**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 **FORM
        10-Q**
 
 (Mark
        One)
 [X]
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 **For
        the Quarterly Period Ended March 31, 2007**
 
 **OR**
 
 [   ]
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 **For
        the transition period from ______________ to
        ______________**
 
 **Commission
        File Number:  000-19992**
 
 **REDWOOD
        MORTGAGE INVESTORS VII,**
 **a
        California Limited Partnership**
 (Exact
        name of registrant as specified in its charter)
 
 **California**
              
              **94-3094928**(State
                  or other jurisdiction of incorporation
              
              (I.R.S.
                  Employeror
                  organization)
              
              Identification
                  No.)
 
 **900
                  Veterans Blvd., Suite 500, Redwood City, CA**
              **94063-1743**(Address
                  of principal executive offices)
              (Zip
                  Code)
 
 **(650)
                  365-5341**
 (Registrant’s
        telephone number, including area code)
 
 **NOT
                  APPLICABLE**
 (Former
        name, former address and former fiscal year, if changed since last
        report)
 
 Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.
 
 Yes
              XX
              
              No
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange
        Act.
 
 Large
        Accelerated
        Filer  [  ]                                                   Accelerated
        Filer  [  ]                                               Non-Accelerated
        Filer  [X]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 
 Yes
              
              
              No
              XX
  1
  **Part
        I – Item 1.   FINANCIAL STATEMENTS**
 
 **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **BALANCE
        SHEETS**
 **MARCH
        31, 2007 (unaudited) AND DECEMBER 31, 2006 (audited)**
 
 **ASSETS**
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006Cash
                  and cash equivalents
              
              $
              1,225,434
              
              
              $
              584,114LoansLoans,
                  secured by deeds of trust
              
              
              5,518,815
              
              
              
              6,218,439Loans,
                  unsecured, net discount of $63,746 and $65,802for
                  March 31, 2007 and December 31, 2006, respectively
              
              
              720,240
              
              
              
              714,6596,239,055
              
              
              
              6,933,098Allowance
                  for loan losses
              
              
              (441,741
              )
              
              
              (454,417
              )Net
                  loans
              
              
              5,797,314
              
              
              
              6,478,681Interest
                  and other receivablesRelated
                  party receivables
              
              
              16,113
              
              
              
              20,634Accrued
                  interest and late fees
              
              
              81,574
              
              
              
              67,754Total
                  interest and other receivables
              
              
              97,687
              
              
              
              88,388Investment
                  in limited liability company
              
              
              880,857
              
              
              
              875,408Real
                  estate held for sale, net
              
              
              1,371,401
              
              
              
              1,371,401Total
                  assets
              
              $
              9,372,693
              
              
              $
              9,397,992
 
 **LIABILITIES
        AND PARTNERS’ CAPITAL**
 
 LiabilitiesPayable
                  to affiliate
              
              $
              71,998
              
              
              $
              71,998Total
                  liabilities
              
              
              71,998
              
              
              
              71,998Partners’
                  capitalLimited
                  partners’ capital, subject to redemption
              
              
              9,288,722
              
              
              
              9,314,021General
                  partners’ capital
              
              
              11,973
              
              
              
              11,973Total
                  partners’ capital
              
              
              9,300,695
              
              
              
              9,325,994Total
                  liabilities and partners’ capital
              
              $
              9,372,693
              
              
              $
              9,397,992
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  2
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **STATEMENTS
        OF INCOME**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (unaudited)**
 
 2007
              
              
              2006RevenuesInterest
                  on loans
              
              $
              139,109
              
              
              $
              129,189Interest-interest
                  bearing accounts
              
              
              8,206
              
              
              
              1,825Late
                  fees
              
              
              1,168
              
              
              
              1,003Other
              
              
              1,232
              
              
              
              5,825149,715
              
              
              
              137,842ExpensesClerical
                  costs through Redwood Mortgage Corp.
              
              
              2,837
              
              
              
              3,264Asset
                  management fees
              
              
              2,922
              
              
              
              —Recovery
                  on losses on loans and real estateheld
                  for sale
              
              
              (12,676
              )
              
              
              (19,954
              )Professional
                  services
              
              
              23,129
              
              
              
              19,749Printing
                  supplies and postage
              
              
              1,740
              
              
              
              813Other
              
              
              5,051
              
              
              
              7,84423,003
              
              
              
              11,716Net
                  income
              
              $
              126,712
              
              
              $
              126,126Net
                  income:  general partners (1%)
              
              $
              1,267
              
              
              $
              1,261limited
                  partners (99%)
              
              
              125,445
              
              
              
              124,865$
              126,712
              
              
              $
              126,126Net
                  income per $1,000 invested by limitedpartners
                  for entire period-where
                  income is compounded and retained
              
              $
              13
              
              
              $
              13-where
                  partner receives income in monthlydistributions
              
              $
              13
              
              
              $
              13
 
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  3
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **STATEMENTS
        OF CASH FLOWS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (unaudited)**
 
 
 2007
              
              
              2006Cash
                  flows from operating activitiesNet
                  income
              
              $
              126,712
              
              
              $
              126,126Adjustments
                  to reconcile net income to net cash providedby
                  operating activitiesRecovery
                  of losses on loans and real estate heldfor
                  sale
              
              
              (12,676
              )
              
              
              (19,954
              )Early
                  withdrawal penalty credited to income
              
              
              (982
              )
              
              
              (1,338
              )Amortization
                  of discount on unsecured loans
              
              
              (2,056
              )
              
              
              —Change
                  in operating assets and liabilitiesAccrued
                  interest and late fees
              
              
              (13,820
              )
              
              
              (1,080
              )Related
                  party receivables
              
              
              4,521
              
              
              
              —Prepaid
                  expenses
              
              
              —
              
              
              
              (3,574
              )Accounts
                  payable and other liabilities
              
              
              —
              
              
              
              32,136Net
                  cash provided by operating activities
              
              
              101,699
              
              
              
              132,316Cash
                  flows from investing activitiesPrincipal
                  collected on loans
              
              
              699,624
              
              
              
              1,112,262Loans
                  originated
              
              
              —
              
              
              
              (1,309,304
              )Advances
                  on unsecured loans
              
              
              (11,721
              )
              
              
              —Proceeds
                  from disposition of real estate
              
              
              —
              
              
              
              (8,760
              )Payments
                  on investment in limited liability company
              
              
              (5,449
              )
              
              
              —Proceeds
                  from unsecured loans
              
              
              8,197
              
              
              
              4,337Net
                  cash provided by (used in) investing activities
              
              
              690,651
              
              
              
              (201,465
              )Cash
                  flows from financing activitiesPartners’
                  withdrawals
              
              
              (151,030
              )
              
              
              (122,780
              )Net
                  (decrease)/increase in cash and cash equivalents
              
              
              641,320
              
              
              
              (191,929
              )Cash
                  and cash equivalents - beginning of period
              
              
              584,114
              
              
              
              1,627,384Cash
                  and cash equivalents - end of period
              
              $
              1,225,434
              
              
              $
              1,435,455
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  4
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
                  1 – GENERAL**
 
 In
        the
        opinion of the management of the Partnership, the accompanying unaudited
        financial statements contain all adjustments, consisting of normal, recurring
        adjustments, necessary to present fairly the financial information included
        therein.  These financial statements should be read in conjunction
        with the audited financial statements included in the Partnership’s Form 10-K
        for the fiscal year ended December 31, 2006 filed with the Securities and
        Exchange Commission.  The results of operations for the three month
        period ended March 31, 2007 are not necessarily indicative of the operating
        results to be expected for the full year.
 
 
 **NOTE
                  2 – SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES**
 
 **Loans,
                  secured by deeds of
                  trust**
 
 As
        of
        March 31, 2007 and December 31, 2006, the Partnership had two loans past
        due 90
        days or more in interest payments and/or past maturity.  The
        outstanding principal balances of these loans at March 31, 2007 and December
        31,
        2006 were $987,500 and $737,500, respectively.  In addition, accrued
        interest, advances and late charges on these loans totaled $37,845 and $26,250
        at March 31, 2007 and December 31, 2006, respectively.  In the opinion
        of management, the delinquent and/or past maturity loans as of March 31,
        2007
        have sufficient collateral to cover the amounts outstanding to the Partnership
        and are still accruing interest.
 
