**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 September 30, 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****AS
                OF SEPTEMBER 30, 2007 (unaudited) AND DECEMBER 31, 2006
                (audited)****ASSETS**September
                30,
            
            
            December
                31,2007
            
            
            2006Cash
                and cash equivalents
            
            $
            345,972
            
            
            $
            584,114LoansLoans,
                secured by deeds of trust
            
            
            6,278,443
            
            
            
            6,218,439Loans,
                unsecured, net discount of $59,633 and 65,802for
                September 30, 2007 and December 31, 2006. respectively
            
            
            757,564
            
            
            
            714,6597,036,007
            
            
            
            6,933,098Allowance
                for loan losses
            
            
            (383,184
            )
            
            
            (454,417
            )Net
                loans
            
            
            6,652,823
            
            
            
            6,478,681Interest
                and other receivablesRelated
                party receivables
            
            
            19,906
            
            
            
            20,634Accrued
                interest and late fees
            
            
            66,731
            
            
            
            67,754Total
                interest and other receivables
            
            
            86,637
            
            
            
            88,388Investment
                in limited liability company
            
            
            907,338
            
            
            
            875,408Real
                estate held for sale, net
            
            
            1,371,401
            
            
            
            1,371,401Total
                other assets
            
            
            2,278,739
            
            
            
            2,246,809Total
                assets
            
            $
            9,364,171
            
            
            $
            9,397,992**LIABILITIES
                AND PARTNERS' CAPITAL**LiabilitiesPayable
                to affiliate
            
            $
            71,998
            
            
            $
            71,998Other
            
            
            12,442
            
            
            
            -Total
                liabilities
            
            
            84,440
            
            
            
            71,998Partners'
                capitalLimited
                partner's capital, subject to redemption
            
            
            9,267,758
            
            
            
            9,314,021General
                partners' capital
            
            
            11,973
            
            
            
            11,973Total
                partners' capital
            
            
            9,279,731
            
            
            
            9,325,994Total
                liabilities and partners' capital
            
            $
            9,364,171
            
            
            $
            9,397,992The
                accompanying notes are an integral part of the consolidated financial
                statements.








2





**REDWOOD
                MORTGAGE INVESTORS VII****(A
                California Limited Partnership)****STATEMENTS
                OF INCOME****FOR
                THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                (unaudited)**THREE
                MONTHS ENDED
            
            
            NINE
                MONTHS ENDEDSEPTEMBER
                30,
            
            
            SEPTEMBER
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006RevenuesInterest
                on loans
            
            $
            149,227
            
            
            $
            139,903
            
            
            $
            411,499
            
            
            $
            410,979Interest-interest
                bearing accounts
            
            
            3,156
            
            
            
            8,021
            
            
            
            24,108
            
            
            
            13,821Late
                fees
            
            
            1,106
            
            
            
            1,638
            
            
            
            2,819
            
            
            
            4,746Other
            
            
            3,982
            
            
            
            1,716
            
            
            
            6,244
            
            
            
            4,741Total
                revenues
            
            
            157,471
            
            
            
            151,278
            
            
            
            444,670
            
            
            
            434,287ExpensesClerical
                costs through Redwood Mortgage Corp.
            
            
            2,642
            
            
            
            3,010
            
            
            
            8,211
            
            
            
            9,389Asset
                management fees
            
            
            -
            
            
            
            8,748
            
            
            
            2,922
            
            
            
            8,748Provision/(Recovery)
                on losses on loans andreal
                estate held for sale
            
            
            6,383
            
            
            
            (4,141
            )
            
            
            (24,994
            )
            
            
            (43,742
            )Professional
                services
            
            
            11,762
            
            
            
            6,322
            
            
            
            50,126
            
            
            
            46,712Printing
                supplies and postage
            
            
            1,651
            
            
            
            786
            
            
            
            5,761
            
            
            
            5,081Other
            
            
            8,750
            
            
            
            10,089
            
            
            
            23,265
            
            
            
            29,382Total
                expenses
            
            
            31,188
            
            
            
            24,814
            
            
            
            65,291
            
            
            
            55,570Net
                income
            
            $
            126,283
            
            
            $
            126,464
            
            
            $
            379,379
            
            
            $
            378,717Net
                income:General
                partners ( 1%)
            
            $
            1,263
            
            
            $
            1,264
            
            
            $
            3,794
            
            
            $
            3,787Limited
                partners (99%)
            
            
            125,020
            
            
            
            125,200
            
            
            
            375,585
            
            
            
            374,930$
            126,283
            
            
            $
            126,464
            
            
            $
            379,379
            
            
            $
            378,717Net
                income per $1,000 invested by limitedpartners
                for the entire period-where
                income is compounded and retained
            
            $
            13
            
            
            $
            13
            
            
            $
            41
            
            
            $
            41-where
                partner receives income in monthlydistributions
            
            $
            13
            
            
            $
            13
            
            
            $
            40
            
            
            $
            40The
                accompanying notes are an integral part of the consolidated financial
                statements.











