REDWOOD MORTGAGE INVESTORS VI
                       (a California Limited Partnership)
                               Index to Form 10-K
                                December 31, 2000

                                     Part I

                                                                        Page No.
Item 1 - Business                                                             3
Item 2 - Properties                                                         4-5
Item 3 - Legal Proceedings                                                    6
Item 4 - Submission of Matters to a Vote of Security Holders (Partners)       6

                                     Part II

Item 5 - Market for the Registrant's "Limited" Partnership Units"and
              Related Unitholder Matters                                      6
Item 6 - Selected Financial Data                                            7-8
Item 7 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         9-13
Item 8 - Financial Statements and Supplementary Data                      13-32
Item 9 - Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                            33

                                    Part III

Item 10 - Directors and Executive Officers of the Registrant                 33
Item 11 - Executive Compensation                                             34
Item 12 - Security Ownership of Certain Beneficial Owners and Management     35
Item 13 - Certain Relationships and Related Transactions                     35

                                     Part IV


Item 14 - Exhibits, Financial Statement Schedules, and Reports
          of Form 8-K                                                     35-36

Signatures                                                                   37


<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
  1934 For the year ended December 31, 2000 Commission File number 33-12519
-------------------------------------------------------------------------------

                         REDWOOD MORTGAGE INVESTORS VI
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               California                                            94-3031211
-------------------------------------------------------------------------------
  State or other jurisdiction of                (I.R.S. Employer Identification)
   incorporation or organization)

 650 El Camino Real #G, Redwood City, CA                                94063
-------------------------------------------------------------------------------
(address of principal executive offices)                             (zip code)

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

Securities registered pursuant to Section 12 (b) of the Act:               None

   Title of each class                Name of each exchange on which registered
-------------------------------------------------------------------------------
         None                                                  None
-------------------------------------------------------------------------------

Securities registered pursuant to
       Section 12 (g) of the Act:                   Limited Partnership Units

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

YES             XX                                   NO
      -------------------                                     -----------------

At the  close  of the  sale of units in  1989,  the  limited  partnership  units
purchased by  non-affiliates  was 97,725.94 units computed at $100.00 a unit for
$9,772,594, excluding General Partners' Contribution of $9,772.

Documents incorporated by reference:

Portions of the Prospectus for Redwood  Mortgage  Investors VI, included as part
of the form S-11 Registration  Statement,  SEC File No. 33-12519 dated September
3, 1987 and Supplement No. 6 dated May 16, 1989,  incorporated in Parts II, III,
and IV.



<PAGE>


                                     Part I
Item 1 - Business

Redwood  Mortgage  Investors  VI  is  a  California  limited   partnership  (the
"Partnership").  D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a
California  corporation,  are the General  Partners.  The address of the General
Partners is 650 El Camino Real,  Suite G, Redwood City,  California  94063.  The
Partnership's primary purpose is to invest its capital in first and second deeds
of trust  secured by Northern  California  properties.  Loans are  arranged  and
serviced by Redwood  Mortgage Corp., an affiliate of the General  Partners.  The
Partnership's  objectives  are to make  Investments  which will: (i) provide the
maximum possible cash returns which Limited Partners may elect to (a) receive as
monthly, quarterly or annual cash distributions or (b) have earnings credited to
their capital  accounts and used to invest in Partnership  activities;  and (ii)
preserve  and protect  the  Partnership's  capital.  The  Partnership's  general
business  is  more  fully  described  under  the  section  entitled  "Investment
Objectives  and  Criteria",  pages  23-26  of  the  Prospectus,  a  part  of the
above-referenced Registration Statement, which is incorporated by reference.

The Partnership was formed in September,  1987, with an approved  120,000  Units
of $100 each  ($12,000,000).  The Units were offered on a "best  efforts"  basis
through  broker/dealer  member firms of the National  Association  of Securities
Dealers, Inc. It immediately began issuing Units and began investing in loans in
October,  1987. The offering terminated in September,  1989, and as of that date
97,725.94  Units were sold  realizing  proceeds of  $9,772,594.  At December 31,
2000, the Partnership  had a balance of loans totaling  $5,570,576 with interest
rates thereon ranging from 6.00% to 14.75%.

Currently  First  Trust  Deeds  comprise  72.01%  of the  total  amount  of Loan
portfolio.  Second  Mortgage Trust Deeds  comprise  24.87% of Loan portfolio and
Third  Mortgage  Trust  Deeds have 3.12% of the Loan  portfolio.  Owner-occupied
homes,  combined with non-owner occupied homes, total 25.62% of the loans. Loans
to  apartments  make up 10.33% of the total  loans  portfolio.  Commercial  Loan
origination  increased from last year,  now comprising  64.05% of the portfolio,
although  this is a  decrease  of 9.46% from 1999.  The past year  brought  many
outstanding low loan to value lending opportunities in the commercial segment of
the market.  The major  concentration of loans,  comprising  74.09% of the total
loans,  are in four  counties  of the San  Francisco  Bay  Area.  The  County of
Sacramento makes up 9.22% of the Loan portfolio.  The balance, as stated on page
five of this report, are primarily in Northern  California.  Currently Loan size
is averaging  $179,696 per Loan.  Some of the loans are  fractionalized  between
affiliated  Partnerships with objectives  similar to those of the Partnership to
further reduce risk.  Average equity per loan transaction stood at 31.07%. A 40%
equity average on loan  origination is generally  considered very  conservative.
Generally,   the  more  equity,   the  more  protection  for  the  lender.   The
Partnership's  Loan  portfolio had only two  properties in foreclosure as of the
end of December 2000,  which  represents  only 6.37% of the  Partnership's  loan
portfolio. One of the borrowers came out of the foreclosure in January 2001, and
the other is making payments on a "best effort basis."


<PAGE>


Item 2 - Properties

As of December 31, 2000, a summary of the  Partnership's  Loan  portfolio is set
forth below.