 **Allowance
        for loan losses**
 
 The
        composition of the allowance for loan losses as of March 31, 2007 and December
        31, 2006 was as follows:
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006Percent
                  of
              
              
              
              
              
              Percent
                  ofloans
                  in
              
              
              
              
              
              loans
                  ineach
              
              
              
              
              
              eachcategory
              
              
              
              
              
              categoryto
                  total
              
              
              
              
              
              to
                  totalAmount
              
              
              loans
              
              
              Amount
              
              
              loansBalance
                  at End of YearApplicable
                  to:DomesticReal
                  estate – mortgageSingle
                  family (1-4 units)
              
              $
              59,096
              
              
              
              38.99
              %
              
              $
              68,548
              
              
              
              45.84
              %Apartments
              
              
              10,156
              
              
              
              12.46
              %
              
              
              10,156
              
              
              
              11.05
              %Commercial
              
              
              37,169
              
              
              
              32.14
              %
              
              
              37,182
              
              
              
              28.54
              %Land
              
              
              52,492
              
              
              
              16.41
              %
              
              
              52,492
              
              
              
              14.57
              %Total
                  real estate – mortgage
              
              $
              158,913
              
              
              
              100
              %
              
              $
              168,378
              
              
              
              100
              %Unsecured
                  loans
              
              $
              282,828
              
              
              
              100
              %
              
              $
              286,039
              
              
              
              100
              %Total
                  unsecured loans
              
              $
              282,828
              
              
              
              100
              %
              
              $
              286,039
              
              
              
              100
              %Total
                  allowance for loan losses
              
              $
              441,741
              
              
              
              100
              %
              
              $
              454,417
              
              
              
              100
              %
 
  5
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 **Allowance
        for loan losses (continued)**
 
 Activity
        in the allowance for loan losses for the nine month period ended March 31,
        2007
        and the year ended December 31, 2006 was as follows:
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006Balance
                  at beginning of period
              
              $
              454,417
              
              
              $
              700,536Charge-offsDomesticReal
                  estate – mortgageSingle
                  family (1-4 units)
              
              
              —
              
              
              
              —Apartments
              
              
              —
              
              
              
              —Commercial
              
              
              —
              
              
              
              (6,707
              )Land
              
              
              —
              
              
              
              ——
              
              
              
              6,707RecoveriesDomesticReal
                  estate – mortgageSingle
                  family (1-4 units)
              
              
              —
              
              
              
              —Apartments
              
              
              —
              
              
              
              —Commercial
              
              
              —
              
              
              
              —Land
              
              
              —
              
              
              
              —Net
                  charge-offs
              
              
              —
              
              
              
              (6,707
              )Additions
                  (recovery) charge to operations
              
              
              (12,676
              )
              
              
              (49,102
              )Transfer
                  to real estate held for sale reserve
              
              
              —
              
              
              
              (190,310
              )Balance
                  at end of period
              
              $
              441,741
              
              
              $
              454,417Ratio
                  of net charge-offs duringthe
                  period to average secured loansoutstanding
                  during the period
              
              
              0.00
              %
              
              
              0.11
              %
 
 At
        March
        31, 2007 and December 31, 2006 there was one unsecured loan totaling $583,215
        that was categorized as impaired by the Partnership.  Interest is no
        longer being accrued on this loan.
 
 **Investment
        in limited liability company**
 
 Investment
        in limited liability company (“LLC”) is accounted for using the equity method as
        one of the Partnership’s general partners is the managing member of the
        LLC.  In February 2005, the Partnership acquired an 8% interest in
        Larkin Property Company, LLC (see note 5).
  6
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 **Income
        taxes**
 
 No
        provision for federal and state income taxes (other than an $800 state minimum
        tax) is made in the financial statements since income taxes are the obligation
        of the partners if and when income taxes apply.
 
 **Reclassifications**
 
 Certain
        reclassifications, not affecting previously reported net income or total
        partners’ capital, have been made to the previously issued financial statements
        to conform to the current year classification.
 
 **Profits
        and losses**
 
 Profits
        and losses are allocated among the limited partners according to their
        respective capital accounts monthly after 1% of the profits and losses are
        allocated to the general partners.
 
 **Management
        estimates**
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions about the reported amounts of assets and liabilities,
        and disclosures of contingent assets and liabilities, at the dates of the
        financial statements and the reported amounts of revenues and expenses during
        the reported periods. Such estimates relate principally to the determination
        of
        the allowance for loan losses, including the valuation of impaired loans
        and the
        valuation of real estate held for sale. Actual results could differ
        significantly from these estimates.
 
 
 **NOTE
        3 – GENERAL PARTNERS AND RELATED PARTIES**
 
 The
                  following are commissions and fees, which will be paid to the general
                  partners.
 
 **Mortgage
        brokerage commissions**
 
 For
        fees
        in connection with the review, selection, evaluation, negotiation and extension
        of loans, Redwood Mortgage Corp., an affiliate of the general partners, may
        collect an amount equivalent to 12% of the loaned amount until six months
        after
        the termination date of the offering.  Thereafter, loan brokerage
        commissions (points) will be limited to an amount not to exceed 4% of the
        total
        Partnership assets per year.  The loan brokerage commissions are paid
        by the borrowers and thus, are not an expense of the Partnership.
 
 **Mortgage
        servicing fees**
 
 Monthly
        mortgage servicing fees of up to 1/8 of 1% (1.5% annual) of the unpaid principal
        are paid to Redwood Mortgage Corp., based on the unpaid principal balance
        of the
        loan portfolio, or such lesser amount as is reasonable and customary in the
        geographic area where the property securing the mortgage is
        located.  Once a loan is categorized as impaired, mortgage servicing
        fees are no longer accrued.  Additional service fees are recorded upon
        the receipt of any subsequent payments on impaired loans.  Redwood
        Mortgage Corp. waived $15,086 in mortgage servicing fees during the first
        quarter of 2007.
 
  7
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        3 – GENERAL PARTNERS AND RELATED PARTIES (continued)**
 
 **Asset
        management fees**
 
 The
        general partners receive monthly fees for managing the Partnership’s loan
        portfolio and operations in an amount up to 1/32 of 1% of the “*net asset
        value”* (3/8 of 1% annually).  The general partners partially
        waived asset management fees of $5,842 and received $2,922 in asset management
        fees during the first quarter of 2007
 
 **Other
        fees**
 
 The
        Partnership Agreement provides for other fees such as reconveyance, mortgage
        assumption and mortgage extension fees.  Such fees are incurred by the
        borrowers and are paid to parties related to the general partners.
 
 **Operating
        expenses**
 
 Redwood
        Mortgage Corp., an affiliate of the general partners, is reimbursed by the
        Partnership for all operating expenses actually incurred by it on behalf
        of the
        Partnership, including without limitation, out-of-pocket general and
        administration expenses of the Partnership, accounting and audit fees, legal
        fees and expenses, postage and preparation of reports to limited
        partners.
 
 
 **NOTE
        4 – REAL ESTATE HELD FOR SALE**
 
 In
        1993
        the Partnership, together with two other affiliates, acquired through
        foreclosure a parcel of land located in East Palo Alto, CA.  As of
        March 31, 2007 the Partnership’s investment in this property was
        $62,720.  The property is currently under contract with a buyer and
        assuming the property is sold on the terms set forth in the purchase agreement,
        the Partnership should recover its investment and some gain.
 
 In
        December 2004, the Partnership acquired undeveloped parcels of land through
        a
        deed in lieu of foreclosure.  The land is located in Stanislaus
        County, California.  It is comprised of three separate lots, which
        total approximately 14 acres.  The parcels are currently for
        sale.  During the third quarter of 2006 the Partnership sold one of
        the three parcels at a loss of approximately $28,336 for which the Partnership
        had provided a loss reserve.  As of March 31, 2007, the Partnership’s
        investment in this property totaled $1,308,681, including accrued interest
        and
        advances, and net of a valuation allowance of $161,974.  This property
        is jointly owned by two other affiliated partnerships.
 
 In
        February 2005, the Partnership acquired another property through foreclosure
        (see Note 5).
 
 The
        following schedule reflects the costs of real estate acquired through
        foreclosure and the recorded reductions to estimated fair values, including
        estimated costs to sell as of March 31, 2007 and December 31, 2006:
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006Costs
                  of properties
              
              $
              1,533,375
              
              
              $
              1,533,375Reduction
                  in value
              
              
              (161,974
              )
              
              
              (161,974
              )Real
                  estate held for sale, net
              
              $
              1,371,401
              
              
              $
              1,371,401
 
  8
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        5 – INVESTMENT IN LIMITED LIABILITY COMPANY**
 
 In
        February, 2005, the Partnership acquired a multi-unit property through
        foreclosure.  This property is located in an upscale neighborhood in
        San Francisco.  At the time the Partnership took ownership of the
        property, the Partnership’s investment totaled $836,702 including accrued
        interest and advances. This property is jointly owned by three other affiliated
        Partnerships.  Upon acquisition the Partnership transferred its
        interest (principally land and building) to Larkin Property Company, LLC
        (“Larkin”), which is 8% owned by the Partnership, and 92% owned by three other
        affiliates.  No allowance for loss has been set aside as management
        believes that the fair value of the property exceeds the combined partnerships’
investment in the property.  The Partnership intends to undertake
        additional improvements to the property.  As of March 31, 2007, the
        Partnership has capitalized approximately $78,471 in costs related to this
        property.  The Partnership pursued efforts to recover funds from the
        guarantors of the original loan and during the third quarter of 2006 obtained
        $34,316, representing the Partnership’s pro rata share of the recovery, from one
        of them.  These proceeds were applied to reduce the Partnership’s
        investment.  At March 31, 2007, the Partnership’s investment in the
        limited liability company totaled $880,857.
 
