage Disclosure Act.   This act was enacted to provide for public access to statistical information on a lenders’ loan activity.  It requires lenders to disclose certain information about the mortgage loans it originates and purchases, such as the race and gender of its customers, the disposition of mortgage applications, income levels and interest rate (i.e. annual percentage rate) information. |
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| ·   | Red Flags Rule.  The Red Flags Rule, which becomes effective on August 1, 2009, requires lenders and creditors to implement an identity theft prevention program to identify and respond to loan applications in which the misuse of a consumer’s personal identification may be suspected. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Graham-Leach-Bliley Act.  This act requires all businesses which have access to consumers’ personal identification information to implement a plan providing for security measures to protect that information.  As part of this program, we provide applicants and borrowers with a copy of our privacy policy. |
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| ·   | Guidance on Nontraditional Mortgage Product Risks.   On September 29, 2006, the federal banking agencies issued guidance to address the risks posed by nontraditional residential mortgage products, that is, mortgage products that allow borrowers to defer repayment of principal or interest. The guidance instructs institutions to ensure that loan terms and underwriting standards are consistent with prudent lending practices, including consideration of a borrower’s ability to repay the debt by final maturity at the fully indexed rate and assuming a fully amortizing repayment schedule; requires institutions to recognize, for higher risk loans, the necessity of verifying the borrower’s income, assets and liabilities; requires institutions to address the risks associated with simultaneous second-lien loans, introductory interest rates, lending to subprime borrowers, non-owner-occupied investor loans, and reduced documentation loans; requires institutions to recognize that nontraditional mortgages, particularly those with risk-layering features, are untested in a stressed environment; requires institutions to recognize that nontraditional mortgage products warrant strong controls and risk management standards, capital levels commensurate with that risk, and allowances for loan and lease losses that reflect the collectibility of the portfolio; and ensure that consumers have sufficient information to clearly understand loan terms and associated risks prior to making product and payment choices. The guidance recommends practices for addressing the risks raised by nontraditional mortgages, including enhanced communications with consumers; promotional materials and other product descriptions that provide information about the costs, terms, features and risks of nontraditional mortgages; more informative monthly statements for payment option adjustable rate mortgages; and specified practices to avoid.  In January 2008, in response to this federal guidance on non-traditional mortgage loans, California enacted SB 385 which requires lenders offering non-traditional mortgages on primary residential properties to provide additional disclosure information pertaining to the terms of the loan offered, as well as a comparison to other loan products that may be available in the marketplace.  The California Department of Real Estate defines ‘non-traditional’ mortgages as those in which there is a deferral of either principal or interest in the loan.  We do not make non-traditional loans on primary residential properties. |
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| ·   | Guidance on Loss Mitigation Strategies for Servicers of Residential Mortgages.  On September 5, 2007, the federal banking agencies issued a statement encouraging regulated institutions and state-supervised entities that service residential mortgages to pursue strategies to mitigate losses while preserving homeownership to the extent possible and appropriate.  The guidance encourages servicers to take proactive steps to preserve homeownership in situations where there are heightened risks to homeowners losing their homes to foreclosures.  Such steps may include loan modification; deferral of payments; extensions of loan maturities; conversion of adjustable rate mortgages into fixed rate or fully indexed, fully amortizing adjustable rate mortgages; capitalization of delinquent amounts; or any combination of these actions.  Servicers are instructed to consider the borrower’s ability to repay the modified obligation to final maturity according to its terms, taking into account the borrower’s total monthly housing-related payments as a percentage of the borrower’s gross monthly income, the borrower’s other obligations, and any additional tax liabilities that may result from loan modifications. Where appropriate, servicers are encouraged to refer borrowers to qualified non-profit and other homeownership counseling services and/or to government programs that are able to work with all parties and avoid unnecessary foreclosures. The guidance states that servicers are expected to treat consumers fairly and to adhere to all applicable legal requirements. |
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| ·   | Housing and Economic Recovery Act of 2008:  Enacted in July 2008, this legislation, among other things, established new Fannie Mae, Freddie Mac and FHA conforming loan limits and established a new Federal Housing Finance Agency.  It also established the new “HOPE for Homeowners Program” to refinance existing borrowers meeting eligibility requirements into fixed-rate FHA mortgage products.  This act also provided for a comprehensive, nationwide licensing and registry system for mortgage originators.  The federal direction to states to adopt national loan originator licensing standards will be implemented in California through the California Department of Real Estate (DRE).  Much of what has been adopted at the federal level has already been in effect in California under the DRE’s regulatory authority for a number of years.  It is anticipated that new standards relating to continuing education requirements, among other things, will be incorporated into DRE regulations, once implemented. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | New Regulations Establishing Protections for Consumers in the Residential Mortgage Market. In 2008, the Federal Reserve Board issued new regulations under the federal Truth-in-Lending Act and the Home Ownership and Equity Protection Act (HOEPA). For mortgage loans governed by HOEPA, the new regulations further restrict prepayment penalties, and enhance the standards relating to the consumer’s ability to repay.  For a new category of closed-end “higher-priced” mortgage loans, the new regulations restrict prepayment penalties, and require escrows for property taxes and property-related insurance for most first lien mortgage loans.  For all closed-end loans secured by a principal dwelling, the new regulations prohibit the coercion of appraisers; require the prompt crediting of payments; prohibit the pyramiding of late fees; require prompt responses to requests for pay-off figures; and require the delivery of transaction-specific Truth-in-Lending Act disclosures within three business days following the receipt of an application.  The new regulations also impose new restrictions on mortgage loan advertising for both open-end and closed-end products. In general, the new regulations are effective October 1, 2009, with certain exceptions. |
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| ·   | Proposed Amendments to the U.S. Bankruptcy Code:  Since 2008, proposed legislation has been introduced before the U.S. Congress for the purpose of amending Chapter 13 in order to permit bankruptcy judges to modify certain terms in certain mortgages in bankruptcy proceedings, a practice commonly known as cramdown.  Presently, Chapter 13 does not permit bankruptcy judges to modify mortgages of bankrupt borrowers.  While the breadth and scope of the terms of the proposed amendments to Chapter 13 differ greatly, some commentators have suggested that such legislation could have the effect of increasing mortgage borrowing costs and thereby reducing the demand for mortgages throughout the industry. It is too early to tell when or if any of the proposed amendments to Chapter 13 may be enacted as proposed and what impact any such enacted amendments to Chapter 13 could have on the mortgage industry. |
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| You Will Be Unable to Evaluate Any Loans or Underlying Properties                                                   | We have not yet identified any specific loans to fund with any future proceeds we will receive from our offering of units.  This means: · Investors must rely entirely on the judgment of our managers in investing the proceeds of the offering. · Investors will be unable to evaluate, in advance, any of the terms of the loans including the selection of borrowers, and the terms of the loans that will be made. · Investors will have no ability to evaluate the identification or location of, or any other important economic and financial data pertaining to, the underlying properties that secure the loans. · We could suffer delays from placing suitable investments, which could adversely affect our ability to pay distributions to our members.                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| If We Are Unable to Raise Substantial Funds, We Will Be Limited in the Number and Type of Properties We May Finance | We are offering our units on a “best efforts” basis, whereby the broker-dealers participating in the offering are only required to use their best efforts to sell our units and have no firm commitment or obligation to purchase any of the units. As a result, we cannot assure you that any amount of proceeds greater than the minimum will be raised in the offering.  If we are unable to raise substantially more than the minimum offering amount, we will originate and purchase fewer loans resulting in less diversification in terms of the number of properties financed, the geographic regions in which such properties are located and the types of properties securing the mortgages in which we invest. In such event, the likelihood of our profitability being affected by the performance of any one of our investments will increase.  An investment in our units will be subject to greater risk to the extent that we lack a diversified portfolio of mortgage assets. In addition, our fixed operating expenses, as a percentage of gross income, would be higher, and our financial condition and ability to pay distributions could be adversely affected if we are unable to raise substantial funds.  |
| Suitable Mortgage Loans May Not Be Available From Time to Time, Which Could Reduce Your Return on Investment        | Our managers receive referrals from a variety of sources, but will only make loans that satisfy our investment criteria.  The ability to find suitable loans is more difficult when the economy is weaker and there is less activity in the real estate market.  For example, currently the residential real estate market in the San Francisco Bay Area is in a downturn, leading to less activity in the market and less demand for residential mortgage loans.  In the event that the current decrease in demand for loans continues, we may be unable to find a sufficient number of suitable loans which could leave us with excess cash.  In such event, we will make short term, interim investments in government obligations, certificates of deposit, money market or other liquid asset accounts, with the offering proceeds pending investment in suitable loans.  Interest returns on these investments are usually lower than on mortgage loans, which would reduce the yield to holders of units, depending on how long these investments are held.                                                                                                                                                    |

| Loan Defaults and Foreclosures May Adversely Affect Us | We are engaged in the business of lending money and, as such, are subject to the risk that borrowers may be unable to repay the loans we have made to them.  Most loans will be interest only or interest with small periodic repayments of principal.  This means: · The loans are structured to provide for relatively small monthly payments with a large “balloon” payment of principal due at the end of the term.  Many borrowers are unable to repay such loans at maturity out of their own funds and are compelled to refinance or sell their property.  |
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|                                                                                                    |  · Defaults and foreclosures may increase if the economy weakens further or if interest rates increase, which may make it more difficult for borrowers to refinance their loans at maturity or sell their property. · If a borrower is unable to repay the loan and defaults, we may be forced to purchase the property at a foreclosure sale.  If we cannot quickly sell or refinance such property, and the property does not produce any significant income, our profitability will be adversely affected. · Recently enacted borrower protection laws in California impose additional notice and disclosure requirements on lenders which may slow or limit a lender’s ability to exercise remedies against residential real property collateral, including its right to sell the property in a foreclosure sale.  We are aware of other proposed federal legislation under consideration which, if enacted, may also limit a lender’s ability to exercise remedies against residential real property collateral following a borrower’s default in the performance of its loan obligations. In addition, any litigation instituted by a defaulting borrower or the operation of the federal bankruptcy laws may have the effect of delaying enforcement of the lien of a defaulted loan and may in certain circumstances reduce the amount realizable from sale of a foreclosed property.  A “lien” is a charge against the property of which the holder may cause the property to be sold and use the proceeds in satisfaction of the lien.  In the event our right to foreclose is contested, the legal proceedings necessary to resolve the issue can be time-consuming. A judicial foreclosure may be subject to most of the delays and expenses of other litigation, sometimes requiring up to several years to complete.  |
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| Our Entry Into Workout Agreements with Delinquent Borrowers Could Lead to a Loss of Revenue             | We may periodically enter into workout agreements with borrowers who are past maturity or delinquent in their regular payments.  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 allows time to pay the loan in full.  In the event we enter into workout agreements, we may experience a loss of revenue, which could adversely affect our profitability and the returns to our members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| We Must Rely on Appraisals Which May Not Be Accurate or May Be Affected by Subsequent Events            | We will primarily be an “asset” rather than a “credit” lender and will rely mainly on the real property securing the loans to protect our investment.  We will rely on appraisals, prepared by unrelated third parties, to determine the fair market value of real property used to secure our loans.  We cannot guarantee that such appraisals will, in any or all cases, be accurate.  If an appraisal is not accurate or subsequent events adversely affect the value of the property, our loan would not be as secure as we anticipated.  In the event of foreclosure, we may not be able to recover our entire investment.  Additionally, since an appraisal fixes the value of real property at a given point in time, subsequent events could adversely affect the value of real property used to secure a loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Our Lack of Emphasis on the Creditworthiness of a Borrower May Increase the Risk of Loan Defaults  | While we will review and consider the income level and general creditworthiness of a borrower as part of our overall evaluation process, such considerations are subordinate to a determination that a borrower has sufficient equity in the security property to satisfy required loan-to-value ratios.  Our lack of emphasis on the creditworthiness of a borrower may increase the risk of defaults on loans we make.  In the event of a loan default, we may be forced to purchase the property securing the loan at a foreclosure sale.  If we cannot quickly sell or refinance the foreclosed property, and if the property does not produce significant income, our profitability will be adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| We Compete With Many Other Mortgage Lenders for Loans Which Could Lead to Lower Yields and Fewer Lending Opportunities | Increased competition for mortgage loans could lead to reduced yields and fewer investment opportunities.  The mortgage lending business is highly competitive, and we will compete with numerous established entities, some of which have more financial resources and experience in the mortgage lending business than our managers.  We will encounter significant competition from banks, insurance companies, savings and loan associations, mortgage bankers, pension funds, real estate investment trusts and other lenders with objectives similar in whole or in part to ours.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| Some of Our Loans are Junior in Priority and More Difficult and Costly to Protect                                      | We anticipate that our loans will eventually be diversified as to priority approximately as follows: · first mortgages – 40-60%· second mortgages (which will be junior to a first mortgage) – 40-60%· third mortgages (which will be junior to the two other mortgages) – 0-10%. The lien securing each loan will not be junior to more than two other encumbrances (a first and, in some cases a second deed of trust) on the real property which is to be used as security for the loan.  In the event of foreclosure under a second or third deed of trust the debt secured by a senior deed(s) of trust must be satisfied before any proceeds from the sale of the property can be applied toward the debt owed to us.  To protect our junior security interest, we may be required to make substantial cash outlays for such items as loan payments to senior lien holders to prevent their foreclosure, property taxes, insurance, repairs, maintenance and any other expenses associated with the property.  These expenditures could have an adverse effect on our profitability.  |
| We Make Construction Loans Which May Subject Us to Greater Risks                                                       | We may make construction loans up to a maximum of 10% of our loan portfolio.  Construction loans are those loans made to borrowers constructing entirely new structures or dwellings, whether residential, commercial or multi-family properties.  Investing in construction loans subjects us to greater risk than loans related to properties with operating histories.  If we foreclose on property under construction, construction will generally have to be completed before the property can begin to generate an income stream or could be sold.  We may not have adequate cash reserves on hand with respect to junior encumbrances and/or construction loans at all times to protect our security.  If we have inadequate cash reserves, we could suffer a loss of our investment.  Additionally, we may be required to obtain permanent financing of the property in addition to the construction loan which could involve the payment of significant fees and additional cash obligations for us.                                                                                                                |