Loans as a Percentage of Total loans

First Trust Deeds                                    $4,011,117.15
Appraised Value of Properties                         5,760,587.40
   Total Investment as a % of Appraisal                     69.63%
First Trust Deeds                                     4,011,117.15
Second Trust Deed Loans                               1,385,496.46
Third Trust Deed Loans                                  173,962.77

Priority Positions:
   First Trust Deeds due other Lenders                8,145,079.00
   Second Trust Deeds due other Lenders                 322,398.00

Total Debt                                           14,038,053.38

   Appraised Property Value                          20,364,599.40
   Total Investments as a % of Appraisal                    68.93%


Number of Loans Outstanding                                     31


Average Investment                                      179,696.01
Average Investment as a % of Net Assets                      2.42%
Largest Investment Outstanding                        1,376,117.03
Largest Investment as a % of Net Assets                     18.54%


Loans as a Percentage of Total Loans

First Trust Deeds                                           72.01%
Second Trust Deeds                                          24.87%
Third Trust Deeds                                            3.12%
                                                      ------------
Total                                                      100.00%

Loans by Type of Property              Amount              Percent

Owner Occupied Homes                   $755,013.69          13.55%
Non-Owner Occupied Homes                672,518.08          12.07%
Apartments                              575,407.08          10.33%
Commercial                            3,567,637.53          64.05%
                                  -----------------     -----------
Total                                $5,570,576.38         100.00%




<PAGE>



The following is a distribution of loans  outstanding as of December 31, 2000 by
Counties.

Santa Clara                $2,158,426.24            38.75%
Alameda                     1,049,222.87            18.84%
Placer                        628,475.37            11.28%
San Mateo                     581,639.55            10.44%
Sacramento                    513,781.57             9.22%
San Francisco                 337,672.18             6.06%
Stanislaus                    177,777.78             3.19%
Shasta                         79,538.11             1.43%
Sonoma                         44,042.71             0.79%
                      -------------------      ------------
Total                      $5,570,576.38           100.00%
                      ===================      ============


Statement of Condition of loans:

         Number of Loans in Foreclosure                        2

Scheduled maturity dates of loans as of December 31, 2000 are as follows:

                         Year Ending
                         December 31,

                             2001                           $3,836,158
                             2002                              592,929
                             2003                              643,704
                             2004                               33,512
                             2005                              161,357
                          Thereafter                           302,916
                                                        ---------------
                                                            $5,570,576
                                                        ===============

The  scheduled  maturities  for 2001 include  $2,623,679 in loans which are past
maturity at December 31, 2000.  $1,990,813  of those loans were  categorized  as
delinquent over 90 days.

Five loans with  principal  outstanding  of  $2,168,651  had  interest  payments
overdue in excess of 90 days.



<PAGE>


Item 3 - Legal Proceedings

In the normal course of business, the Partnership may become involved in various
types of legal proceedings such as assignments of rents, bankruptcy proceedings,
appointments of receivers, unlawful detainers,  judicial foreclosures,  etc., to
enforce the provisions of the deeds.  The  Partnership is a defendant along with
numerous defendants,  including a developer, contractor, and other lenders, in a
lawsuit  involving the  Partnership's  attempt to recover its investment in real
estate acquired through  foreclosure.  Management  anticipates that the ultimate
outcome of these legal  matters will not have a material  adverse  effect on the
net  assets  of the  Partnership  in light of the  Partnership's  allowance  for
doubtful accounts.

Item 4 - Submission of Matters to a Vote of Security Holders (Partners).

No matters have been submitted to a vote of the Partnership.

                                     Part II

Item 5 - Market for the  Registrant's  "Limited  Partnership  Units" and Related
Unitholder Matters.

120,000 Units at $100 each (minimum 20 units) were offered through broker-dealer
member  firms of the  National  Association  of  Securities  Dealers  on a "best
efforts"  basis  (as  indicated  in  Part I item  1).  All  Units  were  sold to
California  residents.  Investors have the option of  withdrawing  earnings on a
monthly,  quarterly or annual basis or  reinvesting  and  compounding  earnings.
Limited  Partners may withdraw from the Partnership in accordance with the terms
of the Partnership Agreement subject to early withdrawal penalties.  There is no
established public trading market for the Units.

A description of the Partnership's Units, transfer restrictions,  and withdrawal
provisions is more fully  described under the section  entitled  "Description of
Units" and "Summary of the Limited  Partnership  Agreement",  pages 38-42 of the
Prospectus,  a part of the  above-referenced  Registration  statement,  which is
incorporated by reference.

As of December 31, 2000,  there were 572 holders of record of the  Partnership's
Units. An increase of 7 from 1999.




<PAGE>


Item 6 - Selected Financial Data

         Redwood  Mortgage  Investors VI began  operations in October 1987.  Its
financial condition and results of operation for five years to December 31, 2000
were:
                                 Balance Sheets
                                     Assets
<TABLE>
                                                                                   December 31,
       ----------------------------------------------------------------------------------------------------------------------------

<S>                                                    <C>              <C>               <C>                <C>               <C>
                                                       2000             1999              1998               1997              1996
                                               -------------    -------------     -------------    ---------------    --------------
Cash                                               $354,860       $1,120,295          $299,775           $331,143          $180,597
                                               -------------    -------------     -------------    ---------------    --------------
Accounts receivable:
  Loans, secured by deeds of trust                5,570,576        5,282,773         7,969,735          8,104,984         9,313,924
  Accrued interest on loans                         664,292          706,841           717,719            617,456           405,783
  Advances on loans                                 133,647          137,930           162,083            127,519           108,019
  Accounts receivables, unsecured                    82,362                0            23,775            161,414           251,531
                                               -------------    -------------     -------------    ---------------    --------------
                                                 $6,450,877       $6,127,544        $8,873,312         $9,011,373       $10,079,257
Less allowance for doubtful accounts                261,452          303,249           202,344             28,614           252,850
                                               -------------    -------------     -------------    ---------------    --------------
                                                 $6,189,425       $5,824,295        $8,670,968         $8,982,759        $9,826,407
                                               -------------    -------------     -------------    ---------------    --------------

Investment in Partnership                                 0                0                 0            708,141           496,040
Note receivable- Redwood
     Mortgage Corp.                                $125,000         $300,000                 0                  0                 0
Real estate owned (REO), held for sale,
    acquired through Foreclosure                    767,583          133,300           169,922            309,319         1,441,007
    REO in process                                        0          668,132                 0                  0                 0
                                               -------------    -------------    -------------     -------------    ---------------
                                                 $7,436,868       $8,046,022        $9,140,665        $10,331,362       $11,944,051
                                               =============    =============     =============    ===============    ==============