 
 **NOTE
        6 – BANK LINE OF CREDIT**
 
 The
        Partnership has a bank line of credit secured by its loan portfolio of up
        to
        $2,500,000 at .25% over prime.  There were no balances outstanding as
        of March 31, 2007 and December 31, 2006 and the interest rate was 8.50% (8.25%
        prime plus .25%) at March 31, 2007.  This line of credit expires in
        December 2011 and requires the Partnership to meet certain financial
        covenants.  The Partnership believes it was in compliance with all
        loan covenants for the three month period ended March 31, 2007 and for the
        year
        ended December 31, 2006.  The Partnership anticipates that the line of
        credit will be renewed at its maturity.  In the event that the line of
        credit is not renewed, the Partnership has the option to convert the line
        of
        credit to a three year term loan beginning December 2011.
 
 
 **NOTE
                  7 – FAIR VALUE OF FINANCIAL
                  INSTRUMENTS**
 
 The
                  following methods and assumptions were used to estimate the fair
                  value of
                  financial instruments:
 
 (a)
              Cash
                  and cash equivalents – The carrying amount equals fair
                  value.  All amounts, including interest bearing accounts, are
                  subject to immediate withdrawal.
 (b)
              Secured
                  loans had a carrying value of $5,518,815 and $6,218,439 at March
                  31, 2007
                  and December 31, 2006, respectively.  The fair value of these
                  loans of $5,530,474 and $6,203,160, respectively, was estimated
                  based upon
                  projected cash flows discounted at the estimated current interest
                  rates at
                  which similar loans would be made.  The applicable amount of the
                  allowance for loan losses along with accrued interest and advances
                  related
                  thereto should also be considered in evaluating the fair value
                  versus the
                  carrying value.
 (c)
              Unsecured
                  loans had a carrying value of $720,240 and $714,659 at March 31,
                  2007 and
                  December 31, 2006, respectively.  The fair value of these loans
                  approximates their carrying value after consideration of the loan
                  losses
                  established by the general partners on these
                  loans.
 
 
  9
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        8 – ASSET CONCENTRATIONS AND CHARACTERISTICS**
 
 Loans
        are
        secured by recorded deeds of trust.  At March 31, 2007 and December
        31, 2006 there were 20 and 22 secured loans outstanding, respectively, with
        the
        following characteristics:
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006Number
                  of secured loans outstanding
              
              
              20
              
              
              
              22Total
                  secured loans outstanding
              
              $
              5,518,815
              
              
              $
              6,218,439Average
                  secured loan outstanding
              
              $
              275,941
              
              
              $
              282,656Average
                  secured loan as percent of total secured loans
              
              
              5.00
              %
              
              
              4.55
              %Average
                  secured loan as percent of partners’ capital
              
              
              2.97
              %
              
              
              3.03
              %Largest
                  secured loan outstanding
              
              $
              500,000
              
              
              $
              550,000Largest
                  secured loan as percent of total secured loans
              
              
              9.06
              %
              
              
              8.84
              %Largest
                  secured loan as percent of partners’ capital
              
              
              5.38
              %
              
              
              5.90
              %Largest
                  secured loan as percent of total assets
              
              
              5.33
              %
              
              
              5.85
              %Number
                  of counties where security is located (all California)
              
              
              13
              
              
              
              14Largest
                  percentage of loans in one county
              
              
              28.76
              %
              
              
              25.53
              %Average
                  secured loan to appraised value of security basedon
                  appraised values and prior liens at time loan wasconsummated
              
              
              61.35
              %
              
              
              61.62
              %Number
                  of secured loans in foreclosure status
              
              None
              
              
              NoneAmount
                  of secured loans in foreclosure status
              
              None
              
              
              None
 
 At
        times,
        loans may exceed 10% of the secured loan portfolio or Partnership assets
        as the
        loan portfolio and assets of the Partnership decrease due to limited partner
        withdrawals and/or loan payoffs.
 
  10
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        8 – ASSET CONCENTRATIONS AND CHARACTERISTICS
        (continued)**
 
 The
        following categories of secured loans were held at March 31, 2007 and December
        31, 2006:
 
 March
                  31,
              
              
              December
                  31,2007
              
              
              2006First
                  trust deeds
              
              $
              4,460,249
              
              
              $
              5,011,682Second
                  trust deeds
              
              
              1,058,566
              
              
              
              1,206,757Third
                  trust deeds
              
              
              —
              
              
              
              —Total
                  loans
              
              
              5,518,815
              
              
              
              6,218,439Prior
                  liens due other lenders at time of loan
              
              
              2,208,336
              
              
              
              2,560,514Total
                  debt
              
              $
              7,727,151
              
              
              $
              8,778,953Appraised
                  property value at time of loan
              
              $
              12,595,894
              
              
              $
              14,247,048Total
                  secured loans as percent of appraisals based onappraised
                  values and prior liens at time loan wasconsummated
              
              
              61.35
              %
              
              
              61.62
              %Secured
                  loans by type of propertySingle
                  family homes (1-4 Units)
              
              $
              2,151,984
              
              
              $
              2,850,592Apartments
              
              
              687,500
              
              
              
              687,500Commercial
              
              
              1,773,518
              
              
              
              1,774,528Land
              
              
              905,813
              
              
              
              905,819$
              5,518,815
              
              
              $
              6,218,439
 
 Scheduled
                  maturity dates of secured loans as of March 31, 2007 are as
                  follows:
 
 Prior
                  to December 31, 2007
              
              
              $
              1,975,000Between
                  January 1, 2008 and December 31, 2008
              
              
              
              1,377,277Between
                  January 1, 2009 and December 31, 2009
              
              
              
              764,521Between
                  January 1, 2010 and December 31, 2010
              
              
              
              513,092Between
                  January 1, 2011 and December 31, 2011
              
              
              
              601,066Thereafter
              
              
              
              287,859Total
              
              
              $
              5,518,815
 
 The
        scheduled maturities for 2007 above had one loan past maturity at March 31,
        2007
        in the amount of $500,000.
 
 The
        Partnership places its cash and temporary cash investments with high credit
        quality institutions.  Periodically, such investments may be in excess
        of federally insured limits.
 
  11
  **REDWOOD
        MORTGAGE INVESTORS VII**
 **(A
        California Limited Partnership)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (unaudited)**
 
 
 **NOTE
        9 – COMMITMENTS AND CONTINGENCIES**
 
 **Workout
        agreements**
 
 The
        Partnership occasionally negotiates a contractual workout agreement with
        borrowers who are delinquent in making payments or where loans are past
        maturity.  Under the terms of the workout agreement the Partnership is
        not obligated to make any additional monetary advances for the maintenance
        or
        repair of the collateral securing the loan.  As of March 31, 2007, the
        Partnership had no loans under a workout agreement.
 
 **Construction
        loans**
 
 The
        Partnership makes construction and rehabilitation loans which are not fully
        disbursed at loan inception.  The Partnership approves the borrowers
        up to a maximum loan balance; however, disbursements are made periodically
        during completion phases of the construction or rehabilitation or at such
        other
        times as required under the loan documents.  At March 31, 2007, there
        were no undisbursed loan funds.  The Partnership does not maintain a
        separate cash reserve to hold the undisbursed obligations, which are intended
        to
        be funded.
 
 **Legal
        proceedings**
 
 The
        Partnership is involved in various legal actions arising in the normal course
        of
        business.  In the opinion of management, such matters will not have a
        material effect upon the financial position of the Partnership.
 
 
 **Part
                  I – Item 2.**
 
 **MANAGEMENT’S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE
        PARTNERSHIP**
 
 **Critical
        Accounting Policies.**
 
 In
        preparing the financial statements, management is required to make estimates
        based on the information available that affect the reported amounts of assets
        and liabilities as of the balance sheet dates and income and expenses during
        the
        reporting periods.  Such estimates relate principally to the
        determination of (1) the allowance for loan losses (i.e. the amount of allowance
        established against loans receivable as an estimate of potential loan losses)
        including the accrued interest and advances that are estimated to be
        unrecoverable based on estimates of amounts to be collected plus estimates
        of
        the value of the property as collateral and (2) the valuation of real estate
        acquired through foreclosure. At March 31, 2007, the Partnership owned four
        real
        estate properties.
 
 Loans
        and
        the related accrued interest, late fees and advances are analyzed on a periodic
        basis for recoverability.  Delinquencies are identified and followed
        as part of the loan system.  A provision is made for loan losses to
        adjust the allowance for loan losses to an amount considered by management
        to be
        adequate, with due consideration to collateral value, to provide for
        unrecoverable loans and receivables, including impaired loans, other loans,
        accrued interest, late fees and advances on loans and other accounts receivable
        (unsecured).  The Partnership charges off uncollectible loans and
        related receivables directly to the allowance account once it is determined
        that
        the full amount is not collectible.
 
