UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM l0-Q

Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2006

Commission file number 000-17248

OWENS MORTGAGE INVESTMENT FUND,a California Limited Partnership(Exact Name of Registrant as Specified In Its Charter)

| | California (State or other jurisdiction of incorporation or organization)              |  | 68-0023931(I.R.S. EmployerIdentification No.)
| | -------------------------------------------------------------------------------------- |  | ---------------------------------------------
| | 2221 Olympic BoulevardWalnut Creek, California (Address of principal executiveoffices) |  | 94595(Zip Code)                              
| | (925) 935-3840Registrant's telephone number,including area code                        |  |                                              

| | 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 [X] 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).  (Check one):
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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
Act). Yes [  ] No [X]
| | -----------------------------------------------------------------------------------------------------------------------

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TABLE OF CONTENTS

PART I  FINANCIAL INFORMATION

| |         |  |                                                                                      |  | Page
| | ------- |  | ------------------------------------------------------------------------------------ |  | ----
| | Item 1. |  | Financial Statements                                                                 |  | 3   
| | Item 2. |  | Managements Discussion and Analysis of Financial Condition andResults of Operations |  | 14  
| | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                           |  | 22  
| | Item 4. |  | Controls and Procedures                                                              |  | 23  

PART II  OTHER INFORMATION

| | Item 1.  |  | Legal Proceedings                                   |  | 23
| | -------- |  | --------------------------------------------------- |  | --
| | Item 1A. |  | Risk Factors                                        |  | 23
| | Item 4.  |  | Submission of Matters to a Vote of Security Holders |  | 23
| | Item 5.  |  | Other Information                                   |  | 23
| | Item 6.  |  | Exhibits                                            |  | 23

| | Exhibit 31.1 |  |  |  | 
| | ------------ |  |  |  | 
| | Exhibit 31.2 |  |  |  | 
| | Exhibit 32   |  |  |  | 

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| | PART I  FINANCIAL INFORMATION
| | ------------------------------

| | Item 1. Financial Statements
| | ----------------------------

OWENS MORTGAGE INVESTMENT FUND,a California Limited Partnership

Consolidated Balance Sheets

March 31, 2006 and December 31, 2005

|                                                                 | (UNAUDITED)March 312006 | December 312005
|---------------------------------------------------------------- | ----------------------- | ---------------
|
|Cash and cash equivalents                                        |                         |                
|Loans secured by trust deeds, net of allowance for               |                         |                
|losses of $4,150,000 in 2006 and 2005                            |                         |                
|Interest and other receivables                                   |                         |                
|Real estate held for sale, net of allowance for losses           |                         |                
|of $660,000 in 2006 and 2005                                     |                         |                
|Real estate held for investment, net of accumulated depreciation |                         |                
|and amortization of $2,211,218 in 2006 and $2,027,620 in 2005    |                         |                
|                                                                 |                         |                
|                                                                 |                         |                
|                                                                 |                         |                
|                                                                 |                         |                

|LIABILITIES AND PARTNERS CAPITAL               
|------------------------------------------------
|LIABILITIES:                                    
|Accrued distributions payable                   
|Due to general partner                          
|Accounts payable and accrued liabilities        
|Note payable                                    
|Line of credit payable                          
|Note and interest payable to general partner    
|                                                
|                                                
|Total Liabilities                               
|                                                
|                                                
|Minority interest                               
|                                                
|                                                
|PARTNERS CAPITAL (units subject to redemption):
|General partner                                 
|Limited partners                                
|                                                
|                                                
|Total partners capital                         
|                                                
|                                                
|                                                
|                                                

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

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OWENS MORTGAGE INVESTMENT FUND,a California Limited Partnership

Consolidated Statements of Income

For the Three Months Ended March 31, 2006 and 2005 (Unaudited)

|                                                    | For the Three Months Ended
|--------------------------------------------------- | --------------------------
|
|REVENUES:                                           |                           
|Interest income on loans secured by trust deeds     |                           
|Gain on sale of real estate                         |                           
|Rental and other income from real estate properties |                           
|Other income                                        |                           
|                                                    |                           
|Total revenues                                      |                           
|                                                    |                           
|                                                    |                           
|EXPENSES:                                           |                           
|Management fees to general partner                  |                           
|Servicing fees to general partner                   |                           
|Carried interest to general partner                 |                           
|Administrative                                      |                           
|Legal and accounting                                |                           
|Rental and other expenses on real estate properties |                           
|Interest expense                                    |                           
|Minority interest                                   |                           
|Provision for loan losses                           |                           
|Other                                               |                           
|                                                    |                           
|Total expenses                                      |                           
|                                                    |                           
|                                                    |                           
|Net income                                          |                           
|                                                    |                           
|                                                    |                           
|Net income allocated to general partner             |                           
|                                                    |                           
|                                                    |                           
|Net income allocated to limited partners            |                           
|                                                    |                           
|                                                    |                           
|Net income allocated to limited partners            |                           
|per weighted average limited partnership unit       |                           
|(286,562,000 and 284,420,000 average units          |                           
|in 2006 and 2005, respectively)                     |                           
|                                                    |                           
|                                                    |                           

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

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OWENS MORTGAGE INVESTMENT FUND,a California Limited Partnership

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2006 and 2005(UNAUDITED)

|                                                        | March 312006 | March 312005
|------------------------------------------------------- | ------------ | ------------
|CASH FLOWS FROM OPERATING ACTIVITIES:                   |              |             
|Net Income                                              |              |             
|Adjustments to reconcile net income                     |              |             
|to net cash provided by operating activities:           |              |             
|Gain on sale of real estate properties                  |              |             
|Provision for loan losses                               |              |             
|Depreciation and amortization                           |              |             
|Changes in operating assets and liabilities:            |              |             
|Interest and other receivables                          |              |             
|Due from affiliate                                      |              |             
|Accounts payable and accrued liabilities                |              |             
|Interest payable to general partner                     |              |             
|Due to general partner                                  |              |             
|                                                        |              |             
|Net cash provided by operating activities               |              |             
|                                                        |              |             
|                                                        |              |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                   |              |             
|Purchases of loans secured by trust deeds               |              |             
|Principal collected on loans                            |              |             
|Loan payoffs                                            |              |             
|Sales of loans to third parties                         |              |             
|Investment in real estate properties                    |              |             
|Net proceeds from disposition of real estate properties |              |             
|Minority interest in limited liability companies        |              |             
|                                                        |              |             
|Net cash provided by (used in) investing activities     |              |             
|                                                        |              |             
|                                                        |              |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                   |              |             
|Proceeds from sale of partnership units                 |              |             
|Accrued distributions payable                           |              |             
|Repayments on note payable                              |              |             
|Proceeds from origination of note payable               |              |             
|Net advances on line of credit                          |              |             
|Partners cash distributions                            |              |             
|Partners capital withdrawals                           |              |             
|                                                        |              |             
|Net cash provided by (used in) financing activities     |              |             
|                                                        |              |             
|                                                        |              |             
|Net increase in cash and cash equivalents               |              |             
|                                                        |              |             
|Cash and cash equivalents at beginning of period        |              |             
|                                                        |              |             
|                                                        |              |             
|Cash and cash equivalents at end of period              |              |             
|                                                        |              |             
|                                                        |              |             
|Supplemental Disclosures of Cash Flow Information       |              |             
|Cash paid during the period for interest                |              |             
|                                                        |              |             

| | See note 2 for supplemental disclosure of non-cash investing activities.
| | ------------------------------------------------------------------------