| We Make Rehabilitation Loans Which May Subject Us to Greater Risks | In addition to construction loans, we may make “rehabilitation loans” to finance remodeling, adding to and/or rehabilitating an existing structure or dwelling, whether residential, commercial or multi-family properties.  We may make rehabilitation loans up to a maximum of 15% of our loan portfolio.  Investing in rehabilitation loans subjects us to greater risk than standard acquisition loans for properties.  If we foreclose on a property undergoing remodeling or rehabilitation, such remodeling or rehabilitation will generally have to be completed before the property can realize the anticipated increase in value from such remodeling or rehabilitation.  We may not have adequate cash reserves on hand with respect to junior encumbrances and/or rehabilitation loans at all times to protect our security.  If we have inadequate cash reserves, we could suffer a loss of our investment.  Additionally, we may be required to obtain permanent financing of the property in addition to the rehabilitation loan which could involve the payment of significant fees and additional cash obligations for us.  |
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| Owning Real Estate Following Foreclosure Will Subject Us to Many Additional Risks             | If a borrower is unable to pay our loan or refinance it when it is due, we may be required to institute foreclosure proceedings against the borrower.  Although we may immediately be able to sell the property, sometimes we will be required to own the property for a period of time.  We will be subject to certain economic and liability risks attendant to all property ownership which could affect our profitability.  The risks of ownership will include the following: · The property could generate less income for us than we could have earned from interest on the loan. · If the property is a rental property we will be required to find and keep tenants. · We will be required to oversee and control operating expenses. · We will be subject to general and local real estate and economic market conditions which could adversely affect the value of the property. · We will be subject to any change in laws or regulations regarding taxes, use, zoning and environmental protection and hazards. · We will be potentially liable for any injury that occurs on or to the property.  |
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| If We Decide to Develop Property Acquired by Us, We Will Face Many Additional Risks           | If we have acquired property through foreclosure or otherwise, there may be circumstances in which it would be in our best interest not to immediately sell the property, but to develop it ourselves.  Depending upon the location of the property and market conditions, the development done by us could be either residential (single or multi-family) or commercial.  Development of any type of real estate involves risks including the following: · We will be required to rely on the skill and financial stability of third party developers and contractors. · Any development or construction will involve obtaining local government permits.  We will be subject to the risk that our project does not meet the requirements necessary to obtain those permits. · Any type of development and construction is subject to delays and cost overruns. · There can be no guarantee that upon completion of the development that we will be able to sell the property or realize a profit from the sale. · Economic factors and real estate market conditions could adversely affect the value of the property.       |
| Bankruptcy and Legal Limitations on Personal Judgments May Adversely Affect Our Profitability | Any borrower has the ability to delay a foreclosure sale by us for a period ranging from several months to several years or more by filing a petition in bankruptcy.  The filing of a petition in bankruptcy automatically stops or “stays” any actions to enforce the terms of the loan.  The length of this delay and the costs associated with it will generally have an adverse impact on our profitability.  We also may not be able to obtain a personal judgment against a borrower.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

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| Unintended Violations of Usury Statutes May Adversely Affect Us                           | Usury laws impose restrictions on the maximum interest that may be charged on our loans.  Under California law, a loan arranged by a licensed California real estate broker will be exempt from applicable California usury provisions.  Since Redwood Mortgage Corp., a licensed California real estate broker and a holder of a California Finance Lenders license, or CFL license, will arrange our loans, our loans should be exempt from applicable state usury provisions. Nevertheless, unintended violations of the usury statutes may occur.  In such an event, we may have insufficient cash to pay any damages, thereby adversely affecting our operations.  We could also lose our entire investment.  We intend to apply for a CFL license.  Once we have obtained and are operating under a CFL license, we should be exempt from the applicable California usury provision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| If We Make High Cost Mortgages, We Will Be Required to Comply With Additional Regulations | Although we anticipate making relatively few loans that would qualify as “high cost mortgages,” as defined by regulations of the Federal Reserve, the failure to comply with these regulations could adversely affect us.  A high cost mortgage is any loan made to a consumer secured by the consumer’s principal residence if either (i) the annual percentage rate exceeds by more than 8%, the yield on Treasury securities having comparable periods of maturity for first mortgages, or 10% for junior mortgages or (ii) the total fees payable by a consumer at or before closing exceeds 8% of the total loan amount.  These regulations primarily focus on: · additional disclosure with respect to the terms of the loan to the borrower; · the timing of such disclosures; and · the prohibition of certain terms in the loan including balloon payments and negative amortization. The failure to comply with the regulations, even if the failure was unintended, will render the loan rescindable for up to three years.  The lender could also be held liable for attorneys’ fees, finance charges and fees paid by the borrower and certain other money damages. In addition, under California law residential mortgage and consumer loans secured by liens on real property of $250,000 or less are considered to be “high cost loans” if they have (i) an annual percentage rate at least 8% above the interest rate on U.S. Treasury securities of a comparable maturity, or (ii) points and fees in excess of 6% of the loan amount, exclusive of the points and fees.  While it is unlikely that we would make many high cost loans, the failure to comply with California law regarding such loans could have significant adverse effects on us.  The law prohibits certain lending practices with respect to high cost loans, including the making of a loan without regard to the borrower’s income or obligations.  When making such loans, lenders must provide borrowers with a consumer disclosure, and provide for an additional rescission period prior to closing the loan.  The reckless or willful failure to comply with any provision of this law, including the mandatory disclosure provisions, could result in, among other penalties, the imposition of administrative penalties of $25,000, loss or suspension of the offending broker’s license, as well as exposure to civil liability to the consumer/borrower (including the imposition of actual and punitive damages). |

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| We Operate in a Highly Regulated Industry and the Failure to Comply with Such Regulations Will Materially Adversely Affect Our Business  | The mortgage business has traditionally been highly regulated.  The costs of complying with these regulations could adversely affect our profitability, and violations of these regulations could materially adversely affect our business and financial results.  Recently, the turmoil in our industry has led to various proposed new legislation, rules and regulations by federal, state and local authorities relating to the origination and servicing of mortgage loans.  If enacted, these initiatives could result in delayed or reduced collections from mortgagors, limitations on the foreclosure process and generally increased servicing costs.  These legislative and regulatory initiatives could ultimately increase our administrative burdens and adversely affect the returns to our members.                                                                                                                                                                                                                                                                                                                        |
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| Since We Are Not Regulated As a Bank, Our Members and Borrowers May Have Fewer Protections                                               | Although we are engaged in mortgage lending, we and our affiliates are not banks and accordingly, are not generally subject to the federal and state banking regulations, policies and oversight applicable to banks.  For example, banks are subject to federal regulation and examination by the Federal Deposit Insurance Corporation, or FDIC, which insures bank deposits up to applicable limits.  The operations of banks are also subject to the regulation and oversight of the Federal Reserve Board and state banking regulators.  Banks are required to maintain a minimum level of regulatory capital in accordance with stringent guidelines established by federal law.  Federal and state banking agencies also regulate the lending practices, capital structure, investment practices and dividend policy of banks, among other things. Because we and our affiliates are generally not subject to the capital requirements and other regulations and oversight applicable to banks, our members and borrowers may not have the same level of protections and safeguards afforded to owners and customers of banks. |

| Loan-To-Value Ratios are Determined by Appraisals, Which May Be in Excess of the Ultimate Purchase Price of the Underlying Property | The so-called “loan-to-value ratio” will not exceed the following: · 80% of the appraised value for residential properties and multi-unit property; · 75% of the appraised value for commercial property; and · 50% of the appraised value for unimproved land. The loan-to-value ratios are determined based on the appraised value of a property which may be in excess of the ultimate purchase price of the underlying property.  We cannot assure you that such appraisals will reflect the actual amount buyers will pay for the property.  In the case of a loan made in connection with a pending property purchase, an appraisal may, for various reasons, reflect a higher or lower value than the purchase amount; we will nevertheless base our loan-to-value ratios on the appraised value, rather than on such purchase amount.  Further, if the value of the property declines to a value below the amount of the loan, the loan could become under-collateralized.  This would result in a risk of loss for us if the borrower defaults on the loan.  |
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| Larger Loans Result in Less Diversity and May Increase Risk                                                                    | We can as a general rule decrease risk of loss from delinquent mortgage loans by investing in a greater total number of loans.  Investing in fewer, larger loans generally decreases diversification of the portfolio and increases risk of loss and possible reduction of yield to our members in the case of a delinquency of such a loan.  However, since larger loans generally will carry a somewhat higher interest rate, our managers may determine, from time to time, that a relatively larger loan is advisable for us.  Our maximum investment in a loan will not exceed 10% of our then total assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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| Use of Borrowed Money May Reduce Our Profitability or Cause Losses Through Liquidation | We will be permitted to borrow funds for the purpose of making loans, for increased liquidity, reducing cash reserve needs or for any other proper purpose on any terms commercially available.  We may assign all or a portion of our loan portfolio and/or all or a portion of real estate that we own as security for such loans.  Our managers may not leverage more than, and our total indebtedness may not at any time exceed, 50% of members’ capital. Changes in the interest rate will have a particularly adverse effect on us if we have borrowed money to fund loans.  Borrowed money will likely bear interest at a variable rate, whereas we are likely to be making fixed rate loans.  Thus, if prevailing interest rates rise, we may have to pay more in interest on the borrowed money than we make on loans to our borrowers. This will reduce our profitability or cause losses through liquidation of loans in order to repay the debt on the borrowed money.  It is possible that we could default on our obligation if we cannot cover the debt on the borrowed money. |
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| Changes in Interest Rates May Affect Your Return on Your Investment                   | We expect that our loans will typically have fixed rates and the majority of our loans will be for terms of one to five years.  Consequently, due to the terms of our loans, if interest rates rapidly increase, such interest rates may exceed the average interest rate earned by our loan portfolio.  If prevailing interest rates rise above the average interest rate being earned by our loan portfolio, you may be unable to quickly sell your units, as they are an illiquid investment, in order to take advantage of higher returns available from other investments.  In addition, an increase in interest rates accompanied by a tight supply of mortgage funds may make refinancing by borrowers with balloon payments difficult or impossible.  This is true regardless of the market value of the underlying property at the time such balloon payments are due.  In such event, the property may be foreclosed upon. Moreover, we expect that the majority of our loans will not include prepayment penalties for a borrower paying off a loan prior to maturity.  The absence of a prepayment penalty in our loans may lead borrowers to refinance higher interest rate loans in a market of falling interest rates.  This would then require us to reinvest the prepayment proceeds in loans or alternative short term investments with lower interest rates and a corresponding lower yield to members.  |
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| Marshaling of Assets Could Delay or Reduce Recovery of Loans                     | As security for a single loan, we may require a borrower to execute deeds of trust on other properties owned by the borrower in addition to the property the borrower is purchasing or refinancing.  In the event of a default by the borrower, we may be required to “marshal” the assets of the borrower.  Marshaling is an equitable doctrine used to protect a junior lienholder with a security interest in a single property from being “squeezed out” by a senior lienholder, such as us, with security interest not only in the property, but in one or more additional properties.  Accordingly, if another creditor of the borrower forced us to marshal the borrower’s assets, foreclosure and eventual recovery of the loan could be delayed or reduced, and our costs associated therewith could be increased.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| We May Provide Loans to Borrowers Who Are in Default Under Other of Their Obligations | While we are primarily an “asset” rather than a “credit” lender and will rely mainly on the real property securing the loans to protect our investment, we may also consider the income level and general creditworthiness of a borrower to determine his or her ability to repay the loan according to its terms.  Accordingly, loans may be made to borrowers who are in default under other of their obligations (e.g., to consolidate their debts) or who do not have sources of income that would be sufficient to qualify for loans from other lenders such as banks or savings and loan associations.  There is a greater risk that such borrowers will default under loans we make to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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| We May Face Potential Liability for Toxic or Hazardous Substances                                            | If we take an equity interest in, management control of, or foreclose on any of the loans, we may be considered the owner of the real property securing such loans.  In the event of any environmental contamination, there can be no assurance that we would not incur full recourse liability for the entire cost of any such removal and cleanup, even if we did not know about or participate in the contamination. Full recourse liability means that any of our property, including the contaminated property, could be sold in order to pay the costs of cleanup in excess of the value of the property at which such contamination occurred.  In addition, we could incur liability to tenants and other users of the affected property, or users of neighboring property, including liability for consequential damages.  Consequential damages are damages which are a consequence of the contamination but are not costs required to clean up the contamination, such as lost profits of a business.                                                                                                                                                                                                                                                                                           |
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| If Properties We Own Contain Hazardous Substances, We Could Be Required to Pay for Their Removal or Clean Up | If we became the “owner” of any real property containing hazardous substances, we would also be exposed to risk of lost revenues during any cleanup, the risk of lower lease rates or decreased occupancy if the existence of such substances or sources on the property were a health risk.  If we fail to remove the substances or sources and clean up the property, federal, state, or local environmental agencies could perform such removal and cleanup.  Such agencies would impose and subsequently foreclose liens on the property for the cost thereof.  We may find it difficult or impossible to sell the property prior to or following any such cleanup.  If such substances are discovered after we sell the property, we could be liable to the purchaser thereof if our managers knew or had reason to know that such substances or sources existed.  In such case, we could also be subject to the costs described above. If we are required to incur such costs or satisfy such liabilities, this could have a material adverse effect on our profitability.  Additionally, if a borrower is required to incur such costs or satisfy such liabilities, this could result in the borrower’s inability to repay its loan from us.  |
| Conflicts May Arise if We Participate in Loans With Other Programs Organized by Our Managers                 | In certain limited circumstances and subject to compliance with applicable regulations or guidelines, we may participate in loans with other programs organized by our managers, where we purchase a fractional undivided interest in a loan.  Our portion of the total loan may be smaller or greater than the portion of the loan made by the other programs.  You should be aware that participating in loans with other programs organized by our managers could result in a conflict of interest between us and our managers as well between us and such other programs, in the event that the borrower defaults on the loan and our managers protect the interests of other programs, which they have organized, in the loan and in the underlying security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