  12
  If
        the
        probable ultimate recovery of the carrying amount of a loan, with due
        consideration for the fair value of collateral, is less than amounts due
        according to the contractual terms of the loan agreement and the shortfall
        in
        the amounts due are not insignificant, the carrying amount of the investment
        shall be reduced to the present value of future cash flows discounted at
        the
        loan’s effective interest rate.  If a loan is collateral dependent, it
        is valued at the estimated fair value of the related collateral.  If
        events and or changes in circumstances cause management to have serious doubts
        about the further collectibility of the contractual payments, a loan may
        be
        categorized as impaired and interest is no longer accrued.  Any
        subsequent payments on impaired loans are applied to reduce the outstanding
        loan
        balances including accrued interest and advances.
 
 Recent
        trends in the economy have been taken into consideration in the aforementioned
        process of arriving at the allowance for loan losses.  Actual results
        could vary from the aforementioned provisions for losses.
 
 Real
        estate held for sale includes real estate acquired through foreclosure and
        is
        stated at the lower of the recorded investment in the loan, plus any senior
        indebtedness, or at the property’s estimated fair value, less estimated costs to
        sell.
 
 The
        Partnership periodically compares the carrying value of real estate to expected
        undiscounted future cash flows for the purpose of assessing the recoverability
        of the recorded amounts.  If the carrying value exceeds future
        undiscounted cash flows, the assets are reduced to estimated fair
        value.
 
 **Forward-Looking
        Statements.**
 
 Certain
        statements in this Report on Form 10-Q which are not historical facts may
        be
        considered forward-looking statements within the meaning of Section 27A of
        the
        Securities Act of 1933, as amended, and Section 21E of the Securities and
        Exchange Act of 1934, as amended, including statements regarding the
        Partnership’s expectations, hopes, intentions, beliefs and strategies regarding
        the future.  Forward-looking statements include statements regarding
        future interest rates and economic conditions and their effect on the
        Partnership and its assets, trends in the California real estate market,
        estimates as to the allowance for loan losses, estimates of future limited
        partner withdrawals, 2007 annualized yield estimates, beliefs relating to
        the
        Partnership’s compliance with its loan covenants, beliefs relating to the
        effects of various legal actions arising in the normal course of business,
        the
        Partnership’s intention not to sell its loan portfolio, management’s beliefs
        relating to the sufficiency of collateral, trends in the California real
        estate
        market moving towards normalcy, and the healthy commercial real estate market
        increasing lending opportunities.  Actual results may be materially
        different from what is projected by such forward-looking
        statements.  Factors that might cause such a difference include
        unexpected material adverse changes in economic conditions and interest rates,
        including such conditions in California, a material adverse decline in the
        market for real estate in California, the impact of competition and competitive
        pricing and downturns in the real estate markets in which the Partnership
        has
        made loans.  All forward-looking statements and reasons why results
        may differ included in this Form 10-Q are made as of the date hereof, and
        we
        assume no obligation to update any such forward-looking statement or reason
        why
        actual results may differ.
 
 **Related
        Parties.**
 
 The
        general partners of the Partnership are Gymno Corporation and Michael R.
        Burwell. Most Partnership business is conducted through Redwood Mortgage
        Corp.,
        an affiliate of the general partner, which arranges, services, and maintains
        the
        loan portfolio for the benefit of the Partnership. Michael R. Burwell is
        President and Chief Financial Officer of Gymno Corporation and Redwood Mortgage
        Corp.  The fees received by the affiliate to the general partners are
        paid pursuant to the Partnership Agreement and are determined at the sole
        discretion of the affiliate to the general partner subject to limitations
        imposed by the Partnership Agreement. In the past, the affiliate to the general
        partners has elected not to take the maximum compensation.  The
        following is a list of various Partnership activities for which related parties
        are compensated.
  13
  
 ·
              ***Mortgage
                  Brokerage Commissions***For fees in
                  connection with the review, selection, evaluation, negotiation
                  and
                  extension of loans, Redwood Mortgage Corp. may collect an amount
                  equivalent to 12% of the loaned amount until 6 months after the
                  termination date of the offering.  Thereafter, the loan
                  brokerage commissions (points) will be limited to an amount not
                  to exceed
                  4% of the total Partnership assets per year.  The loan brokerage
                  commissions are paid by the borrowers, and thus, are not an expense
                  of the
                  Partnership.  Loan brokerage commissions paid by the borrowers
                  were $0 and $28,650 for the three month periods ended March 31,
                  2007 and
                  2006, respectively.
 
 ·
              ***Mortgage
                  Servicing Fees***   Monthly mortgage servicing
                  fees of up to 1/8 of 1% (1.5% on an annual basis) of the unpaid
                  principal
                  of the Partnership’s loans are paid to Redwood Mortgage Corp., or such
                  lesser amount as is reasonable and customary in the geographic
                  area where
                  the property securing the mortgage is located.  Mortgage
                  servicing fees of $0 were incurred for the three month periods
                  ended March
                  31, 2007 and 2006. Redwood Mortgage Corp. waived $15,086 and $13,442
                  in
                  mortgage servicing fees during the three month period ended March
                  31, 2007
                  and 2006, respectively.
 
 ·
              ***Asset
                  Management Fees***The general partners
                  receive monthly fees for managing the Partnership’s portfolio and
                  operations of up to 1/32 of 1% of the *‘net asset value’* (3/8 of
                  1% on an annual basis).  Management fees to the general partners
                  of $2,922 and $0 were incurred for the three month periods ended
                  March 31,
                  2007 and 2006, respectively.  The general partners waived $5,842
                  and $8,723 in asset management fees during the quarter ended March
                  31,
                  2007 and 2006, respectively.
 
 ·
              ***Other
                  Fees***   The Partnership Agreement provides
                  that the general partners may receive other fees such as processing
                  and
                  escrow, reconveyance, mortgage assumption and mortgage extension
                  fees.  Such fees are incurred by the borrowers and are paid to
                  the general partners.  Such fees aggregated $51 and $1,300 for
                  the three month periods ended March 31, 2007 and 2006,
                  respectively.
 
 ·
              ***Income
                  and Losses***All income and losses are
                  credited or charged to partners in relation to their respective
                  Partnership interests.  The allocation to the general partners
                  (combined) is a total of 1%, which was $1,267 and $1,261 for the
                  three
                  month periods ended March 31, 2007 and 2006,
                  respectively.
 
 ·
              ***Operating
                  Expenses***An affiliate of the Partnership,
                  Redwood Mortgage Corp., is reimbursed by the Partnership for all
                  operating
                  expenses actually incurred by it on behalf of the Partnership,
                  including
                  without limitation, out-of-pocket general and administration expenses
                  of
                  the Partnership, accounting and audit fees, legal fees and expenses,
                  postage and preparation of reports to limited partners.  Such
                  reimbursements are reflected as expenses in the statements of
                  income.  Operating expenses totaled $2,837 and $3,264 for the
                  three month periods ended March 31, 2007 and 2006,
                  respectively.
 
 ·
              ***Contributed
                  Capital***The general partners jointly and
                  severally contribute 1/10 of 1% in cash contributions as proceeds
                  from the
                  offerings are received from the limited partners.  As of March
                  31, 2007 and 2006, a general partner, Gymno Corporation, had contributed
                  $11,973 as capital in accordance with the Partnership
                  Agreement.
 
  14
  **Results
        of Operations**– For the three months ended March 31, 2007 and
        2006
 
 Changes
        in the Partnership’s operating results for the three month period ended March
        31, 2007 as compared to 2006 are discussed below:
 
 Changes
                  during the three months ended March 31, 2007
                versus
                  2006Net
                  income
              
              $
              586RevenueInterest
                  on loans
              
              
              9,920Interest
                  – interest bearing accounts
              
              
              6,381Late
                  fees
              
              
              165Other
              
              
              (4,593
              )$
              11,873ExpensesMortgage
                  servicing feesClerical
                  costs through Redwood Mortgage Corp.
              
              
              (427
              )Asset
                  management fees
              
              
              2,922Recovery
                  of losses on loans and real estateheld
                  for sale
              
              
              7,278Professional
                  services
              
              
              3,380Printing
                  supplies and postage
              
              
              927Other
              
              
              (2,793
              )$
              11,287Net
                  income
              
              $
              586
 
 The
        increase in interest on loans of $9,920 (7.68%) for the three month period
        ended
        March 31, 2007 as compared to the same period in 2006 was due to an increase
        in
        the average loan portfolio outstanding to $5,801,177 as of March 31, 2007
        from
        an average balance of $5,786,583 as of March 31, 2006.  The increase
        in interest was also a result of an increase in the average interest rate,
        which
        stood at 9.59% as of March 31, 2007 as compared to 9.27% as of March 31,
        2006.
 
 The
        decrease in other income of $4,593 (78.85%) for the three month period ended
        March 31, 2007 as compared to the same period in 2006 was primarily due to
        a
        decrease in miscellaneous income of $4,236 and early withdrawal penalties
        of
        $357 for the three month period ended March 31, 2007 as compared to the amounts
        for the same period in 2006.
 