                        Liabilities and Partners' Capital
Liabilities:
  Notes payable - bank line of credit                    $0               $0          $390,000           $899,011        $1,530,511
 Accounts payable                                    13,068                0            22,668                898            18,522
  Deferred interest on loans                              0           15,676            20,463                  0                 0
                                               -------------    -------------     -------------    ---------------    --------------
          Total Liabilities                          13,068           15,676           433,131            899,909         1,549,033
                                               -------------    -------------     -------------    ---------------    --------------
Partners' capital:
  Limited partners' capital, subject
      to redemption                               7,414,034        8,020,580         8,697,768          9,421,687        10,385,252
     General partners' capital                        9,766            9,766             9,766              9,766             9,766
                                               -------------    -------------     -------------    ---------------    --------------
      Total partners' capital                     7,423,800        8,030,346         8,707,534          9,431,453        10,395,018
                                               -------------    -------------     -------------    ---------------    --------------
      Total liabilities and partners' capital    $7,436,868       $8,046,022        $9,140,665        $10,331,362       $11,944,051
                                               =============    =============     =============    ===============    ==============
</TABLE>

<PAGE>




                              Statements of Income
<TABLE>

<S>                                                       <C>               <C>            <C>                <C>              <C>
                                                          2000              1999           1998               1997             1996
                                                    -----------    --------------    -----------     --------------    -------------
Gross revenue                                         $785,209        $1,086,317       $871,861         $1,036,596       $1,167,859
Expenses                                               307,280           565,408        359,356            507,409          579,697
                                                    -----------    --------------    -----------     --------------    -------------
Net income                                             477,929           520,909        512,505            529,187          588,162
                                                    ===========    ==============    ===========     ==============    =============
Net income: to general partners (1%)                    $4,779            $5,209         $5,125             $5,292           $5,882
                     to limited partners (99%)         473,150           515,700        507,380            523,895          582,280
                                                    -----------    --------------    -----------     --------------    -------------
                                                      $477,929          $520,909       $512,505           $529,187         $588,162
                                                    ===========    ==============    ===========     ==============    =============

Net Income per $1,000 invested by limited partners for entire period:
  - where income is reinvested and compounded              $62               $62            $56                $53              $54
                                                    ===========    ==============    ===========     ==============    =============
  -where partner receives income in monthly
     distributions                                        $60                $61            $55                $52              $52
                                                    ===========    ==============    ===========     ==============    =============
</TABLE>


In 1997 the annualized  yield was 5.29%, in 1998 the annualized yield was 5.63%,
in 1999 the annualized  yield was 6.24%,  and in 2000 the  annualized  yield was
6.22%.  The  annualized  yield since  inception  through  December 31, 2000, was
7.28%.


<PAGE>


     Item 7 - Management's  Discussion  and Analysis of
              Financial Condition and Results of Operations

On  September  2,  1989,  the  Partnership  had  sold  97,725.94  Units  and its
contributed  capital totaled  $9,772,594 of the approved  $12,000,000  issue, in
Units of $100  each.  As of that  date the  offering  was  formally  closed.  On
December 31, 2000, the Partnership's net capital totaled $7,423,800.

The  Partnership  began funding loans in October 1987. The  Partnership's  loans
outstanding  for  the  years  ended  December  31,  1998,  1999  and  2000  were
$7,969,735,  $5,282,773  and  $5,570,576,  respectively.  The  decrease in loans
outstanding  from  December 31, 1998 to December 31, 2000,  was due primarily to
the  Partnership   utilizing  Loan  payoffs  to  meet  Limited  Partner  capital
liquidations,  line of credit pay-down, uninvested cash in loans and an increase
in Real Estate Owned or in process.  During the years 1998,  1999 and 2000, Loan
principal collections exceeded Limited Partner liquidations.

Since the fall of 1999,  mortgage  interest rates have been rising due primarily
to economic  forces and by the Federal  Reserve raising its core interest rates.
However,  in 2001 the Federal  Reserve has  reversed its policy  towards  higher
rates and is  lowering  its core  interest  rates.  This will have the effect of
lowering interest rates in the marketplace. New loans will be originated at then
existing  interest rates. In the future,  interest rates likely will change from
their current levels.  The General  Partners cannot at this time predict at what
levels  interest rates will be in the future.  Although the rates charged by the
Partnership  are  influenced by the level of interest  rates in the market,  the
General  Partners do not anticipate that rates charged by the Partnership to its
borrowers will change  significantly from the beginning of 2001 over the next 12
months.  Based upon the rates payable in connection with the existing loans, the
current and anticipated  interest rates to be charged by the Partnership and the
General  Partners'   experience,   the  General  Partners  anticipate  that  the
annualized  yield will range  between six and six and one half percent  (6.00% -
6.50%).  As of December 31, 2000 the  Partnership's  Real Estate  Owned  account
balance was  $767,583.  This account had a balance of  $1,017,460,  $169,922 and
$133,300 as of December 31, 1997, 1998, and 1999, respectively. The increase was
due to acquisition of a commercial property through foreclosure  recorded as REO
in process in December 1999. The General Partners anticipate that the annualized
yield for the  forthcoming  year 2001,  will be similar  to the  current  year's
performance level.

Previously the Partnership had a line of credit with a commercial bank which was
secured  by its Loan  portfolio.  The  outstanding  balance  of the bank line of
credit was $390,000, $0 and $0 for the years ended December 1998, 1999 and 2000.
For the  years  ended  December  31,  2000,  1999  and  1998,  interest  on Note
Payable-Bank was $0, $14,714 and $43,170,  respectively.  The primary reason for
this  decrease was that the  Partnership  had a lower  overall  credit  facility
utilization  from 1998 to  December  31,  1999.  During  1999 the  Partnership's
borrowing ranged between $0 and $410,000,  at an interest rate of Prime plus one
percent.  This added source of funds helped in maximizing the Partnership  yield
by  allowing  the  Partnership  to  minimize  the amount of funds in lower yield
investment  accounts  when  appropriate  loans are not  currently  available and
because the loans made by the  Partnership  usually  bear  interest at a rate in
excess of the rate payable to the bank which  extended  the line of credit,  the
amount to be retained by the  Partnership,  after  payment of the line of credit
cost,  will be greater than  without the use of the line of credit.  On December
31, 1999 the Partnership, on its own accord, closed its line of credit with that
bank and ever since that time did not  negotiate a similar  credit line with any
institution  because the borrowing rate for most of 2000 was high and management
also felt that the need for the credit line was not all that urgent.

The  Partnership's  operating  results and  delinquencies  are within the normal
range of the  General  Partners  expectations,  based upon their  experience  in
managing similar  Partnerships  over the last twenty- three years.  Foreclosures
are  a  normal  aspect  of  partnership  operations  and  the  General  Partners
anticipate  that  they  will not have a  material  effect  on  liquidity.  As of
December 31, 2000,  there were two  properties  (representing  6.37% of the loan
portfolio),  in foreclosure.  Cash is continually  being generated from interest
earnings, late charges, prepayment penalties,  amortization of notes and pay-off
of notes.  Currently,  this amount exceeds Partnership expenses and earnings and
Partner liquidation requirements. As Loan opportunities become available, excess
cash and available funds are invested in new loans.