3





**REDWOOD
                MORTGAGE INVESTORS VII****(A
                California Limited Partnership)****STATEMENTS
                OF CASH FLOWS****FOR
                THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                (unaudited)**2007
            
            
            2006Cash
                flows from operating activitiesNet
                income
            
            $
            379,379
            
            
            $
            378,717Adjustments
                to reconcile net income to net cash providedby
                operating activitiesRecovery
                of losses on loans and real estate held for sale
            
            
            (24,994
            )
            
            
            (43,742
            )Early
                withdrawal penalty credited to income
            
            
            (3,301
            )
            
            
            (3,766
            )Amortization
                of discount on unsecured loans
            
            
            (6,169
            )
            
            
            (4,112
            )Change
                in operating assets and liabilitiesAccrued
                interest and late fees
            
            
            (32,716
            )
            
            
            (17,778
            )Related
                party receivables
            
            
            728
            
            
            
            -Accounts
                payable and other liabilities
            
            
            12,442
            
            
            
            7,819Other
                assets
            
            
            -
            
            
            
            (32,615
            )Net
                cash provided by operating activities
            
            
            325,369
            
            
            
            284,523Cash
                flows from investing activitiesPrincipal
                collected on loans
            
            
            1,679,113
            
            
            
            3,226,250Loans
                originated
            
            
            (1,751,617
            )
            
            
            (3,497,153
            )Advances
                on unsecured loans
            
            
            (53,381
            )
            
            
            79,780Payments
                on investment in limited liability company
            
            
            (31,930
            )
            
            
            (19,030
            )Proceeds
                from investment in limited liability company
            
            
            -
            
            
            
            34,316Proceeds
                from unsecured loans
            
            
            16,645
            
            
            
            18,911Net
                cash used in investing activities
            
            
            (141,170
            )
            
            
            (156,926
            )Cash
                flows from financing activitiesPartners'
                withdrawals
            
            
            (422,341
            )
            
            
            (337,049
            )Net
                decrease in cash and cash equivalents
            
            
            (238,142
            )
            
            
            (209,452
            )Cash
                and cash equivalents - beginning of period
            
            
            584,114
            
            
            
            1,627,384Cash
                and cash equivalents - end of period
            
            $
            345,972
            
            
            $
            1,417,932The
                accompanying notes are an integral part of the consolidated financial
                statements.





During
      the third quarter of 2007, the partnership reached a settlement of a note from
      a
      defaulted borrower and wrote-off the balance of $46,239 against the allowance
      for loan loss reserve.  This resulted in a decrease of $12,500 in
      loans receivable, $31,819 in accrued interest and $1,920 in late
      charges.





4


**REDWOOD
      MORTGAGE INVESTORS VII**


**(A
      California Limited Partnership)**


**NOTES
      TO FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 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 nine month
      period ended September 30, 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
      September 30, 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 September 30, 2007 and December
      31, 2006 were $489,453 and $737,500, respectively.  In addition,
      accrued charges and advances and late charges on these loans totaled $6,636
      and
      $26,250, respectively.  In the opinion of management, the delinquent
      and/or past maturity loans as of September 30, 2007 have sufficient collateral
      to cover the outstanding amounts due to the Partnership and are still accruing
      interest.





**Allowance
      for loan losses**





The
      composition of the allowance for loan losses as of September 30, 2007 and
      December 31, 2006 was as follows:





September
                30, 2007
            
            
            December
                31, 2006Percent
                of
            
            
            
            
            
            Percent
                ofloans
                in each
            
            
            
            
            
            loans
                in eachBalance
                at end of year
            
            
            
            
            category
                to
            
            
            
            
            
            category
                toApplicable
                to:
            
            Amount
            
            
            total
                loans
            
            
            Amount
            
            
            total
                loansReal
                estate mortgageSingle-family
                (1-4 units)
            
            $
            54,919
            
            
            
            41.64
            %
            
            $
            68,548
            
            
            
            45.84
            %Apartments
                (5+ units)
            
            
            10,156
            
            
            
            10.95
            %
            
            
            10,156
            
            
            
            11.05
            %Commercial
            
            
            44,982
            
            
            
            40.75
            %
            
            
            37,182
            
            
            
            28.54
            %Land
            
            
            27,832
            
            
            
            6.66
            %
            
            
            52,492
            
            
            
            14.57
            %Total
                real estate-mortgage
            
            $
            137,889
            
            
            
            100.00
            %
            
            $
            168,378
            
            
            
            100.00
            %Unsecured
                loans
            
            $
            245,295
            
            
            
            100.00
            %
            
            $
            286,039
            
            
            
            100.00
            %Total
                unsecured loans
            
            $
            245,295
            
            
            
            100.00
            %
            
            $
            286,039
            
            
            
            100.00
            %Total
                allowance for loan losses
            
            $
            383,184
            
            
            
            100.00
            %
            
            $
            454,417
            
            
            