 The
        increase in interest from interest-bearing accounts of $6,381 (349.64%) for
        the
        three month period ended March 31, 2007 as compared to the same period in
        2006
        was primarily due to an overall higher average interest rate of 4.01% that
        the
        Partnership earned in its money market account during the first three months
        of
        2007 as compared to an average interest rate of 0.6% during the same period
        in
        2006.  The Partnership’s average deposit for the first quarter of 2007
        was $818,384 compared to an average deposit of $1,208,863 during the first
        quarter of 2006.  The substantial difference in rate enabled the
        Partnership to earn higher interest in 2007 than in 2006.
 
 Mortgage
        servicing fees for the three month periods ended March 31, 2007 and 2006
        were
        waived by the servicing agent, Redwood Mortgage Corp.  These fees
        would have otherwise cost the Partnership $15,086 and $13,442 for the three
        month periods ended March 31, 2007 and 2006, respectively.  The
        increase in the waived servicing fee amount from 2006 to 2007 was primarily
        due
        to an increase in the average loan portfolio outstanding of $5,801,177 and
        $5,786,583 as of March 31, 2007 and 2006, respectively.
 
  15
  The
        decrease in recovery of losses on loans and real estate held for sale of
        $7,278
        (36.47%) for the three month period ended March 31, 2007 as compared to the
        same
        period in 2006 is due to management’s determination that the allowance for
        losses on loans and real estate held for sale of $603,715 as of March 31,
        2007
        was adequate.  In addition, the Partnership received $3,539 and $4,337
        during the three month periods ended March 31, 2007 and 2006, respectively,
        in
        recoveries from an unsecured debtor whose balance has been fully provided
        for in
        the loan loss reserve.
 
 The
        increase in professional fees of $3,380 (17.11%) for the three month period
        ended March 31, 2007 as compared to the same period in 2006 was due to general
        professional cost increases in 2007 for legal services, audits, tax return
        processing and the timing of billing.  We anticipate an increase in
        professional fees during 2007 due to the Partnership initiating additional
        compliance work in accordance with the Sarbanes-Oxley Act of 2002.
 
 The
        increase in asset management fees of $2,922 (100%) for the three month period
        ended March 31, 2007 as compared to the same period in 2006 was due to a
        partial
        waiver of $5,842 and a full waiver of $8,723 in management fees by the general
        partners during the quarters ended March 31, 2007 and 2006,
        respectively.
 
 The
        decrease in other expenses of $2,793 (35.61%) for the three month period
        ended
        March 31, 2007 as compared to the same period in 2006 was primarily due to
        a
        decrease in upkeep costs for the real estate held for sale
        properties.  The Partnership spent $5,042 and $7,844 during the three
        month period ended March 31, 2007 and 2006, respectively.
 
 The
        decrease in clerical costs of $427 (13.08%) for the three month period ended
        March 31, 2007 as compared to the same period in 2006 was primarily due to
        lower
        servicing costs.  Partnership capital decreased by $25,299 during the
        first three months of 2007 as the aggregate of earnings distributions and
        capital liquidations was higher than the net income level of the
        Partnership.  For the three month period ended March 31, 2007, limited
        partners’ net income was $125,445 versus earnings distributions of $47,949 and
        capital liquidations of $102,795, which totaled $150,744, as compared to
        limited
        partners’ net income of $124,865 versus earnings distributions of $44,752 and
        capital liquidations of $78,104, which totaled $122,856 for the corresponding
        period in 2006.  Earnings and capital liquidations are a factor of
        limited partner elections and currently limited partners seeking liquidations
        of
        earnings or their capital account increased during the first quarter of 2007.
        During the prior quarters, limited partner income had been higher than earnings
        distributions and capital liquidations which resulted in an increase in the
        limited partners’ capital from $9,270,243 as of December 31, 2005 to $9,325,994
        through December 31, 2006, but decreased to $9,300,695 through March 31,
        2007.
 
 At
        March
        31, 2007, there were no outstanding loans with a filed notice of
        default.
 
 Redwood
        Mortgage Corp., an affiliate of the general partners, received mortgage
        brokerage commissions from loan borrowers of $0 and $28,650 for the three
        month
        periods ended March 31, 2007 and 2006, respectively.  The decrease of
        $28,650 (100%) for the three month period ended March 31, 2007 as compared
        to
        the same period in 2006 was due to no loans being funded in the three month
        period ended March 31, 2007.
 
 **Allowance
        for Losses.**
 
 The
        general partners regularly review the loan portfolio, examining the status
        of
        delinquencies, the underlying collateral securing these loans, borrowers’
payment records, etc.  Based upon this information and other data, the
        allowance for loan losses is increased or decreased. Borrower foreclosures
        are a
        normal aspect of Partnership operations.  The Partnership is not a
        credit based lender and hence while it reviews the credit history and income
        of
        borrowers, and if applicable, the income from income producing properties,
        the
        general partners expect that we will on occasion take back real estate
        security.  At March 31, 2007, the Partnership had one loan totaling
        $487,500, which was past due 90 days or more in interest
        payments.  Additionally, one loan totaling $500,000 was past maturity
        as of March 31, 2007.  One unsecured loan totaling $583,215 was
        impaired at March 31, 2007.
 
  16
  Periodically,
        the Partnership enters into workout agreements with borrowers who are past
        maturity or delinquent in their regular payments.  The Partnership has
        no loans in workout agreements with borrowers as of March 31,
        2007.  Typically, a workout agreement allows the borrower to extend
        the maturity date of the balloon payment and/or allows the borrower to make
        current monthly payments while deferring for periods of time, past due payments
        and balloon payments and allows time to pay the loan in full.  Workout
        agreements and foreclosures generally exist within our loan portfolio to
        greater
        or lesser degrees, depending primarily on the health of the
        economy.  The number of foreclosures and workout agreements will
        generally rise during difficult economic times and conversely fall during
        good
        economic times.  Workout agreements and foreclosures are considered
        when management arrives at an appropriate allowance for loan losses, and
        based
        on our experience; they are reflective of our loan marketplace segment. In
        the
        remainder of 2007, we may initiate foreclosure by filing notices of default
        on
        delinquent borrowers or borrowers who become delinquent during the
        year.  Borrower foreclosures are a normal aspect of Partnership
        operations and the general partners anticipate that they will not have a
        material effect on liquidity.  As a prudent guard against potential
        losses, the general partners have made provisions for losses on loans and
        real
        estate held for sale through foreclosure of $603,715 at March 31,
        2007.  These provisions for losses were made to guard against
        collection losses.  The total provision for losses on loans and real
        estate of $603,715 as of March 31, 2007 is considered by the general partners
        to
        be adequate. Because of the number of variables involved, the magnitude of
        the
        swings possible and the general partners’ inability to control many of these
        factors, actual results may and do sometimes differ significantly from estimates
        made by the general partners.
 
 As
        of
        March 31, 2007, the Partnership had an average loan to value ratio computed
        based on appraised values and prior liens as of the date the loan was made
        of
        61.35%.  This percentage does not account for any increases or
        decreases in property values since the date the loan was made, nor does it
        include any reductions in principal through amortization of payments after
        the
        loan was made.  This low loan to value ratio will assist the
        Partnership in weathering loan delinquencies and foreclosures should they
        occur.
 
 **PORTFOLIO
        REVIEW**– For the three months ended March 31, 2007 and
        2006
 
 **Loan
        Portfolio**
 
 The
        Partnership’s loan portfolio consists primarily of short-term (one to five
        years), fixed rate loans secured by real estate. As of March 31, 2007 and
        2006
        the Partnership’s loans secured by real property collateral in the nine San
        Francisco Bay Area counties (San Francisco, San Mateo, Santa Clara, Alameda,
        Marin, Napa, Solano, Sonoma and Contra Costa) represented $4,316,518 (78.21%)
        and $3,962,419 (70.33%), respectively, of the outstanding secured loan
        portfolio.  The remainder of the portfolio represented loans secured
        by real estate located primarily in Northern California.
 