<PAGE>


The General Partners  regularly review the Loan portfolio,  examining the status
of delinquencies,  the underlying collateral securing these loans, REO expenses,
sales activities,  and borrower's payment records and other data relating to the
Loan  portfolio.  Data on the local real estate market,  and on the national and
local  economy are  studied.  Based upon this  information  and more,  Loan loss
reserves and allowance for doubtful accounts are increased or decreased. Because
of the number of variables  involved,  the magnitude of possible  swings and the
General Partners inability to control many of these factors,  actual results may
and do  sometimes  differ  significantly  from  estimates  made  by the  General
Partners.  Management provided $180,054,  $437,558 and $193,427 as provision for
doubtful  accounts for the years ended December 31, 1998,  December 31, 1999 and
2000, respectively.  The decrease in the provision in 1998 reflects the decrease
in the  amount  of REO,  unsecured  receivables  and the  decreasing  levels  of
delinquency  within the  portfolio.  The increase in  allowance  for 1999 was to
build up reserve for any potential loss in the future. The Partnership  acquired
a piece of Real Estate  through  foreclosure  in 2000. In  anticipation  of this
event,  the  Partnership  carried  $668,132 in its balance  sheet as Real Estate
Owned in Process as of December 31, 1999.

The much publicized  California energy crises has not only affected the hi-tech,
manufacturing,  service and agriculture based  industries,  the professional and
commercial businesses, transportation and utilities sectors, but every household
and individual as a whole. The crisis, which means higher cost to the consumers,
could adversely affect the economy,  employment and the Partnership's lending in
its commercial  sector.  On the real estate scene,  The San Mateo Times February
22, 2001 issue,  reported  that despite the energy crisis and talk of recession,
the median  price of a San Mateo  County home  soared to near  record  levels in
January.  "The  median  price of a  single-family  home  jumped 4  percent  over
December to $651,000, nearing the record $653,000 of last May, during the spring
price-soaring  frenzy.  Realtors insist the hysteria of last spring causing real
estate values to soar, is over and the market has plateaued.  But prices are not
reflecting that yet.

For  example,  the median price of a home in East Palo Alto jumped 25 percent in
January to $736,000.  This is especially  shocking  considering East Palo Alto's
median was well under  $200,000 in January 1998,  with  fixer-uppers  in the low
$100,000s.  While a few high price homes can skew median home  prices,  it is an
indication that the real estate market has not completely plateaued.

Popular three-bedroom,  two-bath homes settled in between $600,000 and $800,000.
Many two-bedroom, one-bath homes are selling for $500,000 and up.

Sales slowed in January, as usual, to 269 from 362 in December countywide.  They
were off from 315 sales in January 2000.

"There are still plenty of buyers  wanting to buy, and now there are more people
wanting  to sell,"  said  Denise  Aquila,  a real  estate  agent at ReMax in San
Carlos.  Despite the stock market's  recent  tanking and many dot-com  failures,
Aquila and other realtors see a strong market this year  countywide  with prices
holding  their own. Part of the reason for the  resilience  is that  entry-level
homes are in the $500,000 to $700,000 range countywide,  and "they aren't making
any more of them," Aquila said. The County's median price for January climbed 21
percent  over the same  period  last  year.  Although  the  article  focuses  on
single-family  residences  only,  corresponding  increase  in values had similar
impact on commercial, industrial and apartment buildings in general.

To the Partnership,  these sales statistics indicate a strong real estate market
that is  beginning  to slow down from the rapid  appreciation  that has occurred
over the last 3 years.  The real  estate  market  appears to be coming more into
balance with similar  numbers of buyers and sellers which will allow buyers more
opportunity to negotiate and be selective in their real estate purchases.

The  California  energy  crisis is a longer-term  problem which the  Partnership
cannot  affect.  Creative and pragmatic  solutions  will need to be developed by
Industry and  Government so as not to stifle the business  growth in California.
The crises  which  means  higher  cost to the  consumers  in the near term could
adversely affect the economy,  employment and the  Partnership's  lending in its
residential and commercial loans by lowering real estate values.


<PAGE>


Bank discount rate fell from 6.00% in May 2000 to 4.50% in March 2001. The price
hike in real  estate  properties  means  more  equity to the  homeowners,  which
increases  equity on the existing  portfolio.  Lower interest rates mean cutting
the cost of capital, improving profit margins and encouraging expansion. It also
helps to induce consumer spending, sparking home sales and mortgage refinancing.
This all translates into more loan activity,  which,  of course,  is healthy for
the Partnership's lending activity.

The  Partnership's  interest in land located in East Palo Alto,  CA was acquired
through foreclosure.  The investment was previously  classified as Investment in
Partnership  in the Financial  Statements  and has been  reclassified  into Real
Estate Owned. The Partnership's basis of $80,142, $20,377 and $ 0, for the years
ended  December 31, 2000,  1999 and 1998,  respectively,  has been invested with
that of two other Partnerships. In order to pursue development options, rezoning
of the property's existing  residential zoning  classification will be required.
The  Partnership  is  continuing  to explore  remediation  options  available to
mitigate the pesticide contamination, which affects the property.

This pesticide contamination appears to be the result of agricultural operations
by  prior  owners.  The  General  Partners  do not  believe  at this  time  that
remediation of the pesticide contaminants will have a material adverse effect on
the financial condition of the Partnership.

At the  time  of  subscription  to the  Partnership,  Limited  Partners  made an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound  earnings  in their  capital  account.  For the years
ended December 31, 1998, 1999 and 2000, the Partnership  made  distributions  of
earnings to Limited Partners after allocation of syndication  costs of $235,837,
$217,526  and  $192,356,  respectively.  Distribution  of  Earnings  to  Limited
Partners after allocation of syndication  costs for the years ended December 31,
1998,  December  31, 1999 and  December  31, 2000 to Limited  Partners'  capital
accounts and not withdrawn, was $271,543, $298,174, and $280,794,  respectively.
As of December  31, 1998,  December  31, 1999 and  December  31,  2000,  Limited
Partners   electing  to  withdraw   earnings   represented   43%,  42%  and  41%
respectively, of the Limited Partners outstanding capital accounts.