            100.00
            %








5


**REDWOOD
      MORTGAGE INVESTORS VII**


**(A
      California Limited Partnership)**


**NOTES
      TO FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 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 September
      30,
      2007 and the year ended December 31, 2006 was as follows:





September
                30,
            
            
            December
                31,2007
            
            
            2006Balance
                at beginning of period
            
            $
            454,417
            
            
            $
            700,536Charge-offsDomesticReal
                estate mortgageSingle-family
                (1-4 units)
            
            
            -
            
            
            
            -Apartments
                (5+ units)
            
            
            -
            
            
            
            -Commercial
            
            
            -
            
            
            
            (6,707
            )Land
            
            
            (46,239
            )
            
            
            -(46,239
            )
            
            
            (6,707
            )RecoveriesDomesticReal
                estate mortgageSingle-family
                (1-4 units)
            
            
            -
            
            
            
            -Apartments
                (5+ units)
            
            
            -
            
            
            
            -Commercial
            
            
            -
            
            
            
            -Land
            
            
            -
            
            
            
            --
            
            
            
            -Net
                charge-offs
            
            
            (46,239
            )
            
            
            (6,707
            )Additions
                (recovery) charged to operations
            
            
            (24,994
            )
            
            
            (49,102
            )Transfer
                to real estate held for sale reserve
            
            
            -
            
            
            
            (190,310
            )Transfer
                from real estate held for sale reserve
            
            
            -
            
            
            
            -Balance
                at end of period
            
            $
            383,184
            
            
            $
            454,417Ratio
                of net charge-offs during the period to averagesecured
                loans outstanding during the period
            
            
            0.74
            %
            
            
            0.11
            %





At
      September 30, 2007 and December 31, 2006, there was one unsecured loan totaling
      $623,366 that was categorized as impaired by the
      Partnership.  Interest is no longer being accrued on this
      loan.





**Investment
      in limited liability company**





An
      investment in a limited liability company is accounted for using the equity
      method.  One of the Partnership’s general partners is the managing
      member of an 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**


**SEPTEMBER
      30, 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.





**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 $42,091 in mortgage servicing fees during the first nine
      months of 2007.





7


**REDWOOD
      MORTGAGE INVESTORS VII**


**(A
      California Limited Partnership)**


**NOTES
      TO FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 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 $23,319 and received $2,922 in asset management
      fees during the first nine months 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. 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
      September 30, 2007, the Partnership’s investment in this property was
      $62,720.  This property was previously under contract for sale, but
      such contract was terminated by the potential buyer in July 2007. The property
      is currently listed for sale.





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.  The land was comprised of three separate lots,
      which totaled approximately 14 acres.  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.  The
      remaining parcels are currently listed for sale.  As of September 30,
      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 with 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 September 30, 2007 and December 31,
      2006:





September
                30,
            
            
            December
                31,2007
            
            
            2006Cost
                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**


**SEPTEMBER
      30, 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 with 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 the fair value of the property exceeds the combined
      partnerships’ investment in the property.  The Partnership has
      commenced making improvements to the property in anticipation of listing the
      property for sale in late 2008.  As of September 30, 2007, the
      Partnership has capitalized approximately $104,952 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 September 30, 2007, the Partnership’s investment in
      Larkin totaled $907,338.








**NOTE
      6 – BANK LINE OF CREDIT**





The
      Partnership previously had a bank line of credit secured by its loan portfolio
      of up to $2,500,000 at .25% over prime.  The Partnership had not
      utilized this facility for some time and in September 2007; the Partnership
      terminated the line of credit.








**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 $6,278,443 and $6,218,439 at September
                30,
                2007 and December 31, 2006, respectively.  The fair value of
                these loans of $6,271,508 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 $757,564 and $714,659 at September
                30, 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**


**SEPTEMBER
      30, 2007 (unaudited)**








**NOTE
      8 – ASSET CONCENTRATIONS AND CHARACTERISTICS**





Loans
      are
      secured by recorded deeds of trust.  At September 30, 2007 and
      December 31, 2006 there were 25 and 22 secured loans outstanding, respectively,
      with the following characteristics:





September
                30,
            
            
            December
                31,2007
            
            
            2006Number
                of secured loans outstanding
            
            
            25
            
            
            
            22Total
                secured loans outstanding
            
            $
            6,278,443
            
            
            $
            6,218,439Average
                secured loan outstanding
            
            $
            251,138
            
            
            $
            282,656Average
                secured loan as percent of total secured loans
            
            
            4.00
            %
            
            
            4.55
            %Average
                secured loan as percent of partners' capital
            
            
            2.71
            %
            
            
            3.03
            %Largest
                secured loan outstanding
            
            $
            500,000
            
            
            $
            550,000Largest
                secured loan as percent of total secured loans
            
            
            7.96
            %
            
            
            8.84
            %Largest
                secured loan as percent of partners' capital
            
            
            5.39
            %
            
            
            5.90
            %Largest
                secured loan as percent of total assets
            
            
            5.34
            %
            
            
            5.85
            %Number
                of counties where security is located (all California)
            