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

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OWENS MORTGAGE INVESTMENT FUND,a California Limited Partnership

Notes to Consolidated Financial Statements

March 31, 2005

|(1) |  | Summary of Significant Accounting Policies
|--- |  | ------------------------------------------

| | In the opinion of the management of Owens Mortgage Investment Fund, a California Limited Partnership, (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, 2005 filed with the Securities and Exchange Commission. The results
of operations for the three month period ended March 31, 2006 are not necessarily indicative of the operating
results to be expected for the full year.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Basis of Presentation
| | ---------------------

| | The consolidated financial statements include the accounts of the Partnership and its majority-owned limited liability companies. All significant inter-company transactions and balances have been eliminated in consolidation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Loans Secured by Trust Deeds and Allowance for Loan Losses
|--- |  | ----------------------------------------------------------

| | Loans secured by trust deeds as of March 31, 2006 and December 31, 2005 are as follows:
| | ---------------------------------------------------------------------------------------

|                            |  |  |   | 2006        |  |  | 2005        | 
|--------------------------- |  |  | - | ----------- |  |  | ----------- | 
|                            |  |  |   |            
|Income-producing properties |  |  | $ | 165,332,465 |  |  | 157,571,480 | 
|Construction                |  |  |   | 59,311,840  |  |  | 52,078,648  | 
|Unimproved land             |  |  |   | 55,874,689  |  |  | 66,297,760  | 
|Residential                 |  |  |   | 348,662     |  |  | 463,362     | 
|                            |  |  |   |            
|                            |  | 
|                            |  |  | $ | 280,867,656 |  |  | 276,411,258 | 
|                            |  |  |   |            
|                            |  | 
|First mortgages             |  |  | $ | 271,201,199 |  |  | 268,231,741 | 
|Second mortgages            |  |  |   | 9,666,457   |  |  | 8,179,517   | 
|                            |  |  |   |            
|                            |  | 
|                            |  |  | $ | 280,867,656 |  |  | 276,411,258 | 
|                            |  |  |   |            

| | Scheduled maturities of loans secured by trust deeds as of March 31, 2006 and the interest rate sensitivity of such loans are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------

|                          | FixedInterestRate | VariableInterestRate | Total
|------------------------- | ----------------- | -------------------- | -----
|Year ending March 31:     |                   |                     
|2006 (past maturity)      |                   |                      | $    
|2007                      |                   |                      |      
|2008                      |                   |                      |      
|2009                      |                   |                      |      
|2010                      |                   |                      |      
|2011                      |                   |                      |      
|Thereafter (through 2014) |                   |                      |      
|                          |                   |                      |      
|                          |                   |                     
|                          |                   |                      | $    
|                          |                   |                      |      

| | The following is a schedule by geographic location of loans secured by trust deeds as of March 31, 2006 and December 31, 2005:
| | ------------------------------------------------------------------------------------------------------------------------------

|               | March 31, 2006Balance | PortfolioPercentage | December 31, 2005Balance | PortfolioPercentage
|-------------- | --------------------- | ------------------- | ------------------------ | -------------------
|Arizona        |                       |                     | $                        | 35,630,246         
|California     |                       |                     |                          | 131,738,907        
|Colorado       |                       |                     |                          | 13,463,689         
|Hawaii         |                       |                     |                          | 1,300,000          
|Idaho          |                       |                     |                          | 1,605,419          
|North Carolina |                       |                     |                          | 15,465,000         
|Nevada         |                       |                     |                          | 8,918,920          
|South Carolina |                       |                     |                          | 3,301,509          
|Texas          |                       |                     |                          | 19,835,000         
|Utah           |                       |                     |                          | 37,148,217         
|Virginia       |                       |                     |                          | 3,185,000          
|Washington     |                       |                     |                          | 9,275,749          
|               |                       |                     |                          |                    
|               |                       |                     | $                        | 280,867,656        
|               |                       |                     |                          |                    

| | Variable rate loans use as indices the one-year, five-year and 10-year Treasury Constant Maturity Index
         (4.82%, 4.82% and 4.86%, respectively, as of March 31, 2006), the prime rate (7.75% as of March 31, 2006)
         or the weighted average cost of funds index for Eleventh or Twelfth District savings institutions (3.62%
         and 3.45%, respectively, as of March 31, 2006) or include terms whereby the interest rate is adjusted at
         a specific later date. Premiums over these indices have varied from 250650 basis points depending upon
         market conditions at the time the loan is made.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006 and December 31, 2005, approximately $272,681,000 (97.1%) and $268,072,000 (97.0%) of
Partnership loans are interest-only and require the borrower to make a balloon payment on the principal amount
upon maturity of the loan. To the extent that a borrower has an obligation to pay mortgage loan principal in a
large lump sum payment, its ability to satisfy this obligation may be dependent upon its ability to sell the
property, obtain suitable refinancing or otherwise raise a substantial cash amount. As a result, these loans
involve a higher risk of default than fully amortizing loans.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006, the Partnership has commitments to advance additional funds to borrowers of construction
and other loans in the total amount of approximately $42,091,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006 and December 31, 2005, the Partnership participated in two and four loans,
         respectively, with a total principal balance of $13,000,000 and $23,000,000, respectively, with an
         unrelated mortgage investment group (the Lead Lender) that originated the loans with the borrowers.
         The General Partner receives the payments on these participated loans from the Lead Lender. Pursuant to
         Intercreditor Agreements between the Partnership and the Lead Lender on all of the participated loans as
         of March 31, 2006 and December 31, 2005, the Partnership is guaranteed its share of interest and
         principal prior to any other investors participating in such loans. During the three months ended March
         31, 2006, the Lead Lender purchased in full the Partnerships participation interest in two participated
         loans with a total principal balance of $9,000,000. In addition, in April 2006 (subsequent to quarter
         end), the Lead Lender purchased in full the two remaining participated loans with a total principal
         balance of $13,000,000.
The scheduled maturities for 2006 include approximately $27,779,000 of loans that are past maturity as of March
31, 2006, of which $15,820,000 represents loans for which interest payments are delinquent over 90 days. Of the
total past maturity loans as of March 31, 2006, $120,000 was paid off subsequent to quarter end.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the three months ended March 31, 2006 and 2005, the Partnership refinanced loans totaling $16,500,000 and
$11,621,000, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnerships investment in impaired loans that were delinquent in monthly payments greater than ninety days
         was approximately $25,599,000 and $25,899,000 as of March 31, 2006 and December 31, 2005, respectively.
         In addition, the Partnerships investment in impaired loans that were past maturity (delinquent in
         principal) but current in monthly payments was approximately $11,959,000 and $32,349,000 as of March 31,
         2006 and December 31, 2005, respectively. Of these impaired loans, none were in the process of
foreclosure and $1,600,000 involved borrowers who were in bankruptcy as of March 31, 2006 and December 31, 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnerships investment in loans delinquent in monthly payments greater than ninety days consisted of nine
and ten loans as of March 31, 2006 and December 31, 2005, respectively. As of March 31, 2006, $9,899,000 of the
delinquent loans has a specific related allowance for credit losses totaling $1,500,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There is a non-specific allowance for credit losses of $2,650,000 for the remaining delinquent balance and for
other loans. The Partnership has discontinued the accrual of interest on all loans that are delinquent in monthly
payments greater than ninety days.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes in the allowance for loan losses for the three months ended March 31, 2006 and 2005 were as follows
| | -----------------------------------------------------------------------------------------------------------