The  Partnership  also allows the Limited  Partners  to withdraw  their  capital
account  subject  to  certain   limitations  (see   liquidation   provisions  of
Partnership Agreement). For the years ended December 31, 1998, December 31, 1999
and December  31, 2000,  $122,069,  $128,295  and  $200,417  respectively,  were
liquidated  subject  to the 10% and/or 8% penalty  for early  withdrawal.  These
withdrawals are within the normally  anticipated range that the General Partners
would expect in their  experience  in this and other  Partnerships.  The General
Partners  expect  that a small  percentage  of  Limited  Partners  will elect to
liquidate  their  capital  accounts  over one year  with a 10%  and/or  8% early
withdrawal  penalty.  In  originally  conceiving  the  Partnership,  the General
Partners wanted to provide  Limited  Partners  needing their capital  returned a
degree of liquidity.  Generally,  Limited Partners electing to withdraw over one
year need to liquidate  investments to raise cash. The trend the  Partnership is
experiencing in withdrawals by Limited Partners  electing a one year liquidation
program  represents a small percentage of Limited Partner capital as of December
31, 1998, December 31, 1999 and December 31, 2000 respectively,  and is expected
by the General Partners to commonly occur at these levels.

Additionally,  for the years ended  December  31,  1998,  December  31, 1999 and
December 31, 2000, $938,040, $847,067 and $686,923 respectively, were liquidated
by Limited Partners who have elected a liquidation program over a period of five
years or longer.  Once the initial five-year hold period has passed, the General
Partners expect to see an increase in liquidations due to the ability of Limited
Partners to withdraw without penalty.  This ability to withdraw after five years
by Limited Partners has the effect of providing  Limited Partner liquidity which
the General  Partners  then  expect a portion of the  Limited  Partners to avail
themselves  of.  This has the  anticipated  effect of the  partnership  growing,
primarily  through  reinvestment  of  earnings in years one  through  five.  The
General Partners expect to see increasing numbers of Limited Partner withdrawals
in years five through eleven,  at which time the bulk of those Limited  Partners
who have  sought  withdrawal  will  have been  liquidated.  After  year  eleven,
liquidation  generally  subsides  and the  Partnership  capital  again  tends to
increase.


<PAGE>


Actual  liquidation  of both capital and earnings from year five (1992)  through
year twelve  (2000) is shown  hereunder,  which  confirms  the General  Partners
theory on the liquidation habits of the Limited Partners:

                                    Years ended December 31,
<TABLE>

<S>                              <C>              <C>                <C>                <C>              <C>
                                 1992             1993               1994               1995             1996
                         -------------    -------------      -------------      -------------    -------------
Earnings                     $323,037          377,712            303,014            303,098          294,678
Capital                      *232,370         *528,737           *729,449           *892,953       *1,183,099
                         -------------    -------------      -------------      -------------    -------------
Total                        $555,407         $906,449         $1,032,463         $1,196,051       $1,477,777
                         =============    =============      =============      =============    =============

                                 1997             1998               1999               2000
                        --------------    -------------      -------------     --------------
Earnings                      257,670          235,837            217,526            192,356
Capital                    *1,297,410       *1,060,109           *975,362           *887,340
                        --------------    -------------      -------------     --------------
Total                      $1,555,080       $1,295,946         $1,192,888         $1,079,696
                        ==============    =============      =============     ==============
</TABLE>

*These amounts represent gross of early withdrawal penalties.

The Year 2000 was considered by most to be a challenge for the entire world with
respect to the conversion of existing computerized  operations.  The Partnership
relied on Redwood Mortgage Corp., third parties and various software vendors for
its hardware and software needs.  Since year 2000 has come and gone, we have not
experienced any computer  hardware  breakdowns.  We assumed that our testing and
upgrading of computer  hardware prior to year 2000 identified all hardware areas
of concern.  Computer  software  programs  are all  operational  with only minor
problems  being  experienced  with some  programs.  These  problems  were  being
addressed  by the  appropriate  software  vendors or software  programmers.  All
annual  computerized  functions have been run, and testing of the operations has
taken place.

The costs of updating  our  computer  systems  were  substantially  borne by the
non-affiliated  software vendors and the in house system conversion costs to the
partnership were marginal.

Year 2000 issues do not appear to have affected,  in any significant manner, any
industries or businesses in the marketplace in which the Partnership  places its
loans.  We believe that year 2000 issues were a non-event  and will have little,
if any,  future  effect on the  Partnership,  its  affiliates  or the people and
businesses with which it associates.

With this report we hereby conclude our discussion on the Y2K issue.

After 25 years of active  participation  in the  mortgage  business,  D. Russell
Burwell,  our founder and a General  Partner of the  Partnership  has decided to
retire  effective  September 30, 2001.  "Russ" has enjoyed a long and successful
career.  His original  business model, upon which our Partnership has its roots,
has withstood the test of time through varying  economic  cycles.  Collectively,
the various Redwood Mortgage Investors  Partnerships (I-VIII) have grown from an
idea to over  $110,000,000  in assets and  produced  excellent  results  for the
Limited  Partners.  Under  Russ'  stewardship  Redwood  Mortgage  Investor's  VI
originally  raised  $9,772,594 in Limited Partner Capital  contributions  and at
December 31, 2000 had $7,414,034 in remaining Limited Partner Capital.

Over  the  last  few  years,   Russ  has  been  passing  along  his  duties  and
responsibilities  to the  remaining  General  Partners.  The  remaining  General
Partners  are  Mr.  Michael   Burwell  and  Gymno   Corporation,   a  California
Corporation.  Mr. Michael Burwell has been a General Partner of Redwood Mortgage
Investors VI since its inception and has been employed by Redwood Mortgage Corp,
an  affiliate  of the  Partnership,  since  1979.  The  Partnership  through the
remaining  General Partners and the employees of its affiliate  Redwood Mortgage
Corp., is well prepared for Russ's  departure and looks forward to emulating the
steady  consistent  returns that the Limited  Partners have enjoyed during Russ'
tenure.

Mr. D. Russell  Burwell is  providing  this notification  pursuant to  Article 8
Section  8.02  of the  Limited  Partnership  Agreement.  The  remaining  General
Partners have elected to continue the business of the  Partnership  as described
in Article 9 Section 9.01(d) of the Limited Partnership Agreement.
<PAGE>

The General  Partners have  determined that for purposes of establishing a value
for reporting purposes,  including brokerage and trustee account statements, the
estimated  value of the  limited  partnership  interests  on a per unit basis is
equal to the capital account balance of each investor in the  Partnership.  Each
investor's  capital account balance is set forth periodically on the Partnership
account statement provided to investors. The amount of Partnership earnings each
investor is entitled to receive is determined by the ratio that each  investor's
capital account bears to the total amount of all investor  capital accounts then
outstanding.  The capital account balance of each investor should be included on
any NASD member client account statement in providing a per unit estimated value
of the client's investment in the Partnership in accordance with NASD Rule 2340.