            
            15
            
            
            
            14Largest
                percentage of secured loans in one county
            
            
            30.86
            %
            
            
            25.53
            %Number
                of secured loans in foreclosure status
            
            None
            
            
            NoneAmount
                of secured loans in foreclosure
            
            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**


**SEPTEMBER
      30, 2007 (unaudited)**








**NOTE
      8 – ASSET CONCENTRATIONS AND CHARACTERISTICS
      (continued)**





The
      following categories of secured loans were held at September 30, 2007 and
      December 31, 2006:





September
                30,
            
            
            December
                31,2007
            
            
            2006First
                trust deeds
            
            $
            5,130,540
            
            
            $
            5,011,682Second
                trust deeds
            
            
            1,058,092
            
            
            
            1,206,757Third
                trust deeds
            
            
            89,811
            
            
            
            -Total
                loans
            
            
            6,278,443
            
            
            
            6,218,439Prior
                liens due other lenders at time of loan
            
            
            2,308,163
            
            
            
            2,560,514Total
                debt
            
            $
            8,586,606
            
            
            $
            8,778,953Appraised
                property value at time of loan
            
            $
            14,257,967
            
            
            $
            14,247,048Total
                secured loans as a percent of appraisalsbased
                on appraised values and prior liensat
                time loan was consummated
            
            
            60.22
            %
            
            
            61.62
            %Secured
                loans by type of propertySingle-family
                (1-4 units)
            
            $
            2,614,711
            
            
            $
            2,850,592Apartments
                (5+ units)
            
            
            687,500
            
            
            
            687,500Commercial
            
            
            2,558,243
            
            
            
            1,774,528Land
            
            
            417,989
            
            
            
            905,819Total
                secured loans
            
            $
            6,278,443
            
            
            $
            6,218,439





Scheduled
                maturity dates of secured loans as of September 30, 2007 are as
                follows:





AmountPrior
                to December 31, 2007
            
            $
            987,500Between
                January 1, 2008 and December 31, 2008
            
            
            1,486,952Between
                January 1, 2009 and December 31, 2009
            
            
            1,200,413Between
                January 1, 2010 and December 31, 2010
            
            
            511,154Between
                January 1, 2011 and December 31, 2011
            
            
            600,593Thereafter
            
            
            1,491,831$
            6,278,443





The
      scheduled maturities for 2007 above include one loan totaling $300,000 past
      maturity at September 30, 2007.





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**


**SEPTEMBER
      30, 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 whose 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 September 30, 2007,
      the Partnership did not have any 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 September 30, 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**





From
      time
      to time, 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 September 30, 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
      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, real estate values and other 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, and
      the healthy commercial real estate market increasing lending opportunities
      and
      the impact on the Partnership of higher loan delinquencies in the “sub prime”
lending market.  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 $17,800 and $10,688 for the three month periods and $52,150
                and
                $74,350 for the nine month periods ended September 30, 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.  Redwood Mortgage
                Corp. waived the entire mortgage servicing fees, totaling $14,068
                and
                $14,795 for the three month periods, and $42,091 and $42,420 for
                the nine
                month periods ended September 30, 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).  Net management fees to the general
                partners of $0 and $8,748 were incurred for the three month periods
                and
                $2,922 and $8,748 incurred for the nine month periods ended September
                30,
                2007 and 2006, respectively.  The general partners waived $8,735
                and $0 in asset management fees during the three month periods and
                $23,319
                and $17,448 during the nine month periods ended September 30, 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 $1,438 and $1,222
                for the three month periods and $3,430 and $3,542 for the nine month
                periods ended September 30, 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 $1,263 and $1,264 for the
                three
                month periods and $3,794 and $3,787 for the nine month periods ended
                September 30, 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 $2,642 and $3,010 for the
                three month periods and $8,211 and $9,389 for the nine month periods
                ended
                September 30, 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 each of
                September 30, 2007 and 2006, a general partner, Gymno Corporation,
                had
                contributed $11,973 as capital in accordance with the Partnership
                Agreement.





14


**Results
      of Operations**





Changes
      in the Partnership’s operating results are tabulated for reference and discussed
      below:





Changes
                during the three
            
            
            Changes
                during the ninemonths
                ended
            
            
            months
                endedSeptember
                30, 2007
            
            
            September
                30, 2007versus
                2006
            
            
            versus
                2006Dollars
            
            
            %
            
            
            Dollars
            
            
            %RevenueInterest
                on loans
            
            $
            9,324
            
            
            
            6.66
            %
            
            $
            520
            
            
            
            0.13
            %Interest-interest
                bearing accounts
            
            
            (4,865
            )
            
            
            -60.65
            %
            
            
            10,287
            
            
            
            74.43
            %Late
                fees
            
            
            (532
            )
            
            
            -32.48
            %
            
            
            (1,927
            )
            
            
            -40.60
            %Other
            
            
            2,266
            
            
            
            132.05
            %
            
            
            1,503
            
            
            
            31.70
            %6,193
            
            
            
            4.09
            %
            
            
            10,383
            
            
            
            2.39
            %ExpensesMortgage
                servicing fees
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Clerical
                costs through RedwoodMortgage
                Corp.
            