|                             | 2006 | 2005
|---------------------------- | ---- | ----
|Balance, beginning of period |      |     
|Provision                    |      |     
|Recovery of bad debts        |      |     
|Charge-off                   |      |     
|                             |      |     
|Balance, end of period       |      |     
|                             |      |     

| | The General Partner believes that the allowance for estimated loan losses is appropriate as of March 31, 2006. The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the underlying collateral.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006 and December 31, 2005, the Partnerships loans secured by deeds of trust on real property collateral located in Northern California totaled approximately 41% ($114,514,000) and 36% ($100,218,000), respectively, of the loan portfolio. The Northern California region (which includes the following counties and all counties north: Monterey, Fresno, Kings, Tulare and Inyo) is a large geographic area which has a diversified economic base. The ability of borrowers to repay loans is influenced by the economic strength of the region and the impact of prevailing market conditions on the value of real estate.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Real Estate Held for Sale
|--- |  | -------------------------

| | Real estate held for sale as of March 31, 2006 and December 31, 2005 consists of the following
properties acquired through foreclosure from 1997 through 2005:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                         | 2006 | 2005       
|-------------------------------------------------------- | ---- | -----------
|Manufactured home subdivision development, Ione,         |      |            
|California                                               |      | 857,765    
|Undeveloped land, Gresham, Oregon, net of valuation      |     
|allowance of $250,000                                    |      | 1,374,048  
|Undeveloped land, San Jose, California                   |      | 3,025,992  
|Industrial land and buildings, Santa Clara, California   |      | 4,258,407  
|Eight condominium units, Lincoln City, Oregon, net of    |     
|valuation allowance of $410,000 (held within Oregon      |     
|Leisure Homes, LLC)                                      |      | 1,117,924  
|Manufactured home subdivision development, Lake Charles, |     
|Louisiana (held within Dation, LLC)                      |      | 2,724,488  
|                                                         |      |            
|                                                         |      | $13,358,624
|                                                         |      |            

| | Changes in the allowance for real estate losses for the three months ended March 31, 2006 and 2005 were as follows:
| | -------------------------------------------------------------------------------------------------------------------

|                                | 2006 | 2005
|------------------------------- | ---- | ----
|Balance, beginning of period    |      |     
|Provision                       |      |     
|Deductions for real estate sold |      |     
|                                |      |     
|Balance, end of period          |      |     
|                                |      |     

| | Investment in Limited Liability Companies
| | -----------------------------------------

| | Oregon Leisure Homes, LLC
| | -------------------------

| | Oregon Leisure Homes, LLC (OLH) is an Oregon limited liability company formed in 2001 for the purpose of
         developing and selling eight condominium units located in Lincoln City, Oregon, which were acquired by
         the Partnership via a deed in lieu of foreclosure. The Partnership is the sole member in OLH. The
assets, liabilities, income and expenses of OLH have been consolidated into the accompanying consolidated balance
sheet and income statement of the Partnership.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the three months ended March 31, 2006, the Partnership advanced an additional $21,000 to OLH for continued
operation and marketing of the condominium units that are for sale and received repayment of advances of $5,000
from collections on notes receivable. The net loss to the Partnership was approximately $29,000 and $41,000 for
the three months ended March 31, 2006 and 2005, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dation, LLC
| | -----------

| | Dation, LLC (Dation) was formed in 2001 between the Partnership and an unrelated developer for the
         purpose of developing and selling lots in a manufactured home park located in Lake Charles, Louisiana,
         which were acquired by the Partnership via a deed in lieu of foreclosure. The Partnership advances funds
         to Dation as needed. The Partnership owns 50% of Dation and is co-manager. Pursuant to the Operating
         Agreement, the Partnership is to receive 50% of Dations profits and losses after receipt of all
         interest on the original loan and priority return on partner contributions allocated at the rate of 12%
         per annum. The Partnership has recorded 100% of Dations net losses since inception because its joint
venture partner has no capital in Dation. The assets, liabilities, income and expenses of Dation have been
consolidated into the accompanying consolidated balance sheet and income statement of the Partnership.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dation sold one lot during the three months ended March 31, 2006 and 2005, and repaid $0 and $10,000 of the loan
to the Partnership, respectively. The Partnership advanced an additional $46,000 and $145,000 to Dation during
the three months ended March 31, 2006 and 2005, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The net income (loss) to the Partnership was approximately $61,000 and $(34,000) for the three months ended March
31, 2006 and 2005, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Real Estate Held for Investment
|--- |  | -------------------------------

| | Real estate held for investment as of March 31, 2006 and December 31, 2005 is comprised of a retail property
located in Greeley, Colorado held within 720 University, LLC (see below), a light industrial building located in
Paso Robles, California, a commercial building located in Roseville, California, and an assisted living facility
located in Monterey, California as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | 2006 | 2005
|------------------------------ | ---- | ----
|Land                           |      |     
|Buildings                      |      |     
|Improvements                   |      |     
|Other                          |      |     
|                               |      |     
|                               |      |     
|                               |      |     
|Less: Accumulated depreciation |      |     
|and amortization               |      |     
|                               |      |     
|                               |      |     
|                               |      |     

| | Bayview Gardens, LLC
| | --------------------

| | The Partnership is the sole member of a limited liability company, Bayview Gardens, LLC (Bayview), which operates
an assisted living facility located in Monterey, California (which was obtained by the Partnership via a deed in
lieu of foreclosure on a first mortgage loan in June 2004). Under the terms of a lease agreement between the
Partnership and Bayview, the assisted living facility is leased to Bayview by the Partnership and the facility is
managed by an outside property manager.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The net loss to the Partnership from Bayview operations was $62,000 and $89,000 (including depreciation of
approximately $48,000 and $47,000) for the three months ended March 31, 2006 and 2005, respectively. The assets,
liabilities, income and expenses of Bayview have been consolidated into the accompanying consolidated balance
sheet and income statement of the Partnership. The Partnerships investment in Bayview real property was
approximately $5,990,000 and $5,991,000 as of March 31, 2006 and December 31, 2005, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 720 University, LLC
| | -------------------

| | The Partnership has an investment in a limited liability company, 720 University, LLC (720 University), which
owns a commercial retail property located in Greeley, Colorado. The Partnership receives 65% of the profits and
losses in 720 University after priority return on partner contributions is allocated at the rate of 10% per
annum. The assets, liabilities, income and expenses of 720 University have been consolidated into the
accompanying consolidated balance sheet and income statement of the Partnership. The net income (loss) to the
Partnership was approximately $132,000 and $(26,000) (including depreciation and amortization of $121,000 and
$166,000) for the three months ended March 31, 2006 and 2005, respectively. The minority interest of the joint
venture partner of approximately $163,000 and $160,000 as of March 31, 2006 and December 31, 2005, respectively,
is reported in the accompanying consolidated balance sheets. The Partnerships investment in 720 University
property and improvements was approximately $14,887,000 and $14,898,000 as of March 31, 2006 and December 31,
2005, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Transactions with Affiliates
|--- |  | ----------------------------