 As
        of
        March 31, 2007 and 2006, the Partnership held 20 and 23 loans, respectively,
        in
        the following categories:
 
 March
                  31,2007
              
              
              2006Single
                  Family Homes (1-4 units)
              
              $
              2,151,984
              
              
              
              39
              %
              
              $
              3,156,303
              
              
              
              56
              %Commercial
              
              
              1,773,518
              
              
              
              32
              %
              
              
              1,251,738
              
              
              
              22
              %Apartments
                  (5+ units)
              
              
              687,500
              
              
              
              12
              %
              
              
              570,000
              
              
              
              10
              %Land
              
              
              905,813
              
              
              
              17
              %
              
              
              656,358
              
              
              
              12
              %Total
              
              $
              5,518,815
              
              
              
              100
              %
              
              $
              5,634,399
              
              
              
              100
              %
 
  17
  As
        of
        March 31, 2007, the Partnership held 20 loans secured by deeds of
        trust.  The following table sets forth the priorities, asset
        concentrations and maturities of the loans held by the Partnership as of
        March
        31, 2007:
 
 **PRIORITIES,
        ASSET CONCENTRATIONS AND MATURITIES OF LOANS**
 **As
        of March 31, 2007**
 
 #
                  of Loans
              
              
              Amount
              
              
              Percent1st
                  Mortgages
              
              
              16
              
              
              $
              4,460,249
              
              
              
              81
              %2nd
                  Mortgages
              
              
              4
              
              
              
              1,058,566
              
              
              
              19
              %Total
              
              
              20
              
              
              $
              5,518,815
              
              
              
              100
              %Maturing
                  prior to 12/31/07
              
              
              5
              
              
              $
              1,975,000
              
              
              
              36
              %Maturing
                  between 01/01/08 and 12/31/08
              
              
              6
              
              
              
              1,377,277
              
              
              
              25
              %Maturing
                  between 01/01/09 and 12/31/09
              
              
              3
              
              
              
              764,521
              
              
              
              14
              %Maturing
                  after 12/31/09
              
              
              6
              
              
              
              1,402,017
              
              
              
              25
              %Total
              
              
              20
              
              
              $
              5,518,815
              
              
              
              100
              %Average
                  Secured Loan
              
              
              
              
              
              $
              275,941
              
              
              
              5
              %Largest
                  Secured Loan
              
              
              
              
              
              
              500,000
              
              
              
              9
              %Smallest
                  Secured Loan
              
              
              
              
              
              
              101,066
              
              
              
              2
              %Average
                  Loan-to-Value based upon appraisals andprior
                  liens at time loan was consummated
              
              
              
              
              
              
              
              
              
              
              61.35
              %
 
 The
        Partnership’s largest loan in the principal amount of $500,000 represents 9.06%
        of outstanding secured loans and 5.33% of Partnership assets.  Over
        time, loans may increase above 10% of the secured loan portfolio or Partnership
        assets as the loan portfolio and assets of the Partnership decrease due to
        limited partner withdrawals and/or loan payoffs.
 
 **Borrower
        Liquidity and Capital Resources**.
 
 The
        Partnership relies upon loan payoffs, borrowers’ mortgage payments, and, to a
        lesser degree, its line of credit for the source of funds for
        loans.  Over the past several years, mortgage interest rates have
        decreased somewhat from those available at the inception of the
        Partnership.  If interest rates were to increase substantially, the
        yield of the Partnership’s loans may provide lower yields than other comparable
        debt-related investments.  Additionally, since the Partnership has
        made primarily fixed rate loans, if interest rates were to rise, the likely
        result would be a slower prepayment rate for the Partnership.  This
        could cause a lower degree of liquidity as well as a slowdown in the ability
        of
        the Partnership to invest in loans at the then current interest
        rates.  Conversely, in the event interest rates were to decline, the
        Partnership could see significant borrower prepayments, which, if the
        Partnership can only obtain the then existing lower rates of interest, may
        cause
        a dilution of the Partnership’s yield on loans, thereby lowering the
        Partnership’s overall yield to the limited partners.  The Partnership
        to a lesser degree relies upon its line of credit to fund
        loans.  Generally, the Partnership’s loans are fixed rate, whereas the
        credit line is a variable rate loan.  In the event of a significant
        increase in overall interest rates, the credit line rate of interest could
        increase to a rate above the average portfolio rate of
        interest.  Should such an event occur, the general partners would
        desire to pay off the line of credit.  Retirement of the line of
        credit would reduce the overall liquidity of the Partnership.  Cash is
        constantly being generated from borrower payments of interest, principal
        and
        loan payoffs.  Currently, cash flow exceeds Partnership expenses and
        earnings distribution requirements.  Excess cash flow is invested in
        new loan opportunities, when available, and is used to reduce the Partnership
        credit line or for other Partnership business.
 
  18
  At
        the
        time of subscription to the Partnership, limited partners made an irrevocable
        decision to either take distributions of earnings monthly, quarterly or annually
        or to compound earnings in their capital account.  For the three month
        periods ended March 31, 2007 and 2006, the Partnership made the following
        allocations of earnings both to the limited partners who elected to compound
        their earnings, and those that chose to distribute:
 
 Three
                  months ended March 31,2007
              
              
              2006Compounding
              
              $
              77,496
              
              
              $
              80,113Distributing
              
              $
              47,949
              
              
              $
              44,752
 
 As
        of
        March 31, 2007 and 2006, limited partners electing to withdraw earnings
        represented 38% and 36% of the limited partners’ capital.
 
 The
        Partnership agreement also allows the limited partners to withdraw their
        capital
        account subject to certain limitations.  For the three month periods
        ended March 31, 2007 and 2006, $11,085 and $16,726, respectively, were
        liquidated subject to the 10% penalty for early withdrawal.  These
        withdrawals are within the normally anticipated range that the general partners
        would expect in their experience in this and other partnerships. The general
        partners expect that a small percentage of limited partners will elect to
        liquidate their capital accounts over one year with a 10% early withdrawal
        penalty.  In originally conceiving the Partnership, the general
        partners wanted to provide limited partners needing their capital returned
        a
        degree of liquidity.  Generally, limited partners electing to withdraw
        over one year need to liquidate their investment to raise cash.  The
        trend the Partnership is experiencing in withdrawals by limited partners
        electing a one year liquidation program represents a small percentage of
        limited
        partner capital as of March 31, 2007 and 2006, respectively.
 
 Additionally,
        for the three month periods ended March 31, 2007 and 2006, $91,710 and $61,379,
        respectively, were liquidated by limited partners who have elected a liquidation
        program over a period of five years or longer.  This ability to
        withdraw after five years by limited partners has the effect of providing
        limited partner liquidity.  The general partners expect a portion of
        the limited partners to take advantage of this provision.  This has
        the anticipated effect of the Partnership growing, primarily through
        reinvestment of earnings in years one through five.  The general
        partners expect to see increasing numbers of limited partner withdrawals
        in
        years five through eleven, after which time the bulk of those limited partners
        who have sought withdrawal have been liquidated.  After year eleven,
        liquidation generally subsides.
 
 Earnings
        and capital liquidations, including early withdrawals, during the three months
        ended March 31, 2007 and 2006 were:
 
 Three
                  months ended March 31,2007
              
              
              2006Earnings
                  liquidation
              
              $
              47,949
              
              
              $
              44,752Capital
                  liquidation*
              
              $
              102,795
              
              
              $
              78,104Total
              
              $
              150,744
              
              
              $
              122,856
 
 *
        These
        are gross amounts, which are not net of early withdrawal penalties.
 
  19
  In
        some
        cases in order to satisfy Broker Dealers and other reporting requirements,
        the
        general partners have valued the limited partners’ interest in the Partnership
        on a basis which utilizes a per Unit system of calculation, rather than based
        upon the investors’ capital account.  This information has been
        reported in this manner in order to allow the Partnership to integrate with
        certain software used by the Broker Dealers and other reporting
        entities.  In those cases, the Partnership will report to Broker
        Dealers, Trust Companies and others a “reporting” number of Units based upon a
        $1.00 per Unit calculation.  The number of reporting Units provided
        will be calculated based upon the limited partner’s capital account value
        divided by $1.00.  Each investor’s capital account balance is set
        forth periodically on the Partnership account statement provided to
        investors.  The reporting Units are solely for Broker Dealers
        requiring such information for their software programs and do not reflect
        actual
        Units owned by a limited partner or the limited partners’ right or interest in
        cash flow or any other economic benefit in the Partnership.  Each
        investor’s capital account balance is set forth periodically on the Partnership
        account statement provided to investors.  The amount of Partnership
        earnings each investor is entitled to receive is determined by the ratio
        that
        each investor’s capital account bears to the total amount of all investor
        capital accounts then outstanding.  The capital account balance of
        each investor should be included on any NASD member client account statement
        in
        providing a per Unit estimated value of the client’s investment in the
        Partnership in accordance with NASD Rule 2340.
 
 While
        the
        general partners have set an estimated value for the Partnership Units, such
        determination may not be representative of the ultimate price realized by
        an
        investor for such Units upon sale.  No public trading market exists
        for the Partnership’s Units and none is likely to develop.  Thus,
        there is no certainty that the Units can be sold at a price equal to the
        stated
        value of the capital account.  Furthermore, the ability of an investor
        to liquidate his or her investment is limited subject to certain liquidation
        rights provided by the Partnership, which may include early withdrawal
        penalties.
 
 **Current
        Economic Conditions.**
 
 During
        2006 and through the first quarter of 2007, the United States economy as
        a whole
        preformed well, although there has been a noticeable deceleration in
        growth.  Gross Domestic Product increased at a 1.3% rate for the first
        quarter of 2007 as compared to a 2.5% rate for the fourth quarter of 2006
        and
        3.4% for the year 2006.  The positive GDP increases are healthy
        overall but indicate a slowing economy.  Unemployment continued to
        remain low during the first quarter of 2007 at a rate of 4.9% for the United
        States, a rate of 5.2% for California and a rate of 4.2% for the city of
        San
        Francisco.  The Federal Reserve Board left the Federal Funds Rate
        unchanged at 5.25% at its April, 2007 meeting and for its previous six
        consecutive meetings.  The 10-year treasury bonds continued to trade
        in a narrow margin during the first quarter of 2007 at around
        4.7%.  This has helped 30 year fixed rate mortgages to remain
        consistent during the first quarter at approximately 6.2%.
 