            
            (368
            )
            
            
            -12.23
            %
            
            
            (1,178
            )
            
            
            -12.55
            %Asset
                management fees
            
            
            (8,748
            )
            
            
            -100.00
            %
            
            
            (5,826
            )
            
            
            -66.60
            %Provision/(Recovery)
                of loses on loansand
                real estate held for sale
            
            
            10,524
            
            
            
            -254.14
            %
            
            
            18,748
            
            
            
            -42.86
            %Professional
                services
            
            
            5,440
            
            
            
            86.05
            %
            
            
            3,414
            
            
            
            7.31
            %Printing
                supplies and postage
            
            
            865
            
            
            
            110.05
            %
            
            
            680
            
            
            
            13.38
            %Other
            
            
            (1,339
            )
            
            
            -13.27
            %
            
            
            (6,117
            )
            
            
            -20.82
            %6,374
            
            
            
            25.69
            %
            
            
            9,721
            
            
            
            17.49
            %Net
                income
            
            $
            (181
            )
            
            
            -0.14
            %
            
            $
            662
            
            
            
            0.17
            %





The
      increases in interest on loans  for the three and nine month periods
      of 2007, compared to the same periods in 2006 was primarily due to an increase
      in the  average interest rates. For the third quarters of 2007 and
      2006, the rates averaged 9.55% and 9.35% respectively. During the nine month
      periods, the average rates were 9.34% and 9.27% respectively.





The
      decrease in interest from interest bearing accounts for the quarter was
      primarily due to a decrease in the average account balances from $879,015 in
      2006 to $338,689 in 2007.  The increase for the nine month period was
      due primarily to an increase in the average interest rate earned from 1.19%
      in
      2006 to 3.94% in 2007, offset by a decrease in the average account balances
      from
      $1,548,457 in 2006 to $816,389 in 2007.





The
      decrease in late fees for the three and  nine month periods of 2007
      compared to the same periods in 2006 was primarily due to a reduction in late
      mortgage payments by the borrowers.





15


The
      increase in other income for the three and  nine month periods of 2007
      compared to the same periods in 2006 was primarily due to an increase in
      miscellaneous income.





Mortgage
      servicing fees for the three and nine month periods ended September 30, 2007
      and
      2006 were waived by the servicing agent, Redwood Mortgage Corp.  These
      fees would have otherwise cost the Partnership $14,068 and $10,688 for the
      three
      month periods and $42,091 and $42,420 for the nine month periods ended September
      30, 2007 and 2006, respectively.





The
      decrease in clerical costs for the three and nine month periods compared to
      the
      same periods in 2006 was primarily due to lower servicing costs.





The
      decrease in asset management fees for the three month period compared to the
      same period in 2006 was due to a full waiver of $8,735 in 2007 and no waiver
      in
      2006 by the general partners.  The general partners also increased
      their waived fees in 2007 to $23,319 compared to $17,448 in 2006 for the nine
      month periods.





The
      increase in provision/(recovery) of losses on loans and real estate held for
      sale for the three month period was due to an increase in the provision by
      $4,327 and a reduction in recoveries of $6,197.  The increase for the
      nine month period was due to an increase in the provision of $6,383 and a
      decrease in recoveries of $12,365.  The increase to the provision is
      due to management’s determination to maintain an adequate allowance for losses
      on loans and real estate held for sale of $545,158.





The
      increase in professional fees for the three and nine month periods ended in
      2007
      as compared to the same periods in 2006 was due to increased fees and the timing
      of professional services and costs associated with the various partnership
      regulatory filings, the annual audit and the services of a consultant related
      to
      compliance work in accordance with the Sarbanes-Oxley Act of
      2002.  Additional payments to the same consultant are anticipated for
      the fourth quarter of 2007 as the engagement reaches completion.





The
      decrease in other expenses for the three and nine month periods in 2007 as
      compared to the same periods in 2006 was primarily due to a decrease in upkeep
      costs for the real estate held for sale.  The Partnership spent $8,742
      and $10,089 during the three month periods and $21,826 and $27,982 for the
      nine
      month periods ended 2007 and 2006, respectively.





Partnership
      capital decreased by $46,263 during the first nine months of 2007 as the
      aggregate of earnings distributions and capital liquidations was higher than
      the
      net income level of the Partnership.  For the nine month period ended
      September 30, 2007, limited partners’ net income was $375,585 versus earnings
      distributions of $143,822 and capital liquidations of
      $278,027,  totaling $421,849,  compared to limited partners’
net income of $374,930 versus earnings distributions of $137,048 and capital
      liquidations of $199,979, totaling $337,027 for the corresponding period in
      2006.  Earnings and capital liquidations are a factor of limited
      partner elections and limited partners seeking liquidations of earnings or
      their
      capital account increased during the first nine months of
      2007,  resulting in a decline in partners’ capital from $9,325,994 as
      of December 31, 2006, to $9,279,731 as of September 30, 2007.