| | In consideration of the management services rendered to the Partnership, Owens Financial Group, Inc. (OFG), the General Partner, is entitled to receive from the Partnership a management fee payable monthly, subject to a maximum of 2.75% per annum of the average unpaid balance of the Partnerships mortgage loans.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All of the Partnerships loans are serviced by OFG, in consideration for which OFG receives up to .25% per annum of the unpaid principal balance of the loans.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | OFG, at its sole discretion may, on a monthly basis, adjust the management and servicing fees as long as they do
not exceed the allowable limits calculated on an annual calendar year basis. Even though the fees for a
particular month may exceed one-twelfth of the maximum limits, at the end of the calendar year the sum of the
fees collected for each of the twelve months may not exceed the stated limits. Management fees amounted to
approximately $1,170,000 and $1,139,000 for the three months ended March 31, 2006 and 2005, respectively. Service
fee payments to OFG approximated $182,000 and $157,000 for the three months ended March 31, 2006 and 2005,
respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The maximum servicing fees were paid to the General Partner during the three months ended March 31, 2006 and
2005. If the maximum management fees had been paid to the General Partner during the three months ended March 31,
2006, the management fees would have been $2,005,000 (increase of $835,000), which would have reduced net income
allocated to limited partners by approximately 15.2% and net income allocated to limited partners per weighted
average limited partner unit by the same percentage to $.02. If the maximum management fees had been paid to the
General Partner during the three months ended March 31, 2005, the management fees would have been $1,724,000
(increase of $585,000), which would have reduced net income allocated to limited partners by approximately 12.3%
and net income allocated to limited partners per weighted average limited partner unit by the same percentage to
$.02.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In determining the yield to the partners and hence the management fees, OFG may consider a number of
         factors, including current market yields, delinquency experience, uninvested cash and real estate
         activities. OFG expects that the management fees it receives from the Partnership will vary in amount
and percentage from period to period, and it is highly likely that OFG will again receive less than the maximum
management fees in the future. However, if OFG chooses to take the maximum allowable management fees in the
future, the yield paid to limited partners may be reduced.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pursuant to the Partnership Agreement, OFG receives all late payment charges from borrowers on loans owned by the
Partnership, with the exception of loans participated with outside entities. The amounts paid to or collected by
OFG for such charges totaled approximately $36,000 and $160,000 for the three months ended March 31, 2006 and
2005, respectively. In addition, the Partnership remits other miscellaneous fees to OFG, which are collected from
loan payments, loan payoffs or advances from loan principal (i.e. funding, demand and partial release fees). Such
fees remitted to OFG totaled approximately $15,000 and $5,000 for the three months ended March 31, 2006 and 2005,
respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | OFG originates all loans the Partnership invests in and receives loan origination fees from borrowers.
         Such fees earned by OFG amounted to approximately $1,998,000 and $6,312,000 on loans originated of
         approximately $83,189,000 and $76,096,000 for the three months ended March 31, 2006 and 2005,
         respectively. Of the $1,998,000 and $6,312,000 in loan origination fees earned by OFG during the three
         months ended March 31, 2006 and 2005, $420,000 and $4,000,000, respectively, were back-end fees that
         will not be collected until either some future date or when the related loans are paid in full.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | OFG is  reimbursed  by the  Partnership  for the  actual  cost of goods and  materials  used for or by the
         Partnership  and obtained  from  unaffiliated  entities and the actual cost of services of  non-management
         and  non-supervisory  personnel  related to the  administration  of the  Partnership  (subject  to certain
         limitations in the Partnership  Agreement).  The amounts  reimbursed to OFG by the Partnership  during the
         three months ended March 31, 2006 and 2005 were $12,000 and $12,000, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Note Payable
|--- |  | ------------

| | The  Partnership  has a note payable with a bank in the amount of  $10,500,000  through its  investment in
         720  University  (see note 4), which is secured by the retail  development  located in Greeley,  Colorado.
         The note  requires  monthly  interest  payments  until  March 1, 2010 at a fixed  rate of 5.07% per annum.
         Commencing  April 1, 2010,  monthly  payments  of $56,816  will be  required,  with the  balance of unpaid
         principal  due on March 1, 2015.  Interest  expense for the three months ended March 31, 2006 and 2005 was
         approximately  $133,000  and  $135,000,  respectively.  The note  contains  certain  covenants,  which the
         Company has complied with as of March 31, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Note Payable to General Partner
|--- |  | -------------------------------

| | The Partnership has a note and interest payable to the General Partner in the total amount of
         approximately $1,296,000 and $1,269,000 as of March 31, 2006 and December 31, 2005, respectively, as a
         result of the deed in lieu of foreclosure obtained on a Partnership loan in June 2004. The principal
         balance of the original note of $907,000 bears interest at the rate of 12.0% per annum, which is to be
         accrued and deferred until maturity. The Partnership recorded interest expense on this note of
         approximately $27,000 during the three months ended March 31, 2006. The note was amended at the time of
         foreclosure in June 2004 to extend the maturity date to June 8, 2009 and specifies that upon the sale of
         the property the General Partner will only be paid the amounts due under the note after the Partnership
         recovers its basis in the property at the time of sale, including any capital improvements made after
         foreclosure, but excluding the amounts capitalized pursuant to this note.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Line of Credit Payable
|--- |  | ----------------------

| | The Partnership has a line of credit agreement with a group of banks, which provides interim financing
         on mortgage loans invested in by the Partnership. All assets of the Partnership are pledged as security
         for the line of credit. The amount of credit available under this line of credit is $50,000,000. The
         line of credit expires on July 31, 2007. The Partnerships line of credit agreement was modified and
         increased by $10,000,000 (to $50,000,000) in February 2006. The terms and conditions of the existing
         credit agreement were maintained with the modification except the additional $10,000,000 available
         expires on July 31, 2006. The balance outstanding on the line of credit was $21,056,000 and $16,300,000
         as of March 31, 2006 and December 31, 2005, respectively. Borrowings under the line of credit bear
         interest at the banks prime rate, which was 7.75% as of March 31, 2006. Interest expense for the three
         months ended March 31, 2006 and 2005 was approximately $495,000 and $1,000, respectively. The
         Partnership is required to maintain non-interest bearing accounts in the total amount of $1,000,000 with
         the banks.  The agreement requires the Partnership to meet certain financial covenants including
         profitability, minimum tangible net worth and total liabilities to tangible net worth. The Partnership
         has complied with these covenants as of March 31, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
| | ---------------------------------------------------------------------------------------------

| | Forward Looking Statements
| | --------------------------

| | Some of the information in this Form 10-Q may contain forward-looking statements. Such statements can be identified by the use of forward-looking words such as may, will, expect, anticipate, estimate,continue or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial conditions or state other forward-looking information. When considering such forward-looking statements you should keep in mind the risk factors and other cautionary statements in the Partnerships Form 10-Q. Although management of the Partnership believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are certain factors, in
addition to these risk factors and cautioning statements, such as general economic conditions, local real estate conditions, adequacy of reserves, or weather and other natural occurrences that might cause a difference between actual results and those forward-looking statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Results of Operations
| | ---------------------