| The Reduction in Availability of Mortgage Lending and the Volatility and Reduction in Liquidity in the Financial Markets May Adversely Affect Our Results | In recent years, the mortgage lending industry has experienced significant instability.  Due to factors such as defaults on subprime loans and the resulting decline in the market value of such loans, lenders, investors and regulators have questioned the adequacy of lending standards and other credit requirements for mortgage loans in recent years.  Deterioration in credit quality among subprime and other nonconforming loans has caused substantially all lenders to eliminate subprime mortgages and most other non-conforming loans.  Fewer loan options, stricter loan qualifications and other limitations or restrictions on the availability of those types of financings make it more difficult for some borrowers to finance the purchase of new and existing homes. These factors have reduced the affordability of homes and the pool of qualified homebuyers and made it more difficult to sell to first time and first time move-up buyers which have long made up a substantial part of the affordable housing market. These reductions in demand would increase the likelihood of defaults on our loans and, consequently, reduce our ability to pay distributions to our shareholders, and the duration and severity of the effects remain uncertain.  |
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| Prior Public Mortgage Programs With Similar Investment Objectives Sponsored By Our Managers are Experiencing Declines in Cash Flows  | Due to recent declines in real estate values and limited availability of credit in the current financial markets, and the resulting reduction in demand for real estate acquisition, many existing borrowers are experiencing difficulties in refinancing their loans or selling their properties to repay debt obligations.  As a result, many mortgage lenders, including Redwood Mortgage Investors VII (“RMI VII”) and Redwood Mortgage Investors VIII (“RMI VIII”), prior public mortgage programs sponsored by our managers, have been experiencing declines in cash flows from reduced loan payoffs, increased loan delinquencies, and increased needs for cash reserves.  The investment objectives and strategy of these prior programs are substantially similar to ours.  Like us, they make loans primarily secured by first and second deeds of trust on California real estate, including residential, commercial and multifamily properties, as well as land.  From time to time, loan originations in one sector or property type become more active due to prevailing market conditions.  As a result, in recent years RMI VIII’s portfolio has become more heavily weighted in residential condominiums and condominium complexes than in other property types.  Recovery of the condominium sector of the real estate market is generally expected to lag behind the single-family residential market.  Availability of financing for condominium properties has been, and will likely continue to be, severely constricted and difficult to obtain. Faced with an increasing number of borrowers that are unable to meet their repayment obligations over the past year, RMI VIII has entered into an increasing number of workout agreements and filed a greater number of default notices than in the past.  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, or allows time to pay the loan in full.  By deferring maturity dates of balloon payments or deferring past due payments, however, workout agreements may adversely affect the lender’s cash flow. A foreclosure may result in RMI VIII becoming the owner of the real estate which originally secured the loan. Given the current economic environment, it is anticipated that RMI VIII will acquire more real estate through foreclosures than it has historically.  RMI VIII may choose to hold many of the properties it forecloses upon for periods of time rather than immediately selling the properties, particularly where the property has the potential to generate rental income or the value of the property can be enhanced through improvements.  In the interim, this will result in RMI VIII being a holder of both debt and equity on California real estate and will require RMI VIII to expend time, effort and resources toward the management of such properties. In response to the above conditions and in an effort to preserve cash for company operations in the current economic environment, in March 2009, RMI VIII, suspended payments to withdrawing partners until further notice and has since significantly reduced the amount of distributions made to investors.  Redwood Mortgage Investors VIII is unable to predict when suspension of liquidations will be lifted or the payment of distributions will increase, as it will depend on general economic and capital market conditions and recovery of the real estate market.  RMI VIII will continue to be affected by these forces until such time as economic conditions improve or stabilize.  In addition, due to declines in residential real estate values, RMI VII and RMI VIII have increased provisions for loan losses, and in the third quarter of 2009, provided non-cash reserves to recognize the decline in the estimated market value of the collateral securing the loans, as required by GAAP.  This resulted in a downward capital account adjustment for all accounts in RMI VII and RMI VIII.   |
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|                                                                                                                            | In December 2009, RMI VIII entered into a forbearance agreement with the lenders for its credit facility.  Under this agreement, the lenders agreed to forbear from exercising its rights and remedies arising out of RMI VIII’s failure to comply with the profitability financial covenant under the loan agreement for the 2009 fiscal year. The forbearance period is effective until May 22, 2010, subject to earlier termination upon the occurrence of certain events. We may experience declines in cash flow and increases in loan delinquencies similar to that experienced by other mortgage lenders, such as RMI VIII.                                                             |
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| Our Operating Results May be Affected by Economic and Regulatory Changes That Have an Adverse Impact on the Real Estate Market. | Our operating results will be subject to risks generally associated with the ownership of assets related to the real estate industry, including: · changes in interest rates and availability of permanent mortgage funds; · changes in general economic or local conditions; · changes in tax, environmental, zoning and other real estate laws; and · periods of high interest rates and tight money supply. Due to these reasons, among others, we cannot assure you that we will be profitable or that we will increase profitability from income we receive from our investments.                                                             |
| The Concentration of Loans with a Single Borrower May Increase Our Risks.                                                       | We may invest in multiple secured loans that share a common borrower.  The aggregate of our loans, however, to any one borrower may not exceed 10% of the gross proceeds of the offering.  The bankruptcy, insolvency or other inability of any borrower that is the subject of multiple loans to pay interest or repay principal on its loans would have adverse effects on our income and reduce the amount of funds available for distribution to members. The more concentrated our portfolio is with one or a few borrowers, the greater credit risk we face. The loss of any one of these borrowers would have a material adverse effect on our financial condition and results of operations. |

| Our Lack of Operating History Makes It Difficult to Evaluate Our Future Prospects  | We are a newly formed entity and have only recently commenced operations.  We have a limited operating history and have not proved we can operate successfully.  Our limited operating history makes it difficult to evaluate the future prospects of our business.  The past performance of other mortgage programs sponsored by our managers is not necessarily indicative of our future performance and there can be no assurance that we will achieve comparable results. |
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|   | We have only generated limited revenues to date.  We are subject to all of the risks inherent in the establishment of a new business enterprise.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business. There is no way to tell at this stage of our history whether we will be able to successfully implement our investment strategy or achieve our investment objective.  There can be no assurance that we will ever achieve any substantial revenues or profitability or that investors will receive any return on investments or the return of their capital contributions.  |
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| Our Managers Will Make Only a Limited Cash Contribution to Us and We Will Initially be Thinly Capitalized  | In connection with our formation, one of our managers, Gymno Corporation, made a cash capital contribution to us of $10,000.  Upon the admission of members pursuant to the offering, we promptly refunded the $10,000 capital contribution to Gymno Corporation, upon which it was withdrawn as our initial member.  Accordingly, we had an initial capitalization of only $10,000 and consequently will be dependent on our managers for the payment of our organizational and offering expenses until sufficient proceeds are raised in the offering.  However, there can be no assurance that our managers will have sufficient funds to financially support us. Given the limited obligation of our managers to make initial and ongoing cash contributions to the company, our ability to adequately capitalize the company will be dependent on our ability to obtain sufficient cash contributions from outside investors in the offering.  There is no assurance that we will be able to raise sufficient proceeds in the offering to adequately capitalize the company and to implement our investment strategy or achieve our investment objective.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| Lack of Liquidity of Units Increases Their Risks                                                           | There are substantial restrictions on the transferability of the units. You will not be free to sell or transfer your units at will, and they may not be acceptable by a lender as security for borrowing.  No public trading market for the units is expected to exist after the offering.  It is highly unlikely that a public trading market will ever develop.  The California Commissioner of Corporations also imposes a restriction on sale or transfer, except to specified persons, because of the investor suitability standards that apply to a purchaser of units who is a resident of California.  Units may not be sold or transferred without consent of the Commissioner, except to family members, other holders of units, and us. Our operating agreement also imposes substantial restrictions upon a member’s ability to transfer units.  The operating agreement provides members with a limited right to redeem units, subject to certain limitations and requirements. The amount that a redeeming member will receive from the company is based on the lesser of the purchase price paid by the redeeming member or the redeeming member’s capital account balance as of the date of each redemption payment.  A capital account is a sum calculated for tax and accounting purposes, and may be greater than or less than the fair market value of such member’s interest in the company.  The fair market value of the units will be irrelevant in determining amounts to be paid upon redemption.  As described above, the amount received by a redeeming member may, under certain circumstances, be based on the member’s capital account balance as of the date of each redemption payment, rather than the date of the redemption request.  Accordingly, the amount paid to a member upon redemption may not reflect the redeeming member’s capital balance as of the date on which the redemption request was made.  In addition, your units may not be readily accepted as collateral for a loan.  Consequently, you should consider the purchase of units only as a long-term investment.  |
| You are Limited in Your Ability to Have Your Units Redeemed Under Our Unit Redemption Program              | Our unit redemption program contains significant restrictions and limitations that limit your ability to redeem your units.  The number of units you may redeem per quarter will be subject to a maximum of the greater of 100,000 units or 25% of your units outstanding.  In addition, we will not, in any calendar year, redeem from all of our members a total of more than 5% (or in any calendar quarter, redeem more than 1.25%) of the weighted average number of all units outstanding during the twelve month period immediately prior to the date of the redemption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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|                                                                                                                                                            | Moreover, our managers reserve the right, in their sole discretion, at any time, to reject any request for redemption, or to suspend or terminate the acceptance of new redemption requests without prior notice, or to terminate, suspend or amend the unit redemption program upon 30 days written notice.  Therefore, in making a decision to purchase units, you should not assume that you will be able to sell any of your units back to us pursuant to our redemption program. We will fund redemptions solely from available company cash flow and will not establish a reserve from which to fund redemptions.  Accordingly, we cannot guarantee that we will have sufficient funds to accommodate all redemption requests made in any given year.                                                                                                                                                                                                                                                                                                 |
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| There is No Assurance You Will Receive Cash Distributions                                                                                                       | Our managers and their affiliates will be paid and reimbursed by us for certain services performed for us and expenses paid on our behalf.  We will bear all other expenses incurred in our operations.  All of these fees and expenses are deducted from cash funds generated by our operations prior to computing the amount that is available for distribution to you.  Our managers, in their discretion, may also retain a portion of cash funds generated from operations for working capital purposes.  Accordingly, there is no assurance as to when or whether cash will be available for distributions to you.                                                                                                                                                                                                                                                                                                                                                                                                                     |
| You Must Rely on Our Managers for Management Decisions; You Will Have No Control Over Our Operation                                                             | All decisions with respect to our management will be made exclusively by our managers.  In addition, our managers originate or arrange all of our mortgage loans.  Our success will, to a large extent, depend on the quality of our management, particularly as it relates to lending decisions.  You have no right or power to take part in our management.  Accordingly, you should not purchase any of the units offered hereby unless you are willing to entrust all aspects of management to our managers.  You should carefully evaluate our managers’ capabilities to perform such functions.                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Because We Do Not Have Independent Directors, Members May Have Less Protection Against Affiliated Transactions and Conflicts of Interests                       | We are managed by our managers who have various conflicts of interest in connection with their management of us.  We do not have a board of directors, nor any independent directors.  The absence of independent directors may leave our members with less protection against affiliated transactions and conflicts of interest arising out of our relationship with our managers and their affiliates and similar matters.  These include arrangements pursuant to which our managers and their affiliates are compensated by us.  If actions are taken by our managers, or expenses are incurred that are not in our best interests, it could have a material adverse effect on our business and operations.                                                                                                                                                                                                                                                                                                                              |
| Because We Do Not Have an Audit or Compensation Committee, Members Will Have to Rely on Our Managers, Who are Not Independent, to Perform These Functions  | Since the units are not listed for trading on a national securities exchange, we are not subject to certain of the corporate governance rules established by the national securities exchanges pursuant to the Sarbanes-Oxley Act of 2002.  Among other things, these rules relate to independent director standards, audit and compensation committees standards and the use of an audit committee financial expert.  Accordingly, our members will not receive the protections these rules and standards were enacted to provide, such as protections against interested director transactions, conflicts of interest and similar matters. We do not have an audit or compensation committee.  As a result, members will have to rely on our managers, none of whom are independent, to perform these functions.  Thus, there is a potential conflict in that our managers, who are engaged in management, will participate in decisions concerning management compensation and audit issues that may affect management performance.  |