While the  General  Partners  have set an  estimated  value for the  Partnership
units,  such  determination  may not be  representative  of the  ultimate  price
realized  by an  Investor  for such units upon sale.  No public  trading  market
exists for the  Partnership's  units and none is likely to  develop.  Thus,  the
ability of an investor to liquidate his or her investment is limited  subject to
certain  liquidation  rights provided by the Partnership which may include early
withdrawal penalties (See the section of the Prospectus entitled "Risk Factors -
Purchase of Units is a long term investment").

Item 8 - Financial Statements and Supplementary Data

Redwood  Mortgage  Investors  VI, a  California  Limited  Partnership's  list of
Financial Statements and Financial Statement schedules:

A- Financial Statements

o       Independent Auditors' Report
o       Balance  Sheets - December  31, 2000,  and  December 31, 1999
o       Statements  of Income for the three years ended December 31, 2000
o       Statements of Changes in Partners'  Capital for the three years ended
        December 31, 2000
o       Statements of Cash Flows for the three years ended December 31, 2000
o       Notes to Financial Statements

B. - Financial Statement Schedules

The following financial statement schedules of Redwood Mortgage Investors VI are
included in Item 8.

o        Schedule II     Valuation and Qualifying Accounts
o        Schedule IV     Loans on Real Estate

All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.



<PAGE>











                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                         (with Auditors' Report Thereon)







<PAGE>


                              ARMANINO McKENNA LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                        1855 Olympic Boulevard, Suite 225
                             Walnut Creek, CA 94596
                                 (925) 939-8500



                          INDEPENDENT AUDITORS' REPORT


THE PARTNERS
REDWOOD MORTGAGE INVESTORS VI
REDWOOD CITY, CALIFORNIA

We have audited the accompanying  balance sheet of REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership) and the related statements of income, changes
in  partners'  capital and cash flows as of and for the year ended  December 31,
2000.  Our audit also included the financial  statement  schedule  listed in the
Index at Item 8. These financial statements and schedules are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial  statements based on our audits. The financial  statements as of
December 31, 1999 and the two years then ended,  were audited by other  auditors
whose report  dated March 15, 2000  expressed  an  unqualified  opinion on those
financial statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the United  States of  America..  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the 2000 financial statements referred to above present fairly,
in all material  respects,  the financial position of REDWOOD MORTGAGE INVESTORS
VI as of December 31, 2000, and the results of its operations and cash flows for
the year ended  December  31,  2000 in  conformity  with  accounting  principles
generally  accepted in the United  States of America.  Also,  in our opinion the
related financial statement schedules,  when considered in relation to the basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.


                            /s/ ARMANINO McKENNA LLP






Walnut Creek, California
March 23, 2001



<PAGE>



                        Caporicci, Cropper & Larson, LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                           1575 Treat Blvd, Suite 208
                             Walnut Creek, CA 94596
                                 (925) 932-3860



                          INDEPENDENT AUDITORS' REPORT


THE PARTNERS
REDWOOD MORTGAGE INVESTORS VI

We have  audited  the  financial  statements  and related  schedules  of REDWOOD
MORTGAGE  INVESTORS VI (A California  Limited  Partnership)  listed in Item 8 on
form 10-K  including  balance  sheets as of  December  31, 1999 and 1998 and the
statements of income,  changes in partners' capital and cash flows for the three
years ended December 31, 1999. These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of REDWOOD MORTGAGE INVESTORS VI
as of December  31, 1999 and 1998,  and the results of its  operations  and cash
flows for the three years ended  December 31, 1999 in conformity  with generally
accepted  accounting  principles.  Further, it is our opinion that the schedules
referred to above present fairly the information set forth therein in compliance
with the  applicable  accounting  regulations  of the  Securities  and  Exchange
Commission.


                              /s/ A. Bruce Cropper
                       Caporicci, Cropper & Larson, LLP











Walnut Creek, California
March 15, 2000


<PAGE>




                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                          DECEMBER 31, 2000 AND 1999

                                     ASSETS

                                                       2000                 1999
                                             --------------       --------------
Cash                                               $354,860           $1,120,295
                                             --------------       --------------
Accounts receivable:
  Loans, secured by deeds of trust                5,570,576            5,282,773
  Accrued interest on loans                         664,292              706,841
  Advances on loans                                 133,647              137,930
  Accounts receivables, unsecured                    82,362                    0
                                             --------------       --------------
                                                  6,450,877            6,127,544
  Less allowance for doubtful accounts              261,452              303,249
                                             --------------       --------------
                                                  6,189,425            5,824,295
                                             --------------       --------------
Note receivable - Redwood Mortgage Corp.            125,000              300,000
Real estate owned, held for sale                    767,583              133,300
Real estate in process of acquisition,
   to be sold                                             0              668,132
                                             --------------       --------------

          Total assets                           $7,436,868           $8,046,022
                                             ==============       ==============


                        LIABILITIES AND PARTNERS' CAPITAL


Liabilities:
  Accounts payable                                  $13,068                   $0
  Deferred interest                                       0               15,676
                                             --------------       --------------
         Total liabilities                           13,068               15,676
                                             --------------       --------------


Partners' capital:
  Limited partners' capital, subject
      to redemption, (note 4D):                   7,414,034            8,020,580

  General partners' capital                           9,766                9,766
                                             --------------       --------------
    Total partners' capital                       7,423,800            8,030,346
                                             --------------       --------------
          Total liabilities and
              partners' capital                  $7,436,868           $8,046,022
                                             ==============       ==============




See accompanying notes to financial statements.