At
      September 30, 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 $17,800 and $10,688 for the three
      month periods.  The increase of $7,112 (66.54%) was due to more loans
      being funded in 2007 ($590,000) than in 2006 ($519,302).  Commissions
      of $52,150 and $74,350 were paid for the nine month periods ended 2007 and
      2006,
      respectively.  The decrease of $22,200 (29.86%) was due to fewer loans
      being funded totaling $1,751,617 and $3,497,153 in the nine month periods ended
      September 30, 2007 and 2006, respectively.





16


**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.  As of September 30, 2007, the Partnership had one loan
      totaling $189,453 past due 90 days or more in interest payments, one loan with
      a
      balance of $300,000 past maturity and one unsecured, impaired loan totaling
      $623,366.





Periodically,
      the Partnership enters into workout agreements with borrowers who are past
      maturity or delinquent in their regular payments.  As of September 30,
      2007, the Partnership did not have any loans subject to a workout
      agreement.  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 varying 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.  During the remainder of 2007, we may initiate foreclosure by
      filing notices of default on delinquent borrowers or borrowers who become
      delinquent.  Borrower foreclosures are a normal aspect of Partnership
      operations and the general partners anticipate they will not have a material
      effect on liquidity.  As a safeguard against potential losses, the
      general partners have made provisions for losses on loans and real estate held
      for sale through foreclosure of $545,158 at September 30, 2007.  These
      provisions for losses were made to guard against collection losses and are
      considered by the general partners to be adequate. However, 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
      September 30, 2007, the Partnership had an average loan to value ratio of 60.22%
      based on appraised values and prior 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 through amortization of payments after the loan was
      made.  This low loan to value ratio should assist the Partnership in
      weathering loan delinquencies and foreclosures in the event they
      occur.





**PORTFOLIO
      REVIEW**– For the nine months ended September 30, 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 September 30, 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 $4,683,553 (74.60%)
      and $4,083,507 (68.73%), respectively, of the outstanding secured loan
      portfolio.  The remainder of the portfolio represented loans secured
      by real estate located primarily in other Northern California
      counties.





17


As
      of
      September 30, 2007 and 2006, the Partnership held 25 and 26 loans, respectively,
      in the following categories:





September
                30,2007
            
            
            2006Single-family
                (1-4 units)
            
            $
            2,614,711
            
            
            
            41.64
            %
            
            $
            3,119,004
            
            
            
            52.50
            %Apartments
                (5+ units)
            
            
            687,500
            
            
            
            10.95
            %
            
            
            242,500
            
            
            
            4.08
            %Commercial
            
            
            2,558,243
            
            
            
            40.75
            %
            
            
            1,673,805
            
            
            
            28.17
            %Land
            
            
            417,989
            
            
            
            6.66
            %
            
            
            905,825
            
            
            
            15.25
            %Total
            
            $
            6,278,443
            
            
            
            100.00
            %
            
            $
            5,941,134
            
            
            
            100.00
            %





The
      following table sets forth the priorities, asset concentrations and maturities
      of the loans held by the Partnership as of September 30, 2007:





**PRIORITIES,
      ASSET CONCENTRATIONS AND MATURITIES OF LOANS**


**As
      of September 30, 2007**





#
                ofSecuredLoans
            
            
            Amount
            
            
            Percent1st
                Mortgages
            
            
            20
            
            
            $
            5,130,540
            
            
            
            81.72
            %2nd
                Mortgages
            
            
            4
            
            
            
            1,058,092
            
            
            
            16.85
            %3rd
                Mortgages
            
            
            1
            
            
            
            89,811
            
            
            
            1.43
            %Total
            
            
            25
            
            
            $
            6,278,443
            
            
            
            100.00
            %Maturing
                prior to 12/31/07
            
            
            3
            
            
            $
            987,500
            
            
            
            15.73
            %Maturing
                between 01/01/08 and 12/31/08
            
            
            7
            
            
            
            1,486,952
            
            
            
            23.68
            %Maturing
                between 01/01/09 and 12/31/09
            
            
            4
            
            
            
            1,200,413
            
            
            
            19.12
            %Maturing
                after 12/31/09
            
            
            11
            
            
            
            2,603,578
            
            
            
            41.47
            %Total
            
            
            25
            
            
            $
            6,278,443
            
            
            
            100.00
            %Average
                secured loan as a % of secured loan portfolio
            
            
            
            
            
            $
            251,138
            
            
            
            4.00
            %Largest
                secured loan as a % of secured loan portfolio
            
            
            
            
            
            $
            500,000
            
            
            
            7.96
            %Smallest
                secured loan as a % of secured loan portfolio
            
            
            
            
            
            $
            89,811
            
            
            
            1.43
            %Average
                secured loan-to-value at time of loan based onappraisals
                and prior liens at time of loan
            
            
            
            
            
            
            
            
            
            
            60.22
            %








The
      Partnership’s largest loan in the principal amount of $500,000 represents 7.96%
      of outstanding secured loans and 5.34% 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.