| | Overview
| | --------

| | Owens Mortgage Investment Fund (the Partnership) is a California Limited Partnership that invests in mortgage loans on real property located in the United States that are primarily originated by the Partnerships general partner, Owens Financial Group, Inc. (the General Partner).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnerships primary objective is to generate monthly income from its investment in mortgage loans. The Partnerships focus is on making mortgage loans to owners and developers of real property whose financing needs are often not met by traditional mortgage lenders. These include borrowers that traditional lenders may not normally consider because of perceived credit risks based on ratings or experience levels, and borrowers who require faster loan decisions. One of the Partnerships competitive advantages is the ability to approve loan applications more quickly than traditional lenders.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnership will originate loans secured by very diverse property types. In addition, the Partnership will occasionally lend to borrowers whom traditional lenders will not normally lend to because of a variety of factors including their credit ratings and/or experience. Due to these factors, the Partnership may make mortgage loans that are riskier than mortgage loans made by commercial banks and other institutional lenders. To compensate for those potential risks, the Partnership seeks to make loans at higher interest rates and with more protection from the underlying real property, such as with lower loan to value ratios.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnerships operating results are affected primarily by:
| | --------------------------------------------------------------

|o |  | the amount of cash available to invest in mortgage loans;
|- |  | ---------------------------------------------------------

|o |  | the amount of borrowing to finance mortgage loan investments;
|- |  | -------------------------------------------------------------

|o |  | the level of real estate lending activity in the markets serviced;
|- |  | ------------------------------------------------------------------

|o |  | the ability to identify and lend to suitable borrowers;
|- |  | -------------------------------------------------------

|o |  | the interest rates the Partnership is able to charge on loans;
|- |  | --------------------------------------------------------------

|o |  | the level of delinquencies on mortgage loans;
|- |  | ---------------------------------------------

|o |  | the level of foreclosures and related loan and real estate losses experienced; and
|- |  | ----------------------------------------------------------------------------------

|o |  | the income or losses from foreclosed properties prior to the time of disposal.
|- |  | ------------------------------------------------------------------------------

| | Economic developments in the United States have generally been favorable in 2005 and early 2006 and this
has led to expansion and gains in employment despite the sharp increase in crude oil prices and the hurricanes
that devastated the Gulf Coast in late summer 2005. Although the disruptions to energy production from the storms
noticeably affected economic activity, the longer-term prospects for the U.S. economy remain favorable. It
appears that inflation expectations have decreased somewhat which has allowed the Federal Reserve to achieve
price stability in an environment of generally solid economic growth. Although the Federal Reserve increased the
discount rate by a total of 2.00% between March 2005 and March 2006, this has not had a substantial impact on the
rates that the Partnership is charging on its loans. In fact, the weighted average interest rate on Partnership
loans decreased slightly from 11.07% as of March 31, 2005 to 10.67% as of March 31, 2006. Presently, the General
Partner does not expect a substantial increase in the rates charged on Partnership loans.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Partnership lending volume increased near the end of 2005 and the first quarter of 2006, which resulted in
decreased available cash and an increase in amounts drawn on the Partnerships line of credit to temporarily fund
investments in new loans as of March 31, 2006 (balance of $21.1M outstanding).  In the past few years, there has
been a shortage of suitable loans for the Partnership to invest in resulting in increased cash. This shortage
also resulted in the Partnership being closed to most new limited partner investments since September 2001.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If economic conditions for real estate worsen in 2006, the Partnership could experience an increase in loan
defaults. This would reduce the amount of income available for distribution to partners. Recognizing this risk,
the General Partner seeks to maintain a low loan-to-value ratio on its loans, which as of March 31, 2006 was
approximately 59% on a weighted average basis. By this means, the Partnership hopes to protect the value of loans
in the event of default by providing an increased equity position in underlying real property in the event of
foreclosure. Nevertheless, no assurances can be given that a marked increase in loan defaults accompanied by a
rapid decline in real estate values will not have a material adverse effect on the Partnerships financial
condition and operating results.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Historically, the General Partner has focused its operations on California and certain Western states.
Because the General Partner has a significant degree of knowledge with respect to the real estate markets in such
states, it is likely most of the Partnerships loans will be concentrated in such states. As of March 31, 2006,
40.8% of loans were secured by real estate in Northern California, while 13.2%, 12.7% , 7.1% and 6.1% were
secured by real estate in Utah, Arizona, Texas and Southern California, respectively. Such geographical
concentration creates greater risk that any downturn in such local real estate markets could have a significant
adverse effect upon results of operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Commercial real estate markets in segmented areas of California have continued to prosper. However,
there can be no assurance that the rate of growth will continue to increase in the future. A worsening economy,
particularly in California, Utah or Arizona, could adversely affect the Partnerships operating results.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Summary of Financial Results
| | ----------------------------

|                                              | Three Months Ended March 31,
|--------------------------------------------- | ----------------------------
|
|Total revenues                                |                             
|Total expenses                                |                             
|                                              |                             
|                                              |                             
|Net income                                    |                             
|                                              |                             
|                                              |                             
|Net income allocated to limited partners      |                             
|                                              |                             
|                                              |                             
|Net income allocated to limited partners      |                             
|per weighted average limited partnership      |                             
|unit                                          |                             
|                                              |                             
|                                              |                             
|Annualized rate of return to limited          |                             
|partners (1)                                  |                             
|                                              |                             
|                                              |                             
|Distribution per partnership unit (yield) (2) |                             
|                                              |                             
|                                              |                             
|Weighted average limited partnership units    |                             
|                                              |                             

|(1) |  | The annualized rate of return to limited partners is calculated based upon the net income allocated to limited partners per weighted average limited partnership unit as of March 31, 2006 and 2005 divided by the number of months during the period and multiplied by twelve (12) months.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Distribution per partnership unit (yield) is the annualized average of the monthly yield paid to the partners for the periods indicated. The monthly yield is calculated by dividing the total monthly cash distribution to partners by the prior months ending partners capital balance.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
| | -------------------------------------------------------------------------------

| | Total Revenues
| | --------------

| | Interest income on loans secured by trust deeds increased $614,000 (9.2%) during the three months ended March 31,
2006, as compared to the same period in 2005. This increase was the result of an increase in the weighted average
balance of the loan portfolio of 16.3% during the three months ended March 31, 2006, as compared to 2005. This
increase was partially offset by a decrease in the weighted average yield of the loan portfolio from 11.07% for
the three months ended March 31, 2005 to 10.66% for the three months ended March 31, 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Gain on sales of real estate decreased $74,000 (76.7%) during the three months ended March 31, 2006, as
compared to the same period in 2005, as only one lot in the manufactured home park within Dation, LLC was sold
during the three months ended March 31, 2006, resulting in a gain of approximately $22,000 to the Partnership.
During the three months ended March 31, 2005, two lots in the manufactured home park located in Ione, California
were sold resulting in a gain of approximately $96,000 to the Partnership.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Rental and other income from real estate properties increased $280,000 (27.8%) during the three months
ended March 31, 2006, as compared to the same period in 2005, as a result of increased rental revenue from the
retail property within 720 University, LLC and the manufactured home park within Dation, LLC. There have been
increased rental rates as a result of lease renewals and tenant turnover at the 720 University property and
increased occupancy at the Dation property over the past year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Total Expenses
| | --------------