<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              STATEMENTS OF INCOME
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
                                                                           YEARS ENDED DECEMBER 31,

                                                              ----------------------------------------------------
<S>                                                               <C>                 <C>               <C>
                                                                  2000                1999              1998
                                                              -------------       -------------     --------------
Revenues:
  Interest on loans                                               $597,996            $743,319           $847,960
  Interest on bank deposits                                         17,021              14,086              8,487
  Interest on promissory note                                       16,091                   0                  0
  Late charges, prepayment penalties, and fees                      29,101              28,912             15,414
  Mortgage servicer subsidy                                        125,000             300,000                  0
                                                              -------------       -------------     --------------
                                                                   785,209           1,086,317            871,861
                                                              -------------       -------------     --------------
Expenses:
  Loan servicing fees                                               48,557              50,150             70,630
  Asset management fee                                               9,780              10,626              6,640
  Clerical costs through Redwood Mortgage Corp.                     19,647              21,748             24,440
  Interest and line of credit costs                                      0              14,714             43,170
  Provision for bad debt and losses
      on real estate acquired through foreclosure                  193,427             437,558            180,054
  Professional services                                             25,462              18,068             18,831
  Other                                                             10,407              12,544             15,591
                                                              -------------       -------------     --------------
                                                                   307,280             565,408            359,356
                                                              -------------       -------------     --------------
Net Income                                                        $477,929            $520,909           $512,505
                                                              =============       =============     ==============
Net income:  To General Partners (1%)                               $4,779              $5,209             $5,125
                      To Limited Partners (99%)                   $473,150            $515,700           $507,380
                                                              -------------       -------------     --------------
                                                                  $477,929            $520,909           $512,505
                                                              =============       =============     ==============

Net income per $1,000 invested by Limited Partners for entire period:
  -where income is reinvested and compounded                      $62                      $62                $53
                                                              =============       =============     ==============

  -where partner receives income in monthly distributions          $61                     $61                $52
                                                              =============       =============     ==============




</TABLE>









See accompanying notes to financial statements.


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
                                                                     PARTNERS' CAPITAL
                                     -----------------------------------------------------------------------------------
                                                LIMITED PARTNERS' CAPITAL
                                     -------------------------------------------------
                                       Capital
                                       Account          Formation                           General
                                       Limited            Loan                              Partners
                                       Partners        Receivable           Total           Capital           Total
                                     -------------    --------------    --------------    -------------    -------------

<S>                                    <C>                <C>              <C>                   <C>         <C>
Balances at January 1, 1998            $9,481,208         ($59,521)        $9,421,687            9,766       $9,431,453

Formation Loan collections                      0            53,291            53,291                0            53,291
Net Income                                507,380                 0           507,380            5,125           512,505
Early withdrawal penalties                (9,834)             6,230           (3,604)                0           (3,604)
Partners' withdrawals                 (1,280,986)                 0       (1,280,986)          (5,125)       (1,286,111)
                                     -------------    --------------    --------------    -------------    --------------

Balances at December 31, 1998           8,697,768                 0         8,697,768            9,766         8,707,534

Net Income                                515,700                 0           515,700            5,209           520,909
Early withdrawal penalties               (10,028)                 0          (10,028)                0          (10,028)
Partners' withdrawals                 (1,182,860)                 0       (1,182,860)          (5,209)       (1,188,069)
                                     -------------    --------------    --------------    -------------    --------------

Balances at December 31, 1999           8,020,580                 0         8,020,580            9,766         8,030,346

Net Income                                473,150                 0           473,150            4,779           477,929
Early withdrawal penalties               (16,335)                 0          (16,335)                0          (16,335)
Partners' withdrawals                 (1,063,361)                 0       (1,063,361)          (4,779)       (1,068,140)
                                     -------------    --------------    --------------    -------------    --------------

Balances at December 31, 2000          $7,414,034                 0        $7,414,034           $9,766        $7,423,800
                                     =============    ==============    ==============    =============    ==============


</TABLE>















See accompanying notes to financial statements


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>

                                                                        YEARS ENDED DECEMBER 31,
                                                           ---------------------------------------------------
<S>                                                            <C>                <C>                <C>
                                                               2000               1999               1998
                                                           -------------      --------------     -------------
Cash flows from operating activities:
  Net income                                                   $477,929            $520,909          $512,505
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Provision for doubtful accounts                            34,738             442,480           268,764
      Provision for Losses (recovery) on real
            estate held for sale                                158,689             (4,922)          (88,710)
      Early withdrawal penalty credited to income              (16,335)            (10,028)           (3,604)
    Change in operating assets and liabilities:
          Accrued interest & advances                          (24,769)           (200,903)         (134,827)
          Increase (decrease) in liabilities:
          Accounts payable and accrued expenses                  13,068            (22,668)            22,668
          Deferred interest on loans                           (15,676)             (4,787)            19,565
                                                           -------------       -------------      ------------
      Net cash provided by operating activities                 627,644             720,081           596,361
                                                           -------------      --------------     -------------
Cash flows from investing activities:
  Principal collected on loans                                2,058,681           2,859,900         1,934,071
  Loans made                                                (2,434,422)           (922,936)       (1,798,822)
  Payments to real estate held for sale                       (129,557)            (24,112)           (2,785)
  Proceeds on real estate held for sale                           5,359              65,656            85,449
  Investment in partnership                                           0                   0         (215,281)
  Proceeds from partnership                                           0                   0         1,068,865
  Proceeds from unsecured accounts receivable                         0                   0            42,605
                                                           -------------      --------------     -------------
    Net cash provided by (used in) investing activities       (499,939)           1,978,508         1,114,102
                                                           -------------      --------------     -------------
Cash flows from financing activities:
 Payments on notes                                              300,000           (390,000)         (509,011)
 Partners withdrawals                                       (1,068,140)         (1,188,069)       (1,286,111)
 Formation loan collections                                           0                   0            53,291
 Note receivable - Redwood Mortgage Corp.                     (125,000)           (300,000)                 0
                                                           -------------      --------------     -------------
    Net cash used in financing activities                     (893,140)         (1,878,069)       (1,741,831)
                                                           -------------      --------------     -------------
Net increase (decrease) in cash                               (765,435)             820,520          (31,368)
Cash - beginning of period                                    1,120,295             299,775           331,143
                                                           -------------      --------------     -------------
Cash - end of period                                           $354,860          $1,120,295          $299,775
                                                           =============      ==============     =============
Cash paid for interest                                               $0             $14,714           $43,170


</TABLE>

See accompanying notes to financial statements


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1 - ORGANIZATION AND GENERAL

Redwood  Mortgage  Investors  VI, (the  "Partnership")  is a California  Limited
Partnership,  of which the General Partners are D. Russell  Burwell,  Michael R.
Burwell and Gymno  Corporation,  a California  corporation owned and operated by
the individual  General  Partners.  The  partnership  was organized to engage in
business as a mortgage lender for the primary purpose of making loans secured by
Deeds of Trust on California real estate.  Loans are being arranged and serviced
by Redwood  Mortgage  Corp.,  (Redwood  Mortgage),  an  affiliate of the General
Partners.  The offering of partnership units was closed with contributed capital
totaling $9,781,366.