18


**Borrower
      Liquidity and Capital Resources**.





The
      Partnership relies upon loan payoffs, and borrowers’ mortgage payments 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.     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 for other Partnership business.





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 and
      nine month periods ended September 30, 2007 and 2006, respectively, 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 September 30,
            
            
            Nine
                months ended September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Compounding
            
            $
            75,855
            
            
            $
            77,521
            
            
            $
            231,763
            
            
            $
            237,882Distributing
            
            $
            48,165
            
            
            $
            47,679
            
            
            $
            143,822
            
            
            $
            137,048





As
      of
      September 30, 2007 and 2006, limited partners electing to withdraw earnings
      represented 38% and 39%, respectively, of the limited partners’
capital.





The
      Partnership agreement also allows the limited partners to withdraw their capital
      account subject to certain limitations.  For the third quarters of
      2007 and 2006, $17,624 and $14,582, respectively, was liquidated subject to
      the
      10% penalty for early withdrawal.  For the nine month periods ended
      September 30, 2007 and 2006, $40,083 and $47,063, respectively, was liquidated
      subject to the 10% penalty for early withdrawal.  These withdrawals
      are within the normally anticipated range the general partners would expect
      in
      their experience in this and other partnerships.





Additionally,
      for the three month periods ended September 30, 2007 and 2006, $76,148 and
      $50,807, respectively, was liquidated by limited partners who have elected
      a
      liquidation program over a period of five years or longer.  For the
      nine month periods ended September 30, 2007 and 2006, $237,944 and $152,916,
      respectively, was liquidated by limited partners who have elected a liquidation
      program over a period of five years or longer.





19


Earnings
      and capital liquidations, including early withdrawals, during the three and
      nine
      months ended September 30, 2007 and 2006 were:





Three
                months ended September 30,
            
            
            Nine
                months ended September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Earnings
                liquidation
            
            $
            48,165
            
            
            $
            47,679
            
            
            $
            143,822
            
            
            $
            137,048Capital
                liquidation *
            
            
            93,772
            
            
            
            65,389
            
            
            
            278,026
            
            
            
            199,979Total
            
            $
            141,937
            
            
            $
            113,068
            
            
            $
            421,848
            
            
            $
            337,027





*
      These
      are gross amounts, which are not net of early withdrawal penalties.





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.**





Economic
      activity as measured by Gross Domestic Product increased from 3.4% to 3.9%
      during the third quarter of 2007.  It is anticipated in the fourth
      quarter of 2007 the Gross Domestic Product will decline from the third quarter
      and will likely come in below the second and third quarter 2007
      measures.  Unemployment remained unchanged for the third quarter of
      2007 at 4.7%, with the slowdown in construction and real estate portions of
      the
      economy, unemployment may trend higher.  Inflation remained low with a
      2.8% increase from September of 2006 to September of 2007.  Of
      particular concern are the high energy costs the economy must bear; throughout
      much of 2007 oil prices have been increasing.  During November2007,
      per barrel oil prices are at all time highs, approaching $100 per
      barrel.  The Federal Reserve met twice in the fall of 2007; in
      acknowledgement of the turmoil in the financial markets from weaker real estate
      markets, the sub prime loan crisis and desires to increase liquidity, the
      Federal Reserve reduced their benchmark federal funds rate by 0.50% in September
      2007 and a further 0.25% in October 2007, for a total reduction of
      0.75%.  These were the first rate cuts in more than two
      years.  Still concerned about the threat of inflation the Federal
      Reserve has not given much indication about whether it is through lowering
      the
      federal funds rate for this year.   Long term interest rates,
      represented by the 10-year treasury bonds, have responded somewhat to the
      lowered federal funds rates.  As long term interest rates are not
      directly related to the federal funds rate it is likely to take some time before
      the lowering of the federal funds rate will have some affect.  During
      late October and early November, 2007 the ten year treasury yields did decline.
      On November 9, 2007 the 10 year Treasury bill fell to 4.23% from a yield of
      5.03% on June 29, 2007, 4.65% on March 30, 2007 and 4.68% on January 2,
      2007.   Mortgage interest rates have likewise declined and are
      near 2007 lows for a conforming 30-year loan.  Freddie Mac reported
      weekly survey results for November 8, 2007 of 6.24% for a 30-year fixed rate
      conforming loan versus a rate of 6.67% on June 28, 2007. This is the lowest
      30-year fixed rates on conforming loans since May.17, 2007 when they averaged
      6.21%.


20


These
      lower interest rates may help real estate acquisitions become more affordable
      for residential purchasers providing a stimulus to the sluggish residential
      market.