 The
        Partnership makes loans primarily in Northern California.  As such the
        regional real estate market is of primary concern to the Partnership. As
        of
        March 31, 2007 and 2006, approximately 78.21% ($4,316,518) and 70.33%
        ($3,962,419), respectively, of the loans held by the Partnership were in
        the
        nine San Francisco Bay Area Counties.  The remainder of the loans held
        was secured primarily by Northern California real estate outside of the San
        Francisco Bay Area.
 
 In
        general, California residential real estate continued to appreciate in value
        during the first quarter of 2007.  According to Dataquick, the median
        price of a California home in March, 2007 was $484,000 a new record up 3%
        from
        the median price of $470,000 in March of 2006.  The total sales
        volumes (the number of homes sold) has been declining.  During March,
        2007 the sales volume was 27.5% less than March, 2006.  The slow down
        in the number of homes sold has not significantly impacted residential sales
        prices.  Mortgage interest rates for both fixed and adjustable rate
        loans have been relatively stable leaving residential affordability similar
        to
        2006.  The stable and slowly appreciating residential real estate
        price environment is comforting to the Partnership as appraised values for
        originated loans can be relied upon and appraisers should have adequate and
        reliable data upon which to make value opinions.
 
  20
  Commercial
        properties continued their strong performance in the San Francisco Bay
        Area.  Vacancy in office properties was 8.6% for the first quarter of
        2007 and rents increased 9.7% to over $40 per square foot for Class A
        properties.  All other regions of the San Francisco Bay Area exhibited
        similar improved results from 2006.  A strong commercial market
        indicates strong job and economic growth, which is good for commercial property
        values and for the lenders who secure loans on commercial
        properties.
 
 For
        Partnership loans outstanding as of March 31, 2007, the Partnership had an
        average loan-to-value ratio of 61.35%, computed based on appraised values
        and
        senior liens as of the date the loan was made.  This percentage does
        not account for any increases or decreases in property values since the date
        the
        loan was made, nor does it include any reductions in principal on senior
        indebtedness through amortization of payments after the loan was
        made.  This low loan-to-value ratio will assist the Partnership in
        weathering loan delinquencies and foreclosures should they occur.
 
 **Part
        I – Item 3. Quantitative and Qualitative Disclosures About Market
        Risk**
 
 The
        following table contains information about the cash held in money market
        accounts, loans held in the Partnership’s portfolio and loans to the Partnership
        pursuant to its line of credit as of March 31, 2007.  The
        presentation, for each category of information, aggregates the assets and
        liabilities by their maturity dates for maturities occurring in each of the
        years 2007 through 2011 and separately aggregates the information for all
        maturities arising after 2011.  The carrying values of these assets
        and liabilities approximate their fair market values as of March 31,
        2007:
 
 2007
              
              
              2008
              
              
              2009
              
              
              2010
              
              
              2011
              
              
              Thereafter
              
              
              TotalInterest
                  earning assets:Money
                  market accounts
              
              $
              1,204,141
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              1,204,141Average
                  interest rate
              
              
              4.01
              %
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4.01
              %Unsecured
                  loans
              
              
              
              
              
              
              
              
              
              
              
              $
              720,240
              
              
              
              
              
              
              
              
              $
              720,240Average
                  interest rate
              
              
              
              
              
              
              
              
              
              
              
              
              0
              %
              
              
              
              
              
              
              
              
              0
              %Loans
                  secured by deedsof
                  trust
              
              $
              1,975,000
              
              
              
              1,377,277
              
              
              
              764,521
              
              
              
              513,092
              
              
              
              601,066
              
              
              
              287,859
              
              
              $
              5,518,815Average
                  interest rate
              
              
              9.53
              %
              
              
              9.52
              %
              
              
              8.40
              %
              
              
              9.38
              %
              
              
              9.11
              %
              
              
              9.6500
              %
              
              
              9.32
              %Interest
                  bearing liabilitiesLine
                  of credit
              
              
              —
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              —Interest
                  rate
              
              
              8.50
              %
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              8.50
              %
 
 **Market
        Risk.**
 
 The
        Partnership’s line of credit bears interest at a variable rate, which is tied to
        the prime rate.  As a result, the Partnership’s primary market risk
        exposure with respect to its obligations is to changes in interest rates,
        which
        will affect the interest cost of outstanding amounts on the line of
        credit.  The Partnership may also suffer market risk tied to general
        trends affecting real estate values that may impact the Partnership’s security
        for its loans.
 
 The
        Partnership’s primary market risk in terms of its profitability is the exposure
        to fluctuations in earnings resulting from fluctuations in general interest
        rates.  The majority of the Partnership’s mortgage loans earn interest
        at fixed rates. Changes in interest rates may also affect the value of the
        Partnership’s investment in mortgage loans and the rates at which the
        Partnership reinvests funds obtained from loan repayments and new capital
        contributions from limited partners.  If interest rates increase, the
        interest rates the Partnership obtains from reinvested funds will generally
        increase, but the value of the Partnership’s existing loans at fixed rates will
        generally tend to decrease.  The risk is mitigated by the fact that
        the Partnership does not intend to sell its loan portfolio, rather such loans
        are expected to be held until they are paid off. If interest rates decrease,
        the
        amounts becoming available to the Partnership for investment due to repayment
        of
        Partnership loans may be reinvested at lower rates than the Partnership had
        been
        able to obtain in prior investments, or than the rates on the repaid
        loans.  In addition, interest rate decreases may encourage borrowers
        to refinance their loans with the Partnership at a time where the Partnership
        is
        unable to reinvest in loans of comparable value.
 
  21
  The
        Partnership does not hedge or otherwise seek to manage interest rate
        risk.  The Partnership does not enter into risk sensitive instruments
        for trading purposes.
 
 **ASSET
        QUALITY**
 
 A
        consequence of lending activities is that occasionally losses will be
        experienced and that the amount of such losses will vary from time to time,
        depending upon the risk characteristics of the loan portfolio as affected
        by
        economic conditions and the financial experiences of borrowers.  Many
        of these factors are beyond the control of the general
        partners.  There is no precise method of predicting specific losses or
        amounts that ultimately may be charged off on particular segments of the
        loan
        portfolio, especially in light of the current economic environment.
 
 The
        conclusion that a loan may become uncollectible, in whole or in part, is
        a
        matter of judgment.  Although institutional lenders are subject to
        requirements and regulations that, among other things, require them to perform
        ongoing analyses of their portfolios, loan-to-value ratios, reserves, etc.,
        and
        to obtain and maintain current information regarding their borrowers and
        the
        securing properties, the Partnership is not subject to these regulations
        and has
        not adopted certain of these practices.  Rather, the general partners,
        in connection with the periodic closing of the accounting records of the
        Partnership and the preparation of the financial statements, determine whether
        the allowance for loan losses is adequate to cover potential loan losses
        of the
        Partnership.  As of March 31, 2007, one loan was past due 90 days or
        more in interest payments totaling $487,500.  This loan was also in
        foreclosure status.  Another loan totaling $500,000 had matured but
        was current on interest payments.  Management believes that there is
        sufficient collateral to cover the amount outstanding to the Partnership
        on
        these loans.  As of March 31, 2007, the general partners have
        determined that the allowance for loan and real estate losses of $603,715
        (6.49%
        of net assets) is adequate in amount.  Because of the number of
        variables involved, the magnitude of the swings possible and the general
        partners’ inability to control many of these factors, actual results may and do
        sometimes differ significantly from estimates made by the general
        partners.
 
 
 **Part
        I – Item 4.   CONTROLS AND PROCEDURES**
 
 As
        of
        March 31, 2007, the Partnership carried out an evaluation, under the supervision
        and with the participation of the general partners of the effectiveness of
        the
        design and operation of the Partnership’s disclosure controls and procedures
        pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as
        amended.  Based upon that evaluation, the general partners concluded
        that the Partnership’s disclosure controls and procedures are effective in
        timely alerting the general partners to material information relating to
        the
        Partnership that is required to be included in our periodic filings with
        the
        Securities and Exchange Commission.  There were no significant changes
        in the Partnership’s internal control over financial reporting during the
        Partnership’s first fiscal quarter that have materially affected, or are
        reasonably likely to materially affect, the Partnership’s internal control over
        financial reporting.
 
  22
  **PART
        II – OTHER INFORMATION**
 
 
 Item
        1.               **Legal
        Proceedings**
 
 The
        Partnership is involved in various legal actions arising in the normal course
        of
        business.  In the opinion of management, such matters will not have a
        material effect upon the financial position of the Partnership.
 