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| Your Ability to Recover Your Investment on Dissolution and Termination Will Be Limited | In the event of our dissolution or termination, the proceeds realized from the liquidation of assets, if any, will be distributed to the members only after the satisfaction of claims of creditors.  Accordingly, your ability to recover all or any portion of your investment under such circumstances will depend on the amount of funds so realized and claims to be satisfied therefrom.  Additionally, if you have elected to reinvest your distributions into additional units through your participation in our distribution reinvestment plan, you could lose such reinvested distributions in addition to the amount of your initial investment.                                                 |
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| We Established the $1 Per Unit Offering Price on an Arbitrary Basis               | We arbitrarily determined the $1 per unit selling price for the offering as well as the $1 per unit price for reinvestment of distributions.  Such price bears no relationship to our book or asset values.  Such price also is not necessarily the amount you may receive pursuant to your limited right to redeem units, subject to certain requirements. The amount that a redeeming member will receive is the lesser of the purchase price for the redeemed units or the redeeming member’s capital account balance as of the date of each redemption payment.  The fair market value of your interest in the company will be irrelevant in determining amounts to be paid upon redemption. |

| Our Managers and Their Affiliates May Purchase Units and Such Units Will Count Towards the Minimum Offering  | Our managers and their affiliates may, in their discretion, purchase units for their own account.  The maximum amount of units that may be purchased by our managers or their affiliates is 1,000,000 units ($1,000,000).  Upon any such purchases of units, our managers or their affiliates will have the same rights as other members in respect of the units owned by them, including the right to vote on matters subject to the vote of members, subject to certain exceptions.  In addition, any units purchased by our managers and their affiliates will be counted toward the minimum of 1,000,000 units ($1,000,000) that must be sold in the primary offering.  As a result, at the time that we sell the minimum offering and commence operations, our managers and their affiliates could represent a significant percentage of the outstanding units and exert control over matters requiring the approval of our members.                                                                                                                                                                              |
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| We May Be Unable to Insure Against Certain Kinds of Losses                                                        | We will require comprehensive insurance, including fire and extended coverage, which is customarily obtained for or by a lender, on properties in which we acquire a security interest.  Generally, such insurance will be obtained by and at the cost of the borrower.  However, there are certain types of losses (generally of a catastrophic nature, such as civil disturbances and acts of God such as earthquakes, floods and slides) which are either uninsurable or not economically insurable.  Should such a disaster occur to, or cause the destruction of, any property serving as collateral for a loan, we could lose both our invested capital and anticipated profits from such investment.  In addition, on certain real estate owned by us as a result of foreclosure, we may require homeowner’s liability insurance.  However, insurance may not be available for theft, vandalism, land or mud slides, hazardous substances or earthquakes on all real estate owned and losses may result from destruction or vandalism of the property thereby adversely affecting our profitability. |

| Our Anticipated Concentration of Mortgages in the San Francisco Bay Area Exposes Us to Greater Risks of Loss if the Local Economy Weakens  | We expect that a significant majority of our loans will be secured by properties located in nine counties that comprise the San Francisco Bay Area (San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa, Marin, Napa, Solano and Sonoma).  As is the case nationally, the residential real estate market in California, including the San Francisco Bay Area, is in a downturn.  Our anticipated concentration of loans in the San Francisco Bay Area exposes us to greater risk of loss if the economy in the San Francisco Bay Area weakens than would be the case if our loans were spread throughout California or the nation.  The San Francisco Bay Area economy and/or real estate market conditions could be weakened by:  |
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|                                           |  · An extended economic slowdown or recession in the area · Overbuilding of commercial and residential properties     · Relocation of businesses outside of the area due to economic factors such as high cost of living and of doing business within the region · Increased interest rates, thereby weakening the general real estate market · Reductions in the availability of credit If the economy were to weaken, it is likely that there would be more property available for sale, values would fall and lending opportunities would decrease.  In addition, a weak economy and increased unemployment could adversely affect borrowers resulting in an increase in the number of loans in default.  |
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| You Will Be Bound by Decision of Majority Vote | Subject to certain limitations, members holding a majority of units may vote to, among other things: · dissolve and terminate the company; · amend the operating agreement, subject to certain limitations; · approve or disapprove the sale of all or substantially all of our assets; or · remove or replace one or all of our managers or elect additional or new managers. If you do not vote with the majority in interest of the other members, you nonetheless will be bound by the majority vote.  Our managers will have the right to increase the offering or conduct additional offerings of units without obtaining your consent or the consent of any other member.                                                                     |

| The Formation Loan May Be Forgiven Under Certain Circumstances  | We will loan to Redwood Mortgage Corp., a manager, funds in an amount equal to the sales commissions and amounts payable in connection with unsolicited sales.  The formation loan will be an unsecured loan that will not bear interest and will be repaid in annual installments.  During the offering period, Redwood Mortgage Corp. will make annual installments of one-tenth of the principal balance of the formation loan as of December 31 of the prior year.  Such payment will be due and payable by December 31 of the following year.  Prior to the termination of the offering, the principal balance of the formation loan will increase as additional sales of units are made each year.  Upon completion of the offering, the balance of the formation loan will be repaid in ten (10) equal annual installments of principal, without interest, commencing on December 31 of the year following the year the offering terminates. A portion of the amount we receive from redeeming members as early redemption penalties may first be applied to reduce the principal balance of the formation loan.  This will have the effect of reducing the amount owed by Redwood Mortgage Corp. to us.  If all or any one of the initial managers are removed as a manager by the vote of a majority in interest of the members and a successor or additional manager begins using any other loan brokerage firm for the placement of loans or loan servicing, Redwood Mortgage Corp. will be immediately released from any further payment obligation under the formation loan.  If all of the managers are removed, no other managers are elected, the company is liquidated and Redwood Mortgage Corp. is no longer receiving payments for services rendered, we will forgive the debt on the formation loan and Redwood Mortgage Corp. will be immediately released from any further obligations under the formation loan.  The non-interest bearing feature of the formation loan will have the effect of slightly diluting your rate of return, but to a much lesser extent than if we were required to bear all of our own syndication expenses out of the offering proceeds. |
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| You Will Have Limited Ability to Liquidate Your Investment Prior to the End of Our Term and May Experience Delays in Receiving Distributions Upon Liquidation | Under our operating agreement, we will continue to operate until October 8, 2028, unless our term is extended by the vote of a majority in interest of the members.  While we do not currently intend to cease operations prior to the end of our term and do not anticipate providing liquidity to our members prior to such time (other than on a limited basis through our unit redemption program), we may dissolve and terminate earlier upon the occurrence of various events described our operating agreement or by operation of law.  Upon our dissolution, our managers will seek to promptly liquidate our assets for the best price reasonably obtainable and to use any proceeds to satisfy our debts, and then to distribute any remaining proceeds to our members and managers in accordance with the terms of our operating agreement.  However, there is no assurance that our managers will be successful in liquidating us on our anticipated termination date or any earlier dissolution date.  Delays in liquidation may arise due to market conditions and other factors beyond the control of our managers.  In the event we are unable to liquidate on or prior to the end of our anticipated term, you and other members may not receive distributions of remaining proceeds, if any, in a timely manner or at all.  |
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| Our Managers Have Limited Assets Which May Affect Their Ability to Fulfill Their Obligations to Us                                                            | Our managers have limited assets and financial resources.  As a result, they may not be unable to fulfill their obligations and responsibilities to us.  Our managers also serve as the sponsors and managers of other mortgage programs and have legal and financial obligations with respect to these other programs.  Additionally, they may have contingent liability for the obligations of such other programs.  To the extent that our managers are required to expend a significant portion of their assets and financial resources to satisfy their obligations or liabilities to such other programs or otherwise, their ability to fulfill their financial and other obligations to us may be adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Delays in Investment Could Adversely Affect Your Return                                                                                                       | A delay will occur between the time you purchase your units and the time the net proceeds of the offering are invested.  This delay could adversely affect the return paid to you.  In order to mitigate this risk, pending the investment of the proceeds of the offering, funds will be placed in such highly liquid, short-term investments designated by our managers.  The interest earned on such interim investments is expected to be less than the interest we would earn on loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| We Cannot Precisely Determine Compensation to be Paid to Our Managers and Their Affiliates                                                     | Our managers and their affiliates are unable to predict the amounts of compensation to be paid to them.  Any such prediction would necessarily involve assumptions of future events and operating results which cannot be made at this time.  As a result, there is a risk that members will not have the opportunity to judge ahead of time whether the compensation realized by our managers is commensurate with the return generated by the loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Payment of Fees to Our Managers and Their Affiliates Will Reduce Cash Available for Investment and Distribution                                               | Our managers and their affiliates will perform services for us in connection with the offer and sale of the units, the selection and acquisition of our investments and the administration of our investments. They will be paid substantial fees for these services, which will reduce the amount of cash available for investment in properties or distribution to members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| Working Capital Reserves May Not be Adequate  | We intend to maintain working capital reserves to meet our obligations, including our carrying costs and operating expenses.  Our managers believe such reserves are reasonably sufficient for our contingencies.  If for any reason those reserves are insufficient, we will have to borrow the required funds or liquidate some or all of our loans.  In the event our managers deem it necessary to borrow funds, there can be no assurance that such borrowing will be on acceptable terms or even available to us.  Such a result might require us to liquidate our investments and abandon our activities.  |
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| We May be Required to Forego More Favorable Investments to Avoid Regulation Under Investment Company Act of 1940                                                                  | Our managers intend to conduct our operations so that we will not be subject to regulation under the Investment Company Act of 1940.  Among other things, they will monitor the proportions of our funds which are placed in various investments and the form of such investments so that we do not come within the definition of an investment company under such Act.  As a result, we may have to forego certain investments which would produce a more favorable return.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| Conflicts May Arise as a Result of Our Managers’ Legal and Financial Obligations to Other Mortgage Programs                                                                      | Our managers and their affiliates are currently involved with five mortgage programs with investment objectives similar to ours.  They may also organize other mortgage programs in the future with investment objectives similar to ours.  Our managers and such affiliates have legal and financial obligations with respect to these other mortgage programs which are similar to their obligations with respect to us.  These obligations may at times conflict or require our managers to limit the resources allocated to us and these other programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Conflicts May Arise From Our Managers’ Allocation of Time Between Us and Other Activities                                                                                        | Our managers and their affiliates have conflicts of interest in allocating the time of their personnel between us and other activities in which they are involved.  Redwood Mortgage Corp. also provides loan brokerage services to investors other than us.  As a result, there will exist conflicts of interest on the part of our managers between us and the other mortgage programs or investors with which they are affiliated at such time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Amount of Loan Brokerage Commissions and Other Compensation to Our Managers May Affect the Rate of Return to You.                                                                       | None of the compensation payable to our managers was determined by arms length negotiations.  We anticipate that the loan brokerage commissions charged to borrowers by Redwood Mortgage Corp., one of our managers, will average approximately 2-5% of the principal amount of each loan, but may be higher or lower depending upon market conditions.  Any increase in the loan brokerage commission charged on loans may have a direct, adverse effect upon the interest rates we charge on loans and thus the overall rate of return to you.  This conflict of interest will exist in connection with every loan transaction, and you must rely upon the fiduciary duties of our managers to protect your interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| If Our Managers Lose or are Unable to Obtain Key Personnel or One or More of Their Key Personnel Decides to Compete With Us, Our Ability to Implement Our Strategic Plans Could be Impaired | We depend on the diligence, experience and skills of certain executive officers and other key personnel of our managers and their affiliates, including Michael R. Burwell, Diana B. Mandarino and Theodore J. Fischer, for the selection, acquisition, structuring and monitoring of our lending and investment activities. These individuals are not bound by employment agreements with the managers or with us.  If any of our managers’ key personnel were to cease their employment with them or their affiliates, our operating results could suffer.  One of our managers has obtained life insurance policies on two of their key personnel.  There is no assurance that such insurance will be sufficient to protect against events that may adversely affect our ability to implement our strategies.  We also believe that our future success depends, in large part, upon the ability of our managers or their affiliates to hire and retain highly skilled managerial, operational and marketing personnel. We cannot assure you that they will be successful in attracting and retaining such personnel. The loss of key personnel and the inability of our managers to hire any key person could harm our business, financial condition, cash flow and results of operations.  |