| | Management fees to the General Partner are paid pursuant to the Partnership Agreement and are determined
at the sole discretion of the General Partner. The maximum management fee permitted under the Partnership
Agreement is 2 3⁄4% per year of the average unpaid balance of mortgage loans. For the years 2003, 2004 and 2005 and
the three months ended March 31, 2006 (annualized), the management fees were 2.01%, 2.00%, 2.27% and 1.61% of the
average unpaid balance of mortgage loans, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In determining the management fees and hence the yield to the partners, the General Partner may consider
a number of factors, including current market yields, delinquency experience, uninvested cash and real estate
activities. The General Partner expects that the management fees that it receives from the Partnership will vary
in amount and percentage from period to period, and it is highly likely that the General Partner will again
receive less than the maximum management fees in the future. However, if the General Partner chooses to take the
maximum allowable management fees in the future, the yield paid to limited partners may be reduced.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If the maximum management fees had been paid to the General Partner during the three months ended March
31, 2006, the management fees would have been $2,005,000 (increase of $835,000), which would have reduced net
income allocated to limited partners by approximately 15.2% and net income allocated to limited partners per
weighted average limited partner unit by the same percentage to $.02.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Servicing fees to the General Partner increased $26,000 (16.3%) due to the increase in the weighted
average balance of the loan portfolio of 16.3% during the three months ended March 31, 2006, as compared to 2005,
as the servicing fees are calculated and paid at the rate of 0.25% per annum of the unpaid principal balance of
the loans, pursuant to the Partnership Agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Legal and accounting expenses decreased $33,000 (27.5%) due to accounting and consulting expenses
incurred in the effort to ready the Partnerships internal controls for audit pursuant to Rule 404 of the
Sarbanes-Oxley Act during the three months ended March 31, 2005. Such expenses were not incurred during the three
months ended March 31, 2006, however, the Partnership expects to incur further accounting and consulting related
fees due to Rule 404 in 2006 and beyond.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest expense increased $431,000 (192.1%) during the three months ended March 31, 2006, as compared to the
same period in 2005, because the Partnership utilized its line of credit to invest in loans secured by trust
deeds over most of the three months ended March 31, 2006 (balance of $21,056,000 as of March 31, 2006), while the
Partnership did not utilize the line of credit during the three months ended March 31, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The decrease in the provision for loan losses of $350,000 during the three months ended March 31, 2006
was the result of an analysis performed on the loan portfolio, which resulted in no increase in the allowance for
loan losses during the quarter. During the three months ended March 31, 2005, the allowance for loan losses was
increased by $350,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Financial Condition
| | -------------------

| | March 31, 2006 and December 31, 2005
| | ------------------------------------

| | Loan Portfolio
| | --------------

| | The number of Partnership mortgage investments decreased from 87 to 78, and the average loan balance
increased from $3,177,000 to $3,601,000 between December 31, 2005 and March 31, 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Approximately $25,599,000 (9.1%) and $25,899,000 (9.4%) of the loans invested in by the Partnership were
more than ninety days delinquent in monthly payments as of March 31, 2006 and December 31, 2005, respectively. In
addition, the Partnerships investment in loans that were past maturity (delinquent in principal) but current in
monthly payments was approximately $11,959,000 (4.3%) and $32,349,000 (11.7%) as of March 31, 2006 and December
31, 2005, respectively. Of the total past maturity loans as of March 31, 2006, one loan in the amount of $120,000
was paid off in full subsequent to quarter end. Of the impaired loans as of March 31, 2006 and December 31, 2005,
none were in the process of foreclosure, and approximately $1,600,000 (0.6%) involved loans to borrowers who were
in bankruptcy.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006 and December 31, 2005, the Partnership participated in two and four loans,
respectively, with a total principal balance of $13,000,000 and $23,000,000, respectively, with an unrelated
mortgage investment group (the Lead Lender) that originated the loans with the borrowers. The General Partner
receives the payments on these participated loans from the Lead Lender. Pursuant to Intercreditor Agreements
between the Partnership and the Lead Lender on all of the participated loans as of March 31, 2006 and December
31, 2005, the Partnership is guaranteed its share of interest and principal prior to any other investors
participating in such loans. During the three months ended March 31, 2006, the Lead Lender purchased in full the
Partnerships participation interest in two participated loans with a total principal balance of $9,000,000. In
addition, in April 2006 (subsequent to quarter end), the Lead Lender purchased in full the two remaining
participated loans with a total principal balance of $13,000,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006 and December 31, 2005, the Partnership held the following types of mortgages:
| | --------------------------------------------------------------------------------------------------

|                            | 2006 | 2005
|--------------------------- | ---- | ----
|1st Mortgages               |      |     
|2nd Mortgages               |      |     
|                            |      |     
|Total                       |      |     
|                            |      |     
|                            |      |     
|Income Producing Properties |      |     
|Construction                |      |     
|Unimproved Land             |      |     
|Residential                 |      |     
|                            |      |     
|Total                       |      |     
|                            |      |     

| | Changes in the allowance for loan losses for the three months ended March 31, 2006 and 2005 were as follows:
| | ------------------------------------------------------------------------------------------------------------

|                             | 2006 | 2005
|---------------------------- | ---- | ----
|Balance, beginning of period |      |     
|Provision                    |      |     
|Recovery of bad debts        |      |     
|Charge-off                   |      |     
|                             |      |     
|Balance, end of period       |      |     
|                             |      |     

| | Real Estate Properties Held for Sale and Investment
| | ---------------------------------------------------

| | As of March 31, 2006, the Partnership held title to ten properties that were foreclosed on or purchased
by the Partnership since 1994 in the amount of $36,563,000 (including properties held in four limited liability
companies), net of allowance for losses of $660,000 and accumulated depreciation and amortization of
approximately $2,211,000. As of March 31, 2006, properties held for sale total $13,359,000 and properties held
for investment total $23,204,000. When the Partnership acquires property by foreclosure, it typically earns less
income on those properties than could be earned on mortgage loans and may not be able to sell the properties in a
timely manner.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the three months ended March 31, 2006, one lot (including a house) located in the manufactured
home park in Dation, LLC was sold for approximately $83,000, resulting in a gain to the Partnership of
approximately $22,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes in the allowance for real estate losses for the three months ended March 31, 2006 and 2005 were as follows:
| | -------------------------------------------------------------------------------------------------------------------

|                                | 2006 | 2005
|------------------------------- | ---- | ----
|Balance, beginning of period    |      |     
|Provision                       |      |     
|Deductions for real estate sold |      |     
|                                |      |     
|Balance, end of period          |      |     
|                                |      |     

| | Three of the Partnerships ten properties do not currently generate revenue. Expenses from real estate
properties have increased from approximately $1,033,000 to $1,040,000 (0.7%) for the three months ended March 31,
2005 and 2006, respectively, and revenues associated with these properties have increased from $1,008,000 to
$1,288,000 (27.8%), respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The increase in revenues from real estate properties is due primarily to increased rental revenue from
the retail property within 720 University, LLC and the manufactured home park within Dation, LLC. There have been
increased rental rates as a result of tenant turnover at the 720 University property and increased occupancy at
the Dation property over the past year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest and Other Receivables
| | ------------------------------

| | Interest and other receivables increased from approximately $3,249,000 as of December 31, 2005 to $4,082,000 as
of March 31, 2006 ($833,000 or 25.6%) due primarily to an increase in the balance of the loan portfolio of
approximately 1.6% between December 31, 2005 and March 31, 2006 and due to the accrual of interest payments on
certain delinquent loans as of March 31, 2006 (which were collected in April 2006).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Due to General Partner
| | ----------------------