 
 Item
        1A.                          **Risk
        Factors**
 
 Not
        Applicable
 
 
 Item
        2.               **Unregistered
        Sales of Equity Securities and Use of Proceeds**
 
 Not
        Applicable.
 
 
 Item
        3.               **Defaults
        upon Senior Securities**
 
 Not
        Applicable.
 
 
 Item
        4.               **Submission
        of Matters to a Vote of Security Holders**
 
 Not
        Applicable.
 
 
 Item
        5.               **Other
        Information**
 
 Not
        Applicable.
 
 
 Item
        6.               **Exhibits**
 
 31.1
        Certification of General Partner pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002
 31.2
        Certification of General Partner pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002
 32.1
        Certification of General Partner pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002
 32.2
        Certification of General Partner pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002
 
  23
  **SIGNATURES**
 
 Pursuant
        to the requirements of Section 13 or 15 (d) of the Securities Exchange Act
        of
        1934 the registrant has duly caused this report to be signed on its behalf
        by
        the undersigned, thereto duly authorized on the 15th day of May,
        2007.
 
 
 **REDWOOD
                  MORTGAGE INVESTORS VII**
 
 By:
              /S/
                  Michael R. BurwellMichael
                  R. Burwell, General PartnerBy:
              Gymno
                  Corporation, General PartnerBy:
              /S/
                  Michael R. BurwellMichael
                  R. Burwell, President,Secretary/Treasurer
                  & Chief Financial Officer
 
 
 
 
 
  24
  Exhibit
        31.1
 
 GENERAL
        PARTNER CERTIFICATION
 
 I,
        Michael R. Burwell, General Partner, certify that:
 
 1.
              I
                  have reviewed this quarterly report on Form 10-Q of Redwood Mortgage
                  Investors VII, a California Limited Partnership (the
                  “Registrant”);
 
 2.
              Based
                  on my knowledge, this quarterly report does not contain any untrue
                  statement of a material fact or omit to state a material fact necessary
                  to
                  make the statements made, in light of the circumstances under which
                  such
                  statements were made, not misleading with respect to the period
                  covered by
                  this quarterly report;
 
 3.
              Based
                  on my knowledge, the financial statements, and other financial
                  information
                  included in this quarterly report, fairly present in all material
                  respects
                  the financial condition, results of operations and cash flows of
                  the
                  Registrant as of, and for, the periods presented in this quarterly
                  report;
 
 4.
              The
                  Registrant’s other certifying officers and I are responsible for
                  establishing and maintaining disclosure controls and procedures
                  (as
                  defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
                  Registrant
                  and we have:
 
 (a)
              designed
                  such disclosure controls and procedures, or caused such disclosure
                  controls and procedures to be designed under our supervision, to
                  ensure
                  that material information relating to the Registrant, including
                  its
                  consolidated subsidiaries, is made known to us by others within
                  those
                  entities, particularly during the period in which this quarterly
                  report is
                  being prepared;
 
 (b)
              evaluated
                  the effectiveness of the Registrant’s disclosure controls and procedures
                  and presented in this report our conclusions about the effectiveness
                  of
                  the disclosure controls and procedures, as of the end of the period
                  covered by this report based on such evaluation;
                  and
 
 (c)
              disclosed
                  in this report any change in the Registrant’s internal control over
                  financial reporting that occurred during the Registrant’s most recent
                  fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an
                  annual report) that has materially affected, or is reasonably likely
                  to
                  materially affect, the Registrant’s internal control over financial
                  reporting; and
 
 5.
              The
                  Registrant’s other certifying officers and I have disclosed, based on our
                  most recent evaluation of internal control over financial reporting,
                  to
                  the Registrant’s auditors and the audit committee of Registrant’s board of
                  directors (or persons performing the equivalent
                  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.
 
 
 
 
 /s/
        Michael R. Burwell
 _____________________________
 Michael
        R. Burwell, General Partner
 May
        15,
        2007
  25
  Exhibit
        31.2
 
 PRESIDENT
        AND CHIEF FINANCIAL OFFICER CERTIFICATION
 
 I,
        Michael R. Burwell, President and Chief Financial Officer of Gymno Corporation,
        General Partner, certify that:
 
 1.
              I
                  have reviewed this quarterly report on Form 10-Q of Redwood Mortgage
                  Investors VII, a California Limited Partnership (the
                  “Registrant”);
 
 2.
              Based
                  on my knowledge, this quarterly report does not contain any untrue
                  statement of a material fact or omit to state a material fact necessary
                  to
                  make the statements made, in light of the circumstances under which
                  such
                  statements were made, not misleading with respect to the period
                  covered by
                  this quarterly report;
 
 3.
              Based
                  on my knowledge, the financial statements, and other financial
                  information
                  included in this quarterly report, fairly present in all material
                  respects
                  the financial condition, results of operations and cash flows of
                  the
                  Registrant as of, and for, the periods presented in this quarterly
                  report;
 
 4.
              The
                  Registrant’s other certifying officers and I are responsible for
                  establishing and maintaining disclosure controls and procedures
                  (as
                  defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
                  Registrant
                  and we have:
 
 (a)
              designed
                  such disclosure controls and procedures, or caused such disclosure
                  controls and procedures to be designed under our supervision, to
                  ensure
                  that material information relating to the Registrant, including
                  its
                  consolidated subsidiaries, is made known to us by others within
                  those
                  entities, particularly during the period in which this quarterly
                  report is
                  being prepared;
 
 (b)
              evaluated
                  the effectiveness of the Registrant’s disclosure controls and procedures
                  and presented in this report our conclusions about the effectiveness
                  of
                  the disclosure controls and procedures, as of the end of the period
                  covered by this report based on such evaluation;
                  and
 
 (c)
              disclosed
                  in this report any change in the Registrant’s internal control over
                  financial reporting that occurred during the Registrant’s most recent
                  fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an
                  annual report) that has materially affected, or is reasonably likely
                  to
                  materially affect, the Registrant’s internal control over financial
                  reporting; and
 
 5.
              The
                  Registrant’s other certifying officers and I have disclosed, based on our
                  most recent evaluation of internal control over financial reporting,
                  to
                  the Registrant’s auditors and the audit committee of Registrant’s board of
                  directors (or persons performing the equivalent
                  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.
 
 
 
 
 /s/
        Michael R. Burwell
 ____________________________
 Michael
        R. Burwell, President and
 Chief
        Financial Officer of Gymno
 Corporation,
        General Partner
 May
        15,
        2007
  26
  Exhibit
        32.1
 
 CERTIFICATION
        PURSUANT TO
 18
        U.S.C
        SECTION 1350,
 AS
        ADOPTED PURSUANT TO
 SECTION
        906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 In
        connection with the Quarterly Report of Redwood Mortgage Investors VII (the
        “Partnership”) on Form 10-Q for the period ending March 31, 2007 as filed with
        the Securities and Exchange Commission on the date hereof (the “Report”),
        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
        the
        Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, General Partner of the
        Partnership, certify, that to the best of my knowledge:
 
 (1)
              The
                  Report fully complies with the requirements of section 13(a) or
                  15(d) of
                  the Securities Exchange Act of 1934;
                  and
 
 (2)
              The
                  information contained in the Report fairly presents, in all material
                  respects, the financial condition and results of operations of
                  the
                  Partnership at the dates and for the periods
                  indicated.
 
 This
        certification has not been, and shall not be deemed “filed” with the Securities
        and Exchange Commission.
 
 
 
 
 /s/
                  Michael R. Burwell
 ______________________________
 Michael
                  R. Burwell, General Partner
 May
                  15, 2007
  27
  Exhibit
        32.2
 
 
 CERTIFICATION
                  PURSUANT TO
 18
                  U.S.C. SECTION 1350
 AS
                  ADOPTED PURSUANT TO
 SECTION
                  906 OF THE SARBANES-OXLEY ACT OF
                  2002
 
 
 In
        connection with the Quarterly Report of Redwood Mortgage Investors VII (the
        “Partnership”) on Form 10-Q for the period ending March 31, 2007 as filed with
        the Securities and Exchange Commission on the date hereof (the “Report”),
        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
        the
        Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, President,
        Secretary/Treasurer & Chief Financial Officer of Gymno Corporation, General
        Partner of the Partnership, certify that to the best of my
        knowledge:
 
 (1)
              The
                  Report fully complies with the requirements of section 13(a) or
                  15(d) of
                  the Securities Exchange Act of 1934;
                  and
 
 (2)
              The
                  information contained in the Report fairly presents, in all material
                  respects, the financial condition and results of operations of
                  the
                  Partnership at the dates and for the periods
                  indicated.
 
 This
        certification has not been, and shall not be deemed “filed” with the Securities
        and Exchange Commission.
 
 
 
 
 /s/
                  Michael R. Burwell
 ________________________________
 Michael
                  R. Burwell, President,
 Secretary/Treasurer
                  & Chief Financial
 Officer
                  of Gymno Corporation, General
                  Partner
 May
                  15, 2007
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