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| We Will Rely on Independent Broker-Dealers to Sell Units in The offering | We are offering the units through selected broker-dealers who are members of FINRA.  None of the broker-dealers participating in the offering will be affiliated with our sponsors or our managers.  Because we do not have a captive or affiliated broker-dealer that will be exclusively or primarily focused on selling our units, our ability to successfully complete the offering will depend, in large part, on our ability to develop and maintain relationships with a sufficient number of unaffiliated participating broker-dealers.  These broker-dealers are engaged in the sale of various securities and investment products beyond those offered by us, including those of competing mortgage programs.  In the event we are unable to enter into selling agreements with a sufficient number of qualified participating broker-dealers, or if those participating broker-dealers engaged by us fail to devote sufficient time and attention to the marketing of our units, we may be unable to raise a sufficient amount of funds in the offering as may be necessary to enable us to be successful. |
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| Risks Associated With Treatment of the Limited Liability Company as a Partnership for Federal Income Tax Purposes | We intend to be treated as a partnership (other than a publicly traded partnership) for federal income tax purposes and not as a corporation.  Although we have received an opinion from Baker & McKenzie LLP to the effect that we will be treated as a partnership (other than a publicly traded partnership) for federal income tax purposes, we will not seek a ruling from the Internal Revenue Service (“IRS”) on the tax treatment of us or our members.  Counsel’s opinion represents only its best legal judgment based upon existing law and, among other things, factual representations provided by our managers.  The opinion of counsel has no binding effect on the IRS or any court, and no assurance can be given that the conclusions reached in said opinion would be sustained by a court if challenged by the IRS. If we were taxable as a corporation, the “pass through” treatment of our income and losses would be lost.  Instead, we would, among other things, pay income tax on our earnings in the same manner and at the same rate as a corporation, and our losses, if any, would not be deductible by the members.  Members would be taxed upon distributions substantially in the manner that corporate shareholders are taxed on dividends.  In addition, if we were classified as a publicly traded partnership but nonetheless remained taxable as a partnership, the passive activity loss rules would apply in a manner that could adversely affect members.  |
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| Your Ability to Offset Income With Our Losses May be Limited                                                      | We are engaged in mortgage lending.  We take the position that most of our income is non-passive income for purposes of certain limitations on the use of losses from passive activities.  It is possible, however, that the IRS could assert that our income is properly treated as portfolio income for purposes of those limitations.  Such treatment is subject to the interpretation of complex Treasury regulations, and is dependent upon a number of factors, such as whether we are engaged in a trade or business, the extent to which we incur liabilities in connection with our activities, and the proper matching of the allocable expenses incurred in the production of income.  There can be no assurance that an IRS challenge to our characterization of our income will not succeed.  It also is possible that we might be unable to allocate expenses to the income produced, in which case members might find their ability to offset income with allocable expenses limited by the 2% floor on miscellaneous investment expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

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| Your Tax Liability May Exceed the Cash You Receive    | Your tax liabilities associated with an investment in the units for a given year may exceed the amount of cash we distribute to you during such year.  As a member, you will be taxed on your allocable share of our taxable income whether or not you actually receive cash distributions from us.  Your taxable income could exceed cash distributions you receive, for example, if you elect to reinvest into additional units the cash distributions you would otherwise have received.  Taxable income in excess of cash distributions also could result if we were to generate so-called “phantom income” (taxable income without an associated receipt of cash).  Phantom income could be recognized from a number of sources, including, without limitation, repayment of principal on loans incurred by the company as well as imputed income due to original issue discount, market discount, imputed interest and significant modifications to existing loans.                                                                                                                                     |
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| We Expect to Generate Unrelated Business Taxable Income    | Tax-exempt investors (such as an employee pension benefit plan or an IRA) may be subject to tax to the extent that income from the units is treated as unrelated business taxable income, or UBTI.  We borrow funds on a limited basis, which can cause a portion of our income to be treated as UBTI.  We may also receive income from services rendered in connection with making or securing loans, which is likely to constitute UBTI.  In addition, although we do not currently intend to own and lease personal property, it is possible we may do so as a result of a foreclosure upon a default.  Although we use reasonable efforts to prevent any borrowings and leases of personal property from causing any significant amount of income from the units to be treated as UBTI, we expect that some portion of our income will be UBTI.  Prospective investors that are tax-exempt entities are urged to consult their own tax advisors regarding the suitability of an investment in units.  In particular, an investment in units may not be suitable for charitable remainder trusts.  |
| IRS Audits Could Result in Adjustments to Your Tax Returns | The IRS could challenge certain federal income tax positions taken by us if we are audited.  Any adjustment to our return resulting from an audit by the IRS would result in adjustments to your tax returns and might result in an examination of items in such returns unrelated to your investment in the units or an examination of tax returns for prior or later years.  Moreover, we and our members could incur substantial legal and accounting costs in contesting any IRS challenge, regardless of the outcome.  Our managers generally will have the authority and power to act for, and bind the company in connection with, any such audit or adjustment for administrative or judicial proceedings in connection therewith.                                                                                                                                                                                                                                                                                                                                                                                          |
| You May be Subject to State and Local Tax Laws        | The state in which you reside may impose an income tax upon your share of our taxable income.  Furthermore, states such as California, in which we will own property generally impose income tax upon a member’s share of the company’s taxable income considered allocable to such states, whether or not a member resides in that state.  As a result, a nonresident member may be required to file a tax return in California and any other such state.  Differences may exist between federal income tax laws and state and local income tax laws.  We may be required to withhold state taxes from distributions to members in certain instances.  You are urged to consult with your own tax advisers with respect to state and local taxation.                                                                                                                                                                                                                                                                                                                                               |

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| Changes in Tax Laws Could Have an Adverse Effect on Your Investment | In recent years, legislative, judicial and administrative changes have been made in the provisions of the federal income tax laws applicable to investments similar to an investment in our units. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect the taxation of a member. Any such changes could have an adverse effect on an investment in our units or on the market value of our assets. You are urged to consult with your own tax advisor with respect to the impact of recent legislation on your investment in units and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our units. You should also note that our counsel’s tax opinion assumes that no legislation will be enacted after the date of this prospectus that will be applicable to an investment in our units. |
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| Risks of Investment by Benefit Plan Investors and Other Tax-Exempt Investors | In considering an investment in the units, if you are an employee benefit plan subject to ERISA, you should consider (i) whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA; or (ii) whether the investment is prudent, since there may not be a market created in which you can sell or otherwise dispose of the units.  In addition if you are a Benefit Plan Investor, including a tax-qualified pension or 401(k) plan or an IRA, you should consider (i) whether a distribution of units from a tax-qualified plan or IRA would be accepted by an IRA custodian as a rollover, and if not, the automatic 20% income tax withholding which you may need to satisfy out of other assets that you own; (ii) whether a required distribution from a tax-qualified plan or IRA commencing on the April 1 following the  calendar year in which you attain age 70 1⁄2 or,  with respect to a tax-qualified plan distribution, retire, if later, could cause you to become subject to income tax that you would need to satisfy out of other assets if you were not able to transfer the unit for cash; and (iii) whether interests in us or the underlying assets owned by us constitute “plan assets” for purposes of Section 406 of ERISA or Section 4975 of the Code which could cause certain transactions with us to constitute non-exempt prohibited transactions.  Finally, all tax-exempt investors, including tax-qualified pension and 401(k) plans and IRAs should consider (i) whether the investment will impair the liquidity of your plan or other entity; and (ii) whether the investment will create unrelated business taxable income for the plan or other entity.  ERISA requires that the assets of a plan be valued at their fair market value as of the close of the plan year, and it may not be possible to adequately value the units from year to year, since there will not be a market for those units and the appreciation of any property may not be shown in the value of the units until we sell or otherwise dispose of our investments.  |
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| ·   | For redemptions beginning after one year (but before two years) 92% of purchase price or 92% of the capital account balance, whichever is less; |
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| ·   | For redemptions beginning after two years (but before three years) 94% of purchase price or 94% of the capital account balance, whichever is less; |
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| ·   | For redemptions beginning after three years (but before four years) 96% of purchase price or 96% of the capital account balance, whichever is less; |
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| ·   | For redemptions beginning after four years (but before five years) 98% of purchase price or 98% of the capital account balance, whichever is less; |
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| ·   | For redemptions beginning after five years, 100% of purchase price or 100% of the capital account balance, whichever is less. |
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|               |   | 2009   |    |
|--------------------|--------|--------|---------|
|               |   |   |    |   |
| Maximum chargeable |   | $      | 231     |   |
| Waived             |   |   | — |   |
| Net charged        |   | $      | 231     |   |

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|               |   | 2009   |    |
|--------------------|--------|--------|---------|
|               |   |   |    |   |
| Maximum chargeable |   | $      | 1,289   |   |
| Waived             |   |   | — |   |
| Net charged        |   | $      | 1,289   |   |

|   | Contributed Capital |
|--------|---------------------|

| Contributions                       |   | $      | 1,895,433 |   |
|-------------------------------------|--------|--------|-----------|--------|
|                                |   |   |      |   |
| Formation Loan made                 |   | $      | 132,680   |   |
| Repayments to date                  |   |   | —   |   |
| Early withdrawal penalties, applied |   |   | —   |   |
| Balance at                          |   |   |      |   |
| December 31, 2009                   |   | $      | 132,680   |   |
|                                |   |   |      |   |
| Percent loaned                      |   |   | 7.00      | %      |

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|                                  |   | Results for 2009 |    |
|---------------------------------------|--------|------------------|---------|
|                                  |   | Dollars          |    |   | Percent |   |
| Revenue                               |   |             |    |   |   |   |
| Loans                                 |   |             |    |   |   |   |
| Interest on loans                     |   | $                | 11,785  |   |   |   | — | % |
| Late fees                             |   |             | — |   |   |   | — |   |
| Total loan revenue                    |   |             | 11,785  |   |   |   | — |   |
| Other                                 |   |             | 6,011   |   |   |   | — |   |
| Total revenues                        |   |             | 17,796  |   |   |   | — |   |
|                                  |   |             |    |   |   |   |   |   |
| Provision for loan loss               |   |             | — |   |   |   | — |   |
|                                  |   |             |    |   |   |   |   |   |
| Operating expenses                    |   |             |    |   |   |   |   |   |
| Mortgage servicing fees               |   |             | 231     |   |   |   | — |   |
| Asset management fees                 |   |             | 1,289   |   |   |   | — |   |
| Amortization of loan origination fees |   |             | 147     |   |   |   | — |   |
| Other                                 |   |             | 2,074   |   |   |   | — |   |
| Total operating expenses              |   |             | 3,741   |   |   |   | — |   |
| Net income (loss)                     |   |             |    |   |   |   |   |   |
|                                  |   | $                | 14,055  |   |   |   | — | % |

|   |   | Average |    | Stated  |   |      |   |
|--------|--------|---------|---------|---------|--------|-----------|--------|
|   |   | Secured |    | Average |   | Effective |   |
|   |   | Loan    |    | Yield   |   | Yield     |   |
| Year   |   | Balance |    | Rate    |   | Rate      |   |
| 2009   |   | $       | 368,897 |    | 9.52   | %         | 9.52   | % |