| | Due to General Partner increased from approximately $301,000 as of December 31, 2005 to approximately
$848,000 as of March 31, 2006 ($547,000 or 181.5%) due to increased management fees owed to the General Partner as
of March 31, 2006 pursuant to the Partnership Agreement (see Results of Operations above).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accounts Payable and Accrued Liabilities
| | ----------------------------------------

| | Accounts payable and accrued liabilities decreased from approximately $1,058,000 as of December 31, 2005
to approximately $780,000 as of March 31, 2006 ($278,000 or 26.3%) due primarily to accrued property taxes on the
Santa Clara, California industrial property obtained via foreclosure in December 2005, that were paid during the
three months ended March 31, 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Note Payable and Interest Payable to General Partner
| | ----------------------------------------------------

| | Note and interest payable to general partner increased from approximately $1,269,000 as of December 31,
2005 to $1,296,000 (increase of $27,000 or 2.2%) as of March 31, 2006, due to the accrual of interest on the note
payable to the General Partner during the three months ended March 31, 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Line of Credit Payable
| | ----------------------

| | Line of credit payable increased from $16,300,000 as of December 31, 2005 to $21,056,000 as of March 31,
2006 (increase of $4,756,000 or 29.2%) due to advances made on the line of credit during the three months ended
March 31, 2006 to enable the Partnership to invest in new mortgage loans. There was an additional $28,944,000
available to be advanced from the line of credit as of March 31, 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Asset Quality

| | There is no precise method of predicting specific losses or amounts that ultimately may be charged off on specific loans or on segments of the loan portfolio. The conclusion that a Partnership loan may become uncollectible, in whole or in part, is a matter of judgment. Although lenders such as banks and savings and loans are subject to regulations that require them to perform ongoing analyses of their loan portfolios (including analyses of loan to value ratios, reserves, etc.), and to obtain current information regarding its borrowers and the securing properties, the Partnership is not subject to these regulations and has not adopted these practices. Rather, management of the General Partner, in connection with the quarterly closing of the accounting records of the Partnership and the preparation
of the financial statements, evaluates the Partnerships mortgage loan portfolio. The allowance for loan losses is established through a provision for loan losses based on the General Partners evaluation of the risk inherent in the Partnerships loan portfolio and current economic conditions. Such evaluation, which includes a review of all loans on which full collectibility may not be reasonably assured, considers among other matters:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | prevailing economic conditions;
|- |  | -------------------------------

|o |  | the Partnerships historical loss experience;
|- |  | ---------------------------------------------

|o |  | the types and dollar amounts of loans in the portfolio;
|- |  | -------------------------------------------------------

|o |  | borrowers financial condition and adverse situations that may affect the borrowers ability to pay;
|- |  | ----------------------------------------------------------------------------------------------------

|o |  | evaluation of industry trends;
|- |  | ------------------------------

|o |  | review and evaluation of loans identified as having loss potential; and
|- |  | -----------------------------------------------------------------------

|o |  | estimated net realizable value or fair value of the underlying collateral.
|- |  | --------------------------------------------------------------------------

| | Based upon this evaluation, a determination is made as to whether the allowance for loan losses is adequate to cover potential losses of the Partnership. Additions to the allowance for loan losses are made by charges to the provision for loan losses. Loan losses deemed to be uncollectible are charged against the allowance for loan losses. Recoveries of previously charged off amounts are credited to the allowance for loan losses.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006, management believes that the allowance for loan losses of $4,150,000 and the allowance for
real estate losses in the amount of $660,000 are adequate.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Liquidity and Capital Resources

| | Sales of Units to investors, portfolio loan payoffs, and advances on the Partnerships line of credit provide the capital for new mortgage investments. If general market interest rates were to rise substantially, investors might turn to interest-yielding investments other than Partnership Units, which would reduce the liquidity of the Partnership and its ability to make additional mortgage investments to take advantage of the generally higher interest rates. In contrast, a significant increase in the dollar amount of loan payoffs and additional limited partner investments without the origination of new loans of the same amount would increase the liquidity of the Partnership. This increase in liquidity could result in a decrease in the yield paid to limited partners as the Partnership would
be required to invest the additional funds in lower yielding, short term investments. With the exception of the reinvestment of distributions, the Partnership has been closed to most new limited partner investments since September 2001, because there have not been enough suitable mortgage investments to allow the Partnership to remain fully invested in loans for a sustained period of time.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Withdrawal percentages have been 5.45%, 3.32%, 4.42%, 4.47%, 4.29% and 4.36% (annualized) for the years
ended December 31, 2001, 2002, 2003, 2004, 2005 and the three months ended March 31, 2006, respectively. These
percentages are the annual average of the limited partners capital withdrawals in each calendar quarter divided
by the total limited partner capital as of the end of each quarter.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The limited partners may withdraw, or partially withdraw, from the Partnership and obtain the return of their outstanding capital accounts at $1.00 per Unit within 61 to 91 days after written notices are delivered to the General Partner, subject to the following limitations, among others:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | No
withdrawal of Units can be requested or made until at least one year from the date of
purchase of those Units, other than Units received under the Partnerships
Reinvested Distribution Plan.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Any
such payments are required to be made only from net proceeds and capital contributions
(as defined) during said 91-day period.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------

|o |  | A
maximum of $100,000 per partner may be withdrawn during any calendar quarter.
|- |  | -------------------------------------------------------------------------------

|o |  | The
General Partner is not required to establish a reserve fund for the purpose of funding
such payments.
|- |  | ---------------------------------------------------------------------------------------------------------

|o |  | No
more than 10% of the total outstanding limited partnership interests may be withdrawn
during any calendar year except upon a plan of dissolution of the Partnership.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnership may incur indebtedness for the purpose of investing in mortgage loans, among other
things. The total amount of indebtedness incurred by the Partnership cannot exceed the sum of 50% of the
aggregate fair market value of all Partnership loans. The Partnership has executed a line of credit agreement
with a bank, which provides interim financing on mortgage loans invested in by the Partnership. The amount of
credit available under this line of credit is $50,000,000. There was $21,056,000 outstanding on the line of
credit as of March 31, 2006. The Partnership also has a note payable with a bank through its investment in 720
University, LLC with a balance of $10,500,000 as of March 31, 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of March 31, 2006, the Partnership has commitments to advance additional funds to borrowers of
construction and other loans in the total amount of approximately $42,091,000. The Partnership expects these
amounts to be advanced to borrowers by December 31, 2007. The source of funds to fulfill these commitments will
be payoffs on existing mortgage loans, sales of Units to investors or advances on the Partnerships line of
credit.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the three months ended March 31, 2006, cash flows provided by operating activities approximated
$5,122,000. Investing activities used approximately $4,791,000 of net cash during the three month period, as
approximately $60,438,000 was used for investing in loans, net of $55,981,000 received from the payoff or sale of
loans. Approximately $3,000 was provided by financing activities, as approximately $4,763,000 of cash was
generated from advances on the Partnerships line of credit and sales of units to the general partner, net of
approximately $4,760,000 of cash distributed to limited partners in the form of income distributions and capital
withdrawals.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Contingency Reserves