While
      the
      economy seems to overall remain healthy, loan delinquencies have been
      rising.  Of particular concern are loan delinquencies in the “sub
      prime” residential real estate lending arena. Delinquencies of sub prime
      borrowers increased significantly during the third quarter of
      2007.  Delinquencies overall have begun to increase significantly as
      borrowers in and outside of the sub-prime arena have begun to default on their
      loans with increasing frequency. In California, “notice of default” filings
      increased 34.5% during the third quarter of 2007 as compared to the second
      quarter of 2007, and increased 166.6% from the third quarter of 2006 according
      to DataQuick Information Systems of La Jolla (“DataQuick”).  Sales of
      residential properties have continued to slow.  Sales of homes and
      condominiums in the nine-county San Francisco Bay Area during September 2007
      were down 31.3 % from August and down 40.1% from September, 2006
      (DataQuick).  Sales have decreased on a year over year basis for the
      last 32 months.  September was the slowest month in DataQuick’s
      statistics which go back to 1988.  Median home prices have not changed
      significantly as the median price paid for a Bay Area home was $625,000 during
      September, 2007 which was down from $655,000 in August and up 0.8 percent from
      $620,000 for September, 2006 (Source:  DataQuick).  Southern
      California fared similarly to the San Francisco Bay Area as sales of new and
      resale houses and condominiums sold in Los Angeles, Riverside, San Diego,
      Ventura, San Bernardino and Orange counties were down 29.9% from August 2007
      and
      down 48.5% from September 2006.  According to DataQuick the median
      price paid for a Southland home was $462,000 in September 2007 down 4.0% from
      September 2006.





The
      partnership loans outstanding as of September 30, 2007, carried an average
      loan-to-value ratio of 60.22% based on appraised value 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 reductions in principal on senior indebtedness through
      amortization of payments after the moan was made.  Borrowers with
      residential properties may find it difficult to refinance or sell their
      properties should they have difficulty making their payments.  In
      these circumstances the lender will have to decide whether to work with the
      borrowers to assist them through a period of financial difficulty or proceed
      with remedies incorporated into the loan documents which often result in a
      foreclosure of the property.  Slow and longer sales periods coupled
      with a general lack of financing alternatives have forced many borrowers and
      lenders into making difficult choices. Residential real estate activity and
      values have declined from the second quarter.





Commercial
      properties performance moderated in the third quarter of 2007.  The
      San Francisco citywide net absorption was 190,000 square feet and rent increases
      tapered to 3.8% during the third quarter of 2007.  This left asking
      rents at $50 a square foot for Class A central business district space and
      Class
      B space at an average rate of $35.80 for downtown space according to Grubb
      and
      Ellis.  Other regions in the San Francisco Bay Area exhibited similar
      results indicating a continuing healthy commercial real estate
      marketplace.





Management
      believes that our loan-to-value ratio of 60.22% will assist the partnership
      in
      weathering loan delinquencies and foreclosures that may occur.





21


**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 September 30, 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 values as of September 30,
      2007:





2007
            
            2008
            2009
            
            2010
            
            2011
            Thereafter
            
            TotalInterest
                earning assets:Money
                market accounts
            
            $
            308,310
            
            
            
            
            
            
            
            
            
            $
            308,310Average
                interest rate
            
            
            3.94
            %
            
            
            
            
            
            
            
            
            
            3.94
            %Unsecured
                loans
            
            
            
            
            
            
            
            $
            757,564
            
            
            
            
            $
            757,564Average
                interest rate
            
            
            
            
            
            
            
            
            0.00
            %
            
            
            
            
            0.00
            %Loans
                secured by deedsof
                trust
            
            $
            987,500
            
            1,486,952
            1,200,413
            
            
            511,154
            
            600,593
            1,491,831
            
            $
            6,278,443Average
                interest rate
            
            
            9.55
            %
            9.69%
            9.16%
            
            
            9.38
            %
            9.11%
            9.60%
            
            
            9.46
            %





**Market
      Risk.**








The
      Partnership’s primary market risk in terms of its profitability is the exposure
      to 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.





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 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 ultimately charged
      off
      on particular segments of the loan portfolio, especially in light of the current
      economic environment.





22


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 September 30, 2007, one loan totaling $189,453 was
      past due 90 days or more in interest payments.  Management believes
      there is sufficient collateral to cover the amount outstanding to the
      Partnership on this loan.  As of September 30, 2007, the general
      partners have determined that the allowance for loan and real estate losses
      of
      $545,158 (5.87% of net assets) is adequate in amount.  Due to 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
      September 30, 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 the Partnership’s disclosure controls and procedures are effective in
      timely alerting the general partners to material information relating to the
      Partnership 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
      third fiscal quarter that have materially affected, or are reasonably likely
      to
      materially affect, the Partnership’s internal control over financial
      reporting.





23


**PART
      II – OTHER INFORMATION**








Item
      1.               **Legal
      Proceedings**





From
      time
      to time, 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





24


**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 14th day of November,
      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

















25


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


November
      14, 2007


26


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


November
      14, 2007


27


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 ended September 30, 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


November
                14, 2007


28


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 ended September 30, 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


November
                14, 2007





29