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|                           |   | 2009   |    |
|--------------------------------|--------|--------|---------|
| Reinvesting                    |   | $      | — |   |
| Distributing                   |   |   | 13,914  |   |
| Total                          |   | $      | 13,914  |   |
| Percent of members’      |   |   |    |   |
| capital, electing distribution |   |   | 100     | % |

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|                                                          |   | 2009   |      |
|---------------------------------------------------------------|--------|--------|-----------|
| Number of secured loans                                       |   |   | 8         |   |
| Secured loans-unpaid principal balance                        |   | $      | 1,253,742 |   |
|                                                          |   |   |      |   |
| Average secured loan                                          |   | $      | 156,718   |   |
| Average secured loan as percent of total secured loans        |   |   | 12.50     | % |
| Average secured loan as percent of members’ capital     |   |   | 13.94     | % |
|                                                          |   |   |      |   |
| Largest secured loan                                          |   | $      | 269,487   |   |
| Largest secured loan as percent of total secured loans        |   |   | 21.49     | % |
| Largest secured loan as percent of members’ capital     |   |   | 23.98     | % |
| Largest secured loan as percent of total assets               |   |   | 15.78     | % |
|                                                          |   |   |      |   |
| Smallest secured loan                                         |   | $      | 98,766    |   |
| Smallest secured loan as percent of total secured loans       |   |   | 7.88      | % |
| Smallest secured loan as percent of members’ capital    |   |   | 8.79      | % |
| Smallest secured loan as percent of total assets              |   |   | 5.78      | % |
|                                                          |   |   |      |   |
| Number of counties where security is located (all California) |   |   | 6         |   |
| Largest percentage of secured loans in one county             |   |   | 29.37     | % |
|                                                          |   |   |      |   |
| Number of secured loans in foreclosure                        |   |   | —   |   |
| Secured loans in foreclosure – unpaid principal balance |   |   | —   |   |
|                                                          |   |   |      |   |
| Number of secured loans with an interest reserve              |   |   | —   |   |
| Interest reserves                                             |   | $      | —   |   |

|                                     | 2009    |   |
|------------------------------------------|---------|--------|
| Lien position                            | Loans   |   | Principal |   | Percent |   |
| First trust deeds                        | 5       |   | $ | 833,817 |   | 67 | % |
| Second trust deeds                       | 3       |   |   | 419,925 |   | 33 |   |
| Third trust deeds                        | — |   |   | — |   | — |   |
| Total secured loans                      | 8       |   |   | 1,253,742 |   | 100 | % |
| Liens due other lenders at loan closing  |    |   |   | 707,893 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Total debt                               |    |   | $ | 1,961,635 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Appraised property value at loan closing |    |   | $ | 4,442,021 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Percent of total debt to appraised       |    |   |   |   |   |   |   |
| values (LTV) at loan closing (1)         |    |   |   | 44.16 | % |   |   |

|   | (1) Based on appraised values and liens due other lenders at loan closing.  The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                | 2009    |   |
|---------------------|---------|--------|
| Property type       | Loans   |   | Principal |   | Percent |   |
| Single family       | 8       |   | $ | 1,253,742 |   | 100 | % |
| Apartments          | — |   |   | — |   | — |   |
| Commercial          | — |   |   | — |   | — |   |
| Land                | — |   |   | — |   | — |   |
| Total secured loans | 8       |   | $ | 1,253,742 |   | 100 | % |

|                         | 2009    |   |
|------------------------------|---------|--------|
| Maturities                   | Loans   |   | Principal |   | Percent |   |
| 2010                         | — |   | $ | — |   | — | % |
| 2011                         | — |   |   | — |   | — |   |
| 2012                         | — |   |   | — |   | — |   |
| 2013                         | 1       |   |   | 98,766 |   | 8 |   |
| 2014                         | 3       |   |   | 335,489 |   | 27 |   |
| Thereafter                   | 4       |   |   | 819,487 |   | 65 |   |
| Total future maturities      | 8       |   |   | 1,253,742 |   | 100 |   |
| Matured at December 31, 2009 | — |   |   | — |   | — |   |
| Total secured loans          | 8       |   | $ | 1,253,742 |   | 100 | % |

|                            |   | Total         |      |   |    |   |
|---------------------------------|--------|---------------|-----------|--------|---------|--------|
| California County               |   | Secured Loans |      |   | Percent |   |
|                            |   |          |      |   |    |   |
| San Francisco Bay Area Counties |   |          |      |   |    |   |
| San Francisco                   |   | $             | 150,000   |   |    |   | 11.96 | % |
| Alameda                         |   |          | 119,925   |   |    |   | 9.57 |   |
| San Mateo                       |   |          | 150,000   |   |    |   | 11.96 |   |
| Marin                           |   |          | 250,000   |   |    |   | 19.94 |   |
|                            |   |          | 669,925   |   |    |   | 53.43 | % |
|                            |   |          |      |   |    |   |   |   |
| Southern California Counties    |   |          |      |   |    |   |   |   |
| Los Angeles                     |   |          | 368,253   |   |    |   | 29.37 | % |
| Riverside                       |   |          | 215,564   |   |    |   | 17.20 |   |
|                            |   |          | 583,817   |   |    |   | 46.57 | % |
| Total                           |   |          |      |   |    |   |   |   |
|                            |   | $             | 1,253,742 |   |    |   | 100.00 | % |

----

| · | Report of Independent Registered Public Accounting Firm                               |
|--------|---------------------------------------------------------------------------------------|
| · | Balance Sheets – December 31, 2009 and 2008                                     |
| · | Statements of Income for the years ended December 31, 2009                            |
| · | Statements of Changes in Members’ Capital for the years ended December 31, 2009 |
| · | Statements of Cash Flows for the years ended December 31, 2009                        |
| · | Notes to Financial Statements                                                         |

| · | Schedule II  – Valuation and Qualifying Accounts |
|--------|------------------------------------------------------------------|
| · | Schedule IV – Mortgage Loans on Real Estate                |

----

----

|                                                       |   | Page No. |
|------------------------------------------------------------|--------|----------|
| Report of Independent Registered Public Accounting Firm    |   | 49       |
|                                                       |   |     |
| Balance Sheets                                             |   | 50       |
|                                                       |   |     |
| Statement of Operations                                    |   | 51       |
|                                                       |   |     |
| Statement of Changes in Members’ Capital             |   | 52       |
|                                                       |   |     |
| Statement of Cash Flows                                    |   | 53       |
|                                                       |   |     |
| Notes to Financial Statements                              |   | 54       |
|                                                       |   |     |
| Supplemental Schedules                                     |   |     |
|                                                       |   |     |
| Schedule II -  Valuation and Qualifying Accounts |   | 67       |
|                                                       |   |     |
| Schedule IV - Mortgage Loans on Real Estate                |   |     |
| Rule 12-29 Loans on Real Estate                            |   | 68       |

----

----

|                      |   | 2009   |      |   | 2008   |   |
|---------------------------|--------|--------|-----------|--------|--------|--------|
| Cash and cash equivalents |   | $      | 371,551   |   |   | $      | 10,000 |   |
|                      |   |   |      |   |   |   |   |   |
| Loans                     |   |   |      |   |   |   |   |   |
| Secured by deeds of trust |   |   |      |   |   |   |   |   |
| Principal balances        |   |   | 1,253,742 |   |   |   | — |   |
| Accrued interest          |   |   | 5,468     |   |   |   | — |   |
| Net loans                 |   |   | 1,259,210 |   |   |   | — |   |
|                      |   |   |      |   |   |   |   |   |
| Receivable from affiliate |   |   | 67,508    |   |   |   | — |   |
|                      |   |   |      |   |   |   |   |   |
| Loan origination fees     |   |   | 9,907     |   |   |   | — |   |
|                      |   |   |      |   |   |   |   |   |
| Total assets              |   | $      | 1,708,176 |   |   | $      | 10,000 |   |

| Liabilities                                                           |   |   |      |   |   |   |    |   |
|-----------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|
| Payable to affiliate                                                  |   | $      | 700       |   |   | $      | — |   |
| Total liabilities                                                     |   |   | 700       |   |   |   | — |   |
|                                                                  |   |   |      |   |   |   |    |   |
| Investors in applicant status                                         |   |   | 583,500   |   |   |   | — |   |
|                                                                  |   |   |      |   |   |   |    |   |
| Capital                                                               |   |   |      |   |   |   |    |   |
| Members’ capital                                                |   |   |      |   |   |   |    |   |
| Members’ capital, subject to redemption, net of unallocated     |   |   |      |   |   |   |    |   |
| syndication costs of $58,447 for 2009; and net of formation           |   |   |      |   |   |   |    |   |
| loan receivable of $132,680 for 2009                                  |   |   | 1,123,244 |   |   |   | — |   |
|                                                                  |   |   |      |   |   |   |    |   |
| Managers’ capital, net of unallocated syndication costs of $590 |   |   |      |   |   |   |    |   |
|  for 2009                                                        |   |   | 732       |   |   |   | 10,000  |   |
| Total members’ capital                                          |   |   | 1,123,976 |   |   |   | 10,000  |   |
|                                                                  |   |   |      |   |   |   |    |   |
| Total liabilities and capital                                         |   | $      | 1,708,176 |   |   | $      | 10,000  |   |

----

|                                             |   | 2009   |    |
|--------------------------------------------------|--------|--------|---------|
| Revenues                                         |   |   |    |
| Loans                                            |   |   |    |
| Interest on loans                                |   | $      | 11,785  |   |
| Late fees                                        |   |   | — |   |
| Total loan revenue                               |   |   | 11,785  |   |
| Other interest                                   |   |   | 2,161   |   |
| Other                                            |   |   | 3,850   |   |
| Total revenues                                   |   |   | 17,796  |   |
|                                             |   |   |    |   |
| Provision for loan losses                        |   |   | — |   |
|                                             |   |   |    |   |
| Operating expenses                               |   |   |    |   |
| Mortgage servicing fees                          |   |   | 231     |   |
| Asset management fees                            |   |   | 1,289   |   |
| Amortization of loan origination fees            |   |   | 147     |   |
| Other                                            |   |   | 2,074   |   |
| Total operating expenses                         |   |   | 3,741   |   |
| Net income (loss)                                |   | $      | 14,055  |   |
|                                             |   |   |    |   |
| Net income (loss)                                |   |   |    |   |
| Managers (  1%)                        |   | $      | 141     |   |
| Members (99%)                                    |   |   | 13,914  |   |
|                                             |   | $      | 14,055  |   |
| Net income (loss) per $1,000 invested by members |   |   |    |   |
| for entire period                                |   | $      | 16      |   |