| | The Partnership maintains cash, cash equivalents and marketable securities as contingency reserves in an aggregate amount of 2% of the limited partners capital accounts to cover expenses in excess of revenues or other unforeseen obligations of the Partnership. Although the General Partner believes that contingency reserves are adequate, it could become necessary for the Partnership to sell or otherwise liquidate certain of its investments to cover such contingencies on terms which might not be favorable to the Partnership.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 3. Quantitative and Qualitative Disclosures About Market Risk
| | ------------------------------------------------------------------

| | The following table provides information about the Partnerships other financial instruments that are
sensitive to changes in interest rates, including debt obligations, as of March 31, 2006. 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 March
31, 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Earning Assets and Interest Bearing Liabilities,Aggregated by Maturity DateTwelve Months Ended March 31,

|                          | 2007 | 2008 | 2009 | 2010        | 2011 | Thereafter | Total     
|------------------------- | ---- | ---- | ---- | ----------- | ---- | ---------- | ----------
|Interest earning          |      |      |      |             |      |            |           
|assets:                   |      |     
|Money market              |      |     
|accounts                  |      |      | $    | 6,752,529   |      |            | --        
|Average interest rate     |      |      |      | 4.3%        |      |            | --        
|Loans secured by          |      |     
|trust deeds               |      |      | $    | 177,476,988 |      | $          | 78,203,631
|Average interest rate     |      |      |      | 10.9%       |      |            | 10.3%     
|                          |      |     
|Interest bearing          |      |     
|liabilities:              |      |     
|Note payable to bank      |      |      |      | --          |      |            | --        
|Average interest rate     |      |      |      | --          |      |            | --        
|Note and interest payable |      |     
|to general partner        |      |      |      | --          |      |            | --        
|Average interest rate     |      |      |      | --          |      |            | --        
|Line of credit            |      |     
|payable                   |      |      |      | --          |      | $          | 21,056,000
|Average interest rate     |      |      |      | --          |      |            | 7.75%     

| | Market Risk
| | -----------

| | Market risk is the exposure to loss resulting from changes in interest rates, equity prices and real
estate values. The Partnership does not have any assets or liabilities denominated in foreign currencies. 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The majority of the Partnerships mortgage loans (92.7% as of March 31, 2006) earn interest at fixed
rates. All of the mortgage loans are held for investment purposes and are held until maturity. The majority of
Partnership loans do not have prepayment penalties for payoff prior to maturity, but many instead require the
borrower to notify the General Partner of the intent to payoff within a specified period of time prior to payoff
(usually 30 to 120 days). If this notification is not made within the proper time frame, the borrower may be
charged interest for that number of days that notification was not received.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes in interest rates may 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. As interest rates increase, although the interest rates the Partnership obtains from reinvested
funds will generally increase, the value of the Partnerships existing loans at fixed rates will generally tend
to decrease. As interest rates decrease, the amounts available to the Partnership from repayment of Partnership
loans may be invested at lower rates than the Partnership had been able to obtain in prior investments, or lower
than the rates on the repaid loans.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Partnerships note payable bears interest at a fixed rate of 5.07%. The Partnerships line of credit
payable ($21,056,000 at March 31, 2006) bears interest at a variable rate, tied to the bank prime rate. As a
result, the Partnerships primary market risk exposure is to changes in interest rates, which will affect the
interest cost of outstanding amounts on the line of credit payable.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 4. Controls and Procedures
| | -------------------------------

| | The General Partner of the Partnership carried out an evaluation, under the supervision and with the
participation of the General Partners management, including the General Partners Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the Partnerships disclosure
controls and procedures as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of the
General Partner concluded that, as of March 31, 2006, which is the end of the period covered by this quarterly
report on Form 10-Q,  the Partnerships disclosure controls and procedures are effective.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There have been no changes in the Partnerships internal control over financial reporting in the fiscal
quarter ending March 31, 2006 that have materially affected, or are reasonably likely to materially affect, the
Partnerships internal controls over financial reporting.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | PART II. OTHER INFORMATION
| | --------------------------

| | Item 1. Legal Proceedings
| | -------------------------

| | There have been no material changes or developments to the legal proceeding previously disclosed in the
Partnerships Form 10-K as of and for the year ended December 31, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 1A. Risk Factors
| | ---------------------

| | There have been no material changes in the Partnerships risk factors as previously disclosed in the
Partnerships Form 10-K as of and for the year ended December 31, 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | None
| | ----

| | Item 5. Other Information
| | -------------------------

|(a) |  | None.
|--- |  | -----

|(b) |  | None
|--- |  | ----

| | Item 6. Exhibits
| | ----------------

|(a) |  | Exhibits
|--- |  | --------

|3 |  | Sixth Amended and Restated Agreement of Limited Partnership, incorporated by reference to Exhibit A to Post-Effective Amendment No. 6 to the Form S-11 Registration Statement No. 333-69272 filed May 3, 2006 and declared effective on May 10, 2006.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1 |  | Certificate of Limited Partnership  Form LP-1: Filed July 1, 1984*
|--- |  | -------------------------------------------------------------------

|3.2 |  | Amendment to Certificate of Limited Partnership  Form LP-2: Filed March 20, 1987*
|--- |  | ----------------------------------------------------------------------------------

|3.3 |  | Amendment to Certificate of Limited Partnership  Form LP-2: Filed August 29, 1989*
|--- |  | -----------------------------------------------------------------------------------

|3.4 |  | Amendment to Certificate of Limited Partnership  Form LP-2: Filed October 22, 1992*
|--- |  | ------------------------------------------------------------------------------------

|3.5 |  | Amendment to Certificate of Limited Partnership  Form LP-2: Filed January 24, 1994*
|--- |  | ------------------------------------------------------------------------------------

|3.6 |  | Amendment to Certificate of Limited Partnership  Form LP-2: Filed December 30, 1994*
|--- |  | -------------------------------------------------------------------------------------

|4.1 |  | Sixth Amended and Restated Limited Partnership Agreement, incorporated by reference to Exhibit A to Post-Effective Amendment No. 6 to the Form S-11 Registration Statement No. 333-69272 filed May 3, 2006 and declared effective on May 10, 2006.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Subscription Agreement and Power of Attorney, incorporated by reference to Exhibit B to Post-Effective Amendment No. 6 to the Form S-11 Registration Statement No. 333-69272 filed May 3, 2006 and declared effective on May 10, 2006.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Section 302 Certification of William C. Owens
|---- |  | ---------------------------------------------

|31.2 |  | Section 302 Certification of Bryan H. Draper
|---- |  | --------------------------------------------

|32 |  | Certifications Pursuant to U.S.C. 18 Section 1350
|-- |  | -------------------------------------------------

| | *Previously filed under Amendment No. 3 to Registration Statement No. 333-69272 and incorporated herein by this reference.
| | --------------------------------------------------------------------------------------------------------------------------

---

SIGNATURES

| | Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dated:   May 15, 2006 |  | OWENS MORTGAGE INVESTMENT FUND,a California Limited PartnershipBy:   Owens Financial Group, Inc., General Partner
| | --------------------- |  | -----------------------------------------------------------------------------------------------------------------
| | Dated:   May 15, 2006 |  | By:   /s/ William C. Owens         William C. Owens, President                                                   
| | Dated:   May 15, 2006 |  | By:   /s/ Bryan H. Draper         Bryan H. Draper, Chief Financial Officer                                       
| | Dated:   May 15, 2006 |  | By:   /s/ Melina A. Platt         Melina A. Platt, Controller