----

|                                               |   |      |       |   | Members |     |
|----------------------------------------------------|--------|-----------|------------|--------|---------|----------|
|                                               |   | Investors |       |   |    |     |   |   |   |   |   |   |   |   |   |
|                                               |   | In        |       |   | Capital |     |   | Unallocated |   |   | Formation |   |   | Total |   |
|                                               |   | Applicant |       |   | Account |     |   | Syndication |   |   | Loan, |   |   | Members’ |   |
|                                               |   | Status    |       |   | Members |     |   | Costs |   |   | Gross |   |   | Capital |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2008                      |   | $         | —    |   |    | $        | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| Contributions on application                       |   |      | 1,899,283  |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Formation loan increases                           |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | (132,680 | ) |   |   | (132,680 | ) |
| Formation loan payments received                   |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Interest credited to investors in applicant status |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Interest withdrawn                                 |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Transfers to members’ capital                |   |      | (1,315,783 | )      |    |     | 1,314,371 |   |   |   | — |   |   |   | — |   |   |   | 1,314,371 |   |
| Net income                                         |   |      | —    |   |    |     | 13,914 |   |   |   | — |   |   |   | — |   |   |   | 13,914 |   |
| Syndication costs incurred                         |   |      | —    |   |    |     | — |   |   |   | (58,447 | ) |   |   | — |   |   |   | (58,447 | ) |
| Allocation of syndication costs                    |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Members’ withdrawals                         |   |      | —    |   |    |     | (13,914 | ) |   |   | — |   |   |   | — |   |   |   | (13,914 | ) |
| Early withdrawal penalties                         |   |      | —    |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2009                      |   |      | 583,500    |   |    |     | 1,314,371 |   |   |   | (58,447 | ) |   |   | (132,680 | ) |   |   | 1,123,244 |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   |      |       |   |    | Managers |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   |      |       |   |    | Capital  |   |   | Unallocated |   |   | Total |   |   | Total |   |
|                                               |   |      |       |   |    | Account  |   |   | Syndication |   |   | Managers’ |   |   | Members’ |   |
|                                               |   |      |       |   |    | Managers |   |   | Costs |   |   | Capital |   |   | Capital |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2008                      |   |      |       |   |    | $        | 10,000 |   |   | $ | — |   |   | $ | 10,000 |   |   | $ | 10,000 |   |
| Formation loan increases                           |   |      |       |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | (132,680 | ) |
| Formation loan payments received                   |   |      |       |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Capital contributed                                |   |      |       |   |    |     | 1,322 |   |   |   | — |   |   |   | 1,322 |   |   |   | 1,315,693 |   |
| Net income                                         |   |      |       |   |    |     | 141 |   |   |   | — |   |   |   | 141 |   |   |   | 14,055 |   |
| Syndication costs incurred                         |   |      |       |   |    |     | — |   |   |   | (590 | ) |   |   | (590 | ) |   |   | (59,037 | ) |
| Allocation of syndication costs                    |   |      |       |   |    |     | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Members’ withdrawals                         |   |      |       |   |    |     | (10,141 | ) |   |   | — |   |   |   | (10,141 | ) |   |   | (24,055 | ) |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2009                      |   |      |       |   |    |     | 1,322 |   |   |   | (590 | ) |   |   | 732 |   |   |   | 1,123,976 |   |
|                                               |   |      |       |   |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                            |   | 2009   |       |
|-----------------------------------------------------------------|--------|--------|------------|
| Cash flows from operating activities                            |   |   |       |
| Net income (loss)                                               |   | $      | 14,055     |   |
| Adjustments to reconcile net income (loss) to net cash provided |   |   |       |   |
| by (used in) operating activities                               |   |   |       |   |
| Amortization of loan origination fees                           |   |   | 147        |   |
| Change in operating assets and liabilities                      |   |   |       |   |
| Accrued interest and late fees                                  |   |   | (5,468     | ) |
| Receivable from affiliate                                       |   |   | (67,508    | ) |
| Loan origination fees                                           |   |   | (10,054    | ) |
| Payable to affiliate                                            |   |   | 700        |   |
| Net cash provided by (used in) operating activities             |   |   | (68,128    | ) |
|  Cash flows from investing activities                      |   |   |       |   |
| Loans originated                                                |   |   | (1,254,177 | ) |
| Principal collected on loans                                    |   |   | 435        |   |
| Net cash provided by (used in) investing activities             |   |   | (1,253,742 | ) |
|  Cash flows from financing activities                      |   |   |       |   |
| Contributions by member applicants                              |   |   | 1,899,193  |   |
| Members’ withdrawals                                      |   |   | (24,055    | ) |
| Syndication costs paid                                          |   |   | (59,037    | ) |
| Formation loan lending                                          |   |   | (132,680   | ) |
| Net cash provided by (used in) financing activities             |   |   | 1,683,421  |   |
| Net increase (decrease) in cash and cash equivalents            |   |   | 361,551    |   |
| Cash and cash equivalents at beginning of year                  |   |   | 10,000     |   |
| Cash and cash equivalents at end of year                        |   | $      | 371,551    |   |

----

|   | NOTE 1 – ORGANIZATION AND GENERAL |
|--------|-----------------------------------------|

----

|   | NOTE 1 – ORGANIZATION AND GENERAL (continued) |
|--------|-----------------------------------------------------|

| ·   | For redemptions beginning after one year (but before two years) 92% of purchase price or 92% of the capital account balance, whichever is less; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For redemptions beginning after two years (but before three years) 94% of purchase price or 94% of the capital account balance, whichever is less; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For redemptions beginning after three years (but before four years) 96% of purchase price or 96% of the capital account balance, whichever is less; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For redemptions beginning after four years (but before five years) 98% of purchase price or 98% of the capital account balance, whichever is less; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For redemptions beginning after five years, 100% of purchase price or 100% of the capital account balance, whichever is less. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

----

|   | NOTE 1 – ORGANIZATION AND GENERAL (continued) |
|--------|-----------------------------------------------------|

|                     |   | Initial     |        |   |   |   |
|--------------------------|--------|-------------|-------------|--------|--------|--------|
|                     |   | Offering of |        |   |   |   |
|                     |   | $           | 150,000,000 |   |   | Total  |   |
|                     |   |        |        |   |   |   |   |
| Member contributions     |   | $           | 1,895,433   |   |   | $      | 1,895,433 |   |
|                     |   |        |        |   |   |   |   |   |
| Formation Loan made      |   | $           | 132,680     |   |   | $      | 132,680 |   |
| Unamortized discount on  |   |        |        |   |   |   |   |   |
| imputed interest         |   |        | (19,532     | )      |   |   | (19,532 | ) |
| Formation Loan made, net |   |        | 113,148     |   |   |   | 113,148 |   |
| Unamortized discount on  |   |        |        |   |   |   |   |   |
| imputed interest         |   |        | 19,532      |   |   |   | 19,532 |   |
| Balance at               |   |        |        |   |   |   |   |   |
| December 31, 2009        |   | $           | 132,680     |   |   | $      | 132,680 |   |
|                     |   |        |        |   |   |   |   |   |
| Percent loaned           |   |        | 7.00        | %      |   |   | 7.00 | % |

----

|   | NOTE 1 – ORGANIZATION AND GENERAL (continued) |
|--------|-----------------------------------------------------|

| Costs incurred                     |   | $      | 59,037  |   |
|------------------------------------|--------|--------|---------|--------|
| Early withdrawal penalties applied |   |   | — |   |
| Allocated to date                  |   |   | — |   |
|                               |   |   |    |   |
| December 31, 2009 balance          |   | $      | 59,037  |   |

|                                            |   | 2009   |      |   | 2008   |   |
|-------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Members’ capital per financial statements |   | $      | 1,123,976 |   |   | $      | 10,000 |   |
| Unallocated syndication costs                   |   |   | 59,037    |   |   |   | — |   |
| Allowance for loan losses                       |   |   | —   |   |   |   | — |   |
| Formation loans receivable                      |   |   | 132,680   |   |   |   | — |   |
|                                            |   |   |      |   |   |   |   |   |
| Members’ capital tax basis                |   | $      | 1,315,693 |   |   | $      | 10,000 |   |

| The company is scheduled to terminate October 8, 2028, unless sooner terminated as provided in the operating agreement. |
|-------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|               |   | 2009   |    |
|--------------------|--------|--------|---------|
|               |   |   |    |   |
| Maximum chargeable |   | $      | 231     |   |
| Waived             |   |   | — |   |
| Net charged        |   | $      | 231     |   |

|               |   | 2009   |    |
|--------------------|--------|--------|---------|
|               |   |   |    |   |
| Maximum chargeable |   | $      | 1,289   |   |
| Waived             |   |   | — |   |
| Net charged        |   | $      | 1,289   |   |

----

|                                                          |   | 2009   |      |
|---------------------------------------------------------------|--------|--------|-----------|
| Number of secured loans                                       |   |   | 8         |   |
| Secured loans-unpaid principal balance                        |   | $      | 1,253,742 |   |
|                                                          |   |   |      |   |
| Average secured loan                                          |   | $      | 156,718   |   |
| Average secured loan as percent of total secured loans        |   |   | 12.50     | % |
| Average secured loan as percent of members’ capital     |   |   | 13.94     | % |
|                                                          |   |   |      |   |
| Largest secured loan                                          |   | $      | 269,487   |   |
| Largest secured loan as percent of total secured loans        |   |   | 21.49     | % |
| Largest secured loan as percent of members’ capital     |   |   | 23.98     | % |
| Largest secured loan as percent of total assets               |   |   | 15.78     | % |
|                                                          |   |   |      |   |
| Smallest secured loan                                         |   | $      | 98,766    |   |
| Smallest secured loan as percent of total secured loans       |   |   | 7.88      | % |
| Smallest secured loan as percent of members’ capital    |   |   | 8.79      | % |
| Smallest secured loan as percent of total assets              |   |   | 5.78      | % |
|                                                          |   |   |      |   |
| Number of counties where security is located (all California) |   |   | 6         |   |
| Largest percentage of secured loans in one county             |   |   | 29.37     | % |
|                                                          |   |   |      |   |
| Number of secured loans in foreclosure                        |   |   | —   |   |
| Secured loans in foreclosure – unpaid principal balance |   |   | —   |   |
|                                                          |   |   |      |   |
| Number of secured loans with an interest reserve              |   |   | —   |   |
| Interest reserves                                             |   | $      | —   |   |

----

|                                     | 2009    |   |
|------------------------------------------|---------|--------|
| Lien position                            | Loans   |   | Principal |   | Percent |   |
| First trust deeds                        | 5       |   | $ | 833,817 |   | 67 | % |
| Second trust deeds                       | 3       |   |   | 419,925 |   | 33 |   |
| Third trust deeds                        | — |   |   | — |   | — |   |
| Total secured loans                      | 8       |   |   | 1,253,742 |   | 100 | % |
| Liens due other lenders at loan closing  |    |   |   | 707,893 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Total debt                               |    |   | $ | 1,961,635 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Appraised property value at loan closing |    |   | $ | 4,442,021 |   |   |   |
|                                     |    |   |   |   |   |   |   |
| Percent of total debt to appraised       |    |   |   |   |   |   |   |
| values (LTV) at loan closing (1)         |    |   |   | 44.16 | % |   |   |
|                                     |    |   |   |   |   |   |   |

|                | 2009    |   |
|---------------------|---------|--------|
| Property type       | Loans   |   | Principal |   | Percent |   |
| Single family       | 8       |   | $ | 1,253,742 |   | 100 | % |
| Apartments          | — |   |   | — |   | — |   |
| Commercial          | — |   |   | — |   | — |   |
| Land                | — |   |   | — |   | — |   |
| Total secured loans | 8       |   | $ | 1,253,742 |   | 100 | % |

|                         | 2009    |   |
|------------------------------|---------|--------|
| Maturities                   | Loans   |   | Principal |   | Percent |   |
| 2010                         | — |   | $ | — |   | — | % |
| 2011                         | — |   |   | — |   | — |   |
| 2012                         | — |   |   | — |   | — |   |
| 2013                         | 1       |   |   | 98,766 |   | 8 |   |
| 2014                         | 3       |   |   | 335,489 |   | 27 |   |
| Thereafter                   | 4       |   |   | 819,487 |   | 65 |   |
| Total future maturities      | 8       |   |   | 1,253,742 |   | 100 |   |
| Matured at December 31, 2009 | — |   |   | — |   | — |   |
| Total secured loans          | 8       |   | $ | 1,253,742 |   | 100 | % |

----

----

|   | The following methods and assumptions were used to estimate the fair value of assets and liabilities: |
|--------|-------------------------------------------------------------------------------------------------------|

| (a)   | Cash and cash equivalents.  The carrying amount equals fair value.  All amounts, including interest bearing accounts, are subject to immediate withdrawal. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Secured loans. The fair value of the non-impaired loans of $1,259,694 at December 31, 2009 was estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. For impaired loans in which a specific allowance is established based on the fair value of the collateral, the collateral fair value is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers opinion of values, and publicly available information on in-market transactions (Level 2 inputs).  Historically, it has been rare for determinations of fair value to be made without substantial reference to current market transactions.  However, in recent years, due to the low number of real estate transactions, and the rising number of transactions that are distressed (i.e., that are executed by an unwilling seller – often compelled by lenders or other claimants - and/or executed without broad exposure or with market exposure but with few, if any, resulting offers), more interpretation, judgment and interpolation/extrapolation within and across property types is required (Level 3 inputs). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Organization and offering expenses |
|--------|------------------------------------|

----

|                         |   | B          |    | C                |   |    |           |   |       |    |
|------------------------------|--------|------------|---------|------------------|--------|---------|----------------|--------|------------|---------|
|                         |   | Balance at |    | Additions        |   |    |           |   |       | E       |
| A                            |   | Beginning  |    | Charged to Costs |   |    | Charged to     |   | D          |    |   |   | Balance at |
| Description                  |   | of Period  |    | and Expenses     |   |    | Other Accounts |   | Deductions |    |   |   | End of Period |
| Year ended December 31, 2008 |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| Deducted from asset accounts |   |       |    |             |   |    |           |   |       |    |   |   |   | ) |   |   |   |   |
| Allowance for loan losses    |   | $          | — |             | $      | — |           |   | $          | — |   | $ | — |   | (a) |   | $ | — |
|                         |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| Cumulative write-down of     |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| real estate owned            |   |       | — |             |   | — |           |   |       | — |   |   | — |   | (b) |   |   | — |
|                         |   | $          | — |             | $      | — |           |   | $          | — |   | $ | — |   |   |   | $ | — |
|                         |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| Year ended December 31, 2009 |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| Deducted from asset accounts |   |       |    |             |   |    |           |   |       |    |   |   |   | ) |   |   |   |   |
| Allowance for loan losses    |   | $          | — |             | $      | — |           |   | $          | — |   | $ | — |   | (a) |   | $ | — |
|                         |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| Cumulative write-down of     |   |       |    |             |   |    |           |   |       |    |   |   |   |   |   |   |   |   |
| real estate owned            |   |       | — |             |   | — |           |   |       | — |   |   | — |   | (b) |   |   | — |
|                         |   | $          | — |             | $      | — |           |   | $          | — |   | $ | — |   |   |   | $ | — |

----

|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   | Col. H      |   |      |       |
|-------------------------------------------------------------------------------------------------|--------|----------|--------|----------|----------|----------|--------|--------|--------|--------|--------|-----------|--------|--------|-------------|-----------|--------|-------------|--------|-----------|------------|
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   | Principal   |   |      |       |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   | Col. F    |   |   |        |      |   | Amount of   |   |      |       |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   | Face      |   |   | Col. G      |      |   | Loans       |   |      |       |
|                                                                                            |   |     |   | Col. C   |     | Col. D   |   |   |   |   |   | Amount of |   |   | Carrying    |      |   | Subject to  |   |      | Col. J     |
|                                                                                            |   | Col. B   |   | Final    |     | Periodic |   |   | Col. E |   |   | Mortgage  |   |   | Amount of   |      |   | Delinquent  |   | Col. I    | California |
| Col. A                                                                                          |   | Interest |   | Maturity |     | Payment  |   |   | Prior  |   |   | Original  |   |   | Mortgage    |      |   | Principal   |   | Type of   | Geographic |
| Descrip                                                                                         |   | Rate     |   | Date     |     | Terms    |   |   | Liens  |   |   | Amount    |   |   | Investments |      |   | or Interest |   | Lien      | Location   |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   |        |   |      |       |
| The following loans individually exceed 3% of aggregate carrying amount of mortgage investments |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   |        |   |      |       |
| Res.                                                                                            |   |     | 9.50   | %        | 08/01/19 |     | $      | 2,270  |   |   |   | —   |   |   | $           | 270,000   |   |        |   | 269,487   |       |   |   | — |   | 1st | Los Angeles |
| Res.                                                                                            |   |     | 9.75   | %        | 07/01/14 |     |   | 961    |   |   |   | —   |   |   |        | 111,800   |   |        |   | 111,564   |       |   |   | — |   | 1st | Riverside |
| Res.                                                                                            |   |     | 9.25   | %        | 11/01/14 |     |   | 987    |   |   |   | 74,569    |   |   |        | 120,000   |   |        |   | 119,925   |       |   |   | — |   | 2nd | Alameda |
| Res.                                                                                            |   |     | 9.75   | %        | 12/01/14 |     |   | 894    |   |   |   | —   |   |   |        | 104,000   |   |        |   | 104,000   |       |   |   | — |   | 1st | Riverside |
| Res.                                                                                            |   |     | 8.75   | %        | 01/01/15 |     |   | 1,967  |   |   |   | —   |   |   |        | 250,000   |   |        |   | 250,000   |       |   |   | — |   | 1st | Marin |
| Res.                                                                                            |   |     | 10.00  | %        | 01/01/15 |     |   | 1,316  |   |   |   | 97,724    |   |   |        | 150,000   |   |        |   | 150,000   |       |   |   | — |   | 2nd | San Mateo |
| Res.                                                                                            |   |     | 9.25   | %        | 03/01/13 |     |   | 823    |   |   |   | —   |   |   |        | 100,000   |   |        |   | 98,766    |       |   |   | — |   | 1st | Los Angeles |
| Res.                                                                                            |   |     | 10.00  | %        | 05/01/18 |     |   | 1,328  |   |   |   | 535,600   |   |   |        | 151,373   |   |        |   | 150,000   |       |   |   | — |   | 2nd | San Francisco |
| Total                                                                                           |   |     |   |     |     |     | $      | 10,546 |   |   | $      | 707,893   |   |   | $           | 1,257,173 |   |        | $      | 1,253,742 |       |   | $ | — |   |   |   |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   |        |   |      |       |   |   |   |   |   |   |
|                                                                                            |   |     |   |     |     |     |   |   |   |   |   |      |   |   |        |      |   |        |   |      |       |   |   |   |   |   |   |

----

|                         |   | 2009   |      |
|------------------------------|--------|--------|-----------|
| Balance at beginning of year |   | $      | —   |   |
|                         |   |   |      |   |
| Additions during period      |   |   |      |   |
| New loans                    |   |   | 1,254,177 |   |
| Other                        |   |   | —   |   |
| Total additions              |   |   | 1,254,177 |   |
|                         |   |   |      |   |
| Deductions during period     |   |   |      |   |
| Collections of principal     |   |   | 435       |   |
| Foreclosures                 |   |   | —   |   |
| Cost of loans sold           |   |   | —   |   |
| Amortization of premium      |   |   | —   |   |
| Other                        |   |   | —   |   |
| Total deductions             |   |   | 435       |   |
|                         |   |   |      |   |
| Balance at close of year     |   | $      | 1,253,742 |   |

----

----

----

| Entity Receiving Compensation | Description of Compensation and Services Rendered | Amount                                                                           |
|-------------------------------|---------------------------------------------------|----------------------------------------------------------------------------------|
| Redwood Mortgage Corp.        | Mortgage Servicing Fee for servicing loans        | $          231                 |
| (Manager)                     |                                              |                                                                             |
|                          |                                              |                                                                             |
| Managers &/or Affiliates  | Asset Management Fee for managing assets          | $       1,289                                 |
|                          |                                              |                                                                             |
| Managers                      | 1% interest in profits (loss)                     | $          141                 |
|                          | Less allocation of syndication costs              | $            — |
|                          |                                              | $          141                 |
|                          |                                              |                                                                             |
| Managers &/or Affiliates  | Portion of early withdrawal penalties applied to  |                                                                             |
|                          | reduce Formation Loan                             | $            — |

| Redwood Mortgage Corp. | Mortgage Brokerage Commissions for services in          |                                        |
|------------------------|---------------------------------------------------------|---------------------------------------------|
|                   | connection with the review, selection, evaluation,      |                                        |
|                   | negotiation, and extension of the loans paid by the     |                                        |
|                   | borrowers and not by the company                        | $      18,095 |
|                   |                                                    |                                        |
| Redwood Mortgage Corp. | Processing and Escrow Fees for services in              |                                        |
|                   | connection with notary, document preparation, credit    |                                        |
|                   | investigation, and escrow fees payable by the borrowers |                                        |
|                   | and not by the company                                  | $2,460                                      |
|                   |                                                    |                                        |
| Gymno Corporation      | Reconveyance Fee                                        | $0                                          |
|                   |                                                    |                                        |

----

----

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

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

|   | 3. | Exhibits. |
|--------|----|-----------|

| Exhibit No. |   | Description of Exhibits |
|-------------|--------|-------------------------|

| 3.1    |   | Limited Liability Company Operating Agreement                                                                                      |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |   | Certificate of Formation                                                                                                           |
| 3.3    |   | Amended and Restated Limited Liability Company Operating Agreement                                                                 |
| 3.4    |   | Second Amended and Restated Limited Liability Company Operating Agreement                                                          |
| 10.1   |   | Distribution Reinvestment Plan                                                                                                     |
| 10.2   |   | Loan Servicing Agreement                                                                                                           |
| 10.3   | (a)    | Form of Note secured by Deed of Trust for Construction Loans, which provides for interest only payments                            |
|   | (b)    | Form of Note secured by Deed of Trust for Commercial Loans which provides for interest only payments                               |
|   | (c)    | Form of Note secured by Deed of Trust for Commercial Loans which provides for principal and interest payments                      |
|   | (d)    | Form of Note secured by Deed of Trust for Residential Loans, which provides for interest only payments.                            |
|   | (e)    | Form of Note secured by Deed of Trust for Residential Loans which provides for interest and principal prepayments                  |
| 10.4   | (a)    | Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing to accompany Exhibit 10.3(a)     |
|   | (b)    | Deed of Trust, Assignment of Leases and Rents, and Security Agreement and Fixture Filing to accompany Exhibits 10.3(b) and 10.3(c) |
|   | (c)    | Deed of Trust, Assignment of Leases and Rents, and Security Agreement and Fixture Filing to accompany Exhibit 10.3(d) and 10.3(e)  |
| 10.5   |   | Agreement to Seek a Lender                                                                                                         |
| 10.6   |   | Formation Loan Promissory Note                                                                                                     |
| 31.1   |   | Certification of Manager pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                 |
| 31.2   |   | Certification of Manager  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                      |
| 31.3   |   | Certification of Manager pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                 |
| 32.1   |   | Certification of Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                 |
| 32.2   |   | Certification of Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                 |
| 32.3   |   | Certification of Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                 |
| 99.1   |   | Selected Portions of the Registrant’s Prospectus, dated June 8, 2009                                                         |

| C. | See A (2) above. Additional reference is made to the company’s prospectus, dated June 8, 2009 and Supplement No. 2 dated February 17, 2010, included as part of the Post Effective Amendment No. 1 to the Registration Statement on Form S-11 (SEC File No. 333-155428),, for financial data related to Gymno Corporation, and Redwood Mortgage Corp., the Managers. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| REDWOOD MORTGAGE INVESTORS IX |
|-------------------------------|

| By:    | /S/ Michael R. Burwell      |                                      |   |
|--------|-----------------------------|-------------------------------------------|--------|
|   | Michael R. Burwell, Manager |                                      |   |
|   |                        |                                      |   |
|   |                        |                                      |   |
| By:    | Gymno Corporation, Manager  |                                      |   |
|   |                        |                                      |   |
|   |                        |                                      |
|   | By:                         | /S/ Michael R. Burwell                    |
|   |                        | Michael R. Burwell, President, Secretary, |
|   |                        | and Principal Financial Officer           |
|   |                        |                                      |
|   |                        |                                      |
|   |                        |                                      |
| By:    | Redwood Mortgage Corp.      |                                      |
|   |                        |                                      |
|   |                        |                                      |
|   | By:                         | /S/ Michael R. Burwell                    |
|   |                        | Michael R. Burwell, President,            |
|   |                        | Secretary/Treasurer                       |

----

| Signature | Title | Date |
|-----------|-------|------|

| /S/ Michael R. Burwell |   |    |   |           |
|------------------------|--------|---------|--------|----------------|
| Michael R. Burwell     |   | Manager |   | March 31, 2010 |

| /S/ Michael R. Burwell |   |                                                                                                                                                                               |   |           |
|------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
| Michael R. Burwell     |   | President of Gymno Corporation, (Principal Executive Officer); Director of Gymno Corporation Secretary/Treasurer of Gymno Corporation (Principal Financial and Accounting Officer) |   | March 31, 2010 |

| /S/ Michael R. Burwell |   |                                                                                                                                     |   |           |
|------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
| Michael R. Burwell     |   | President, Secretary/Treasurer of Redwood Mortgage Corp. (Principal Financial and Accounting Officer);Director of Redwood Mortgage Corp. |   | March 31, 2010 |

----

|   | I, Michael R. Burwell, certify that: |
|--------|--------------------------------------|

| 1. | I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors IX, a Delaware Limited Liability Company (the “Registrant”); |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Based on my knowledge, this 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 report; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and 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 report is being prepared; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | 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 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | 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 forth 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 the Registrant’s board of directors (or persons performing the equivalent functions): |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 information; 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. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | I, Michael R. Burwell, certify that: |
|--------|--------------------------------------|

| 1. | I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors IX, a Delaware Limited Liability Company (the “Registrant”); |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Based on my knowledge, this 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 report; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and 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 report is being prepared; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | 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 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | 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 forth 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 the Registrant’s board of directors (or persons performing the equivalent functions): |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 information; 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. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | I, Michael R. Burwell, certify that: |
|--------|--------------------------------------|

| 1. | I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors IX, a Delaware Limited Liability Company (the “Registrant”); |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Based on my knowledge, this 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 report; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and 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 report is being prepared; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | 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 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | 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 forth 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 the Registrant’s board of directors (or persons performing the equivalent functions): |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 information; 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. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (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 company at the dates and for the periods indicated. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | /s/ Michael R. Burwell |
|--------|------------------------|

|   | _____________________________ |
|--------|-------------------------------|

|   | Michael R. Burwell, Manager |
|--------|-----------------------------|

|   | March 31, 2010 |
|--------|----------------|

----

|   | (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 company at the dates and for the periods indicated. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | /s/ Michael R. Burwell |
|--------|------------------------|

|   | _____________________________ |
|--------|-------------------------------|

|   | Michael R. Burwell, President, and |
|--------|------------------------------------|

|   | Chief Financial Officer of Gymno |
|--------|----------------------------------|

|   | Corporation, Manager |
|--------|----------------------|

----

|   | (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 company at the dates and for the periods indicated. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | /s/ Michael R. Burwell |
|--------|------------------------|

|   | ___________________________ |
|--------|-----------------------------|

|   | Michael R. Burwell, President, |
|--------|--------------------------------|

|   | Redwood Mortgage Corporation, |
|--------|-------------------------------|

|   | Manager |
|--------|---------|

|   | March 31, 2010 |
|--------|----------------|

----