Each month's income is  distributed  to partners based upon their  proportionate
share of partners'  capital.  Some partners have elected to withdraw income on a
monthly, quarterly or annual basis.

A. Sales Commissions - Formation Loan
Sales  commissions  ranging  from 0% (units sold by General  Partners) to 10% of
gross  proceeds were paid by Redwood  Mortgage Corp. an affiliate of the General
Partners that arranges and services the loans. To finance the sales commissions,
the Partnership loaned to Redwood Mortgage Corp. $623,255 (the "Formation Loan")
relating to contributed capital of $9,781,366. The Formation Loan was unsecured,
and was repaid without interest,  over 10 years,  commencing  December 31, 1989.
The last payment was made during 1998.

B. Other Organizational and Offering Expenses
Organizational and offering expenses,  other than sales commissions,  (including
printing  costs,  attorney and accountant  fees,  and other costs),  paid by the
Partnership  from the offering  proceeds  totaled $360,885 or 3.69% of the gross
proceeds  contributed by the Partners.  Such costs have been fully amortized and
allocated to the Partners.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Accrual Basis

Revenues and  expenses  are  accounted  for on the accrual  basis of  accounting
wherein  income is recognized as earned and expenses are recognized as incurred.
Once a Loan is categorized as impaired, interest is no longer accrued thereon.

B. Management Estimates

In preparing the financial statements,  management is required to make estimates
based on the  information  available that affect the reported  amounts of assets
and  liabilities  as of the balance sheet date and revenues and expenses for the
related periods.  Such estimates relate  principally to the determination of the
allowance for doubtful accounts,  including the valuation of impaired loans, and
the valuation of real estate acquired through foreclosure.  Actual results could
differ significantly from these estimates.


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

C. Loans, Secured by Deeds of Trust

The  Partnership  has both the intent and ability to hold the loans to maturity,
i.e.,  held for  long-term  investment.  They are  therefore  valued at cost for
financial  statement  purposes  with  interest  thereon  being  accrued  by  the
effective interest method.

Financial  Accounting  Standards Board Statements  (SFAS) 114 and 118 (effective
January 1, 1995) provide that if the probable  ultimate recovery of the carrying
amount of a Loan, with due  consideration  for the fair value of collateral,  is
less than the recorded  investment and related amounts due and the impairment is
considered to be other than  temporary,  the carrying  amount of the  investment
(cost) shall be reduced to the present value of future cash flows.
At December 31, 2000 and 1999,  reductions in the cost of loans  categorized  as
impaired by the Partnership  totaled  $159,090 and $283,249,  respectively.  The
reduction in stated value was  accomplished  by increasing  the  allowances  for
doubtful accounts.

As presented in Note 10 to the financial statements as of December 31, 2000, the
average  loan to  appraised  value  of  security  at the  time  the  loans  were
consummated  was  68.93%.  When a loan is valued  for  impairment  purposes,  an
updating is made in the valuation of collateral security. However, a low loan to
value ratio tends to minimize reductions for impairment.

D. Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents  include
interest bearing and non-interest bearing bank deposits.

E. Real Estate Owned, Held for Sale

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


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

The  following  schedule  reflects  the costs of real  estate  acquired  through
foreclosure and the recorded reductions to estimated fair values, less estimated
costs to sell as of December 31, 2000 and 1999 not including the  aforementioned
Real Estate in the process of acquisition:

                                                     December 31,
                                ------------------------------------------------
                                        2000                            1999
                                ---------------                 ----------------

Costs of properties                 $1,240,579                         $161,415
Reduction in value                    (472,996)                         (28,115)
                                ---------------                 ----------------

Fair value reflected
    in financial statements            $767,583                         $133,300
                                ===============                 ================

F. Income Taxes

No  provision  for  Federal  and  State  income  taxes is made in the  financial
statements  since  income taxes are the  obligation  of the partners if and when
income taxes apply.

G. Organization and Syndication Costs

The Partnership  bears its own  organization  and syndication  costs (other than
certain  sales  commissions  and  fees  described  above)  including  legal  and
accounting expenses,  printing costs, selling expenses, a 1% wholesale brokerage
fee and filing fees.

H. Allowance for Doubtful Accounts

Loans and the related  accrued  interest,  fees and  advances  are analyzed on a
continuous basis for  recoverability.  Delinquencies are identified and followed
as part of the Loan  system.  A  provision  is made for bad debt to  adjust  the
allowance  for doubtful  accounts to an amount  considered  by  management to be
adequate with due consideration to collateral value to provide for unrecoverable
accounts  receivable,  including  impaired  loans,  unspecified  loans,  accrued
interest and advances on loans, and other accounts receivable  (unsecured).  The
composition  of the allowance for doubtful  accounts as of December 31, 2000 and
1999 was as follows:
                                                    December 31,
                                ------------------------------------------------
                                       2000                            1999
                                ---------------                 ----------------
Impaired loans                         $159,090                         $283,249
Unspecified loans                        20,000                           20,000
Accounts receivable, unsecured           82,362                                0
                                ---------------                 ----------------
                                       $261,452                         $303,249
                                ===============                 ================



<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 DECEMBER 31, 2000

I. Net Income Per $1,000 Invested

Amounts  reflected in the statements of income as net income per $1,000 invested
by Limited  Partners  for the entire  period are  actual  amounts  allocated  to
Limited  Partners  who held  their  investment  throughout  the  period and have
elected to either  leave their  earnings to compound or have  elected to receive
monthly  distributions of their net income.  Individual income is allocated each
month  based on the  Limited  Partners'  pro rata  share of  Partners'  Capital.
Because the net income percentage varies from month to month, amounts per $1,000
will vary for those  individuals  who made or  withdrew  investments  during the
period, or select other options.

NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES

The following are commissions and/or fees which are paid to the General Partners
and/or related parties.

A. Mortgage Brokerage Commissions

Mortgage  brokerage  commissions  for  services in  connection  with the review,
selection,  evaluation,  negotiation  and extension of the loans were limited to
12% of the  principal  amount of the loans  through  the period  ending 6 months
after the termination date of the offering. Thereafter,  commissions are limited
to an amount not to exceed 4% of the total  Partnership  assets  per year.  Such
commissions are paid by the borrowers,  thus, not an expense of the Partnership.
Such  commissions  totaled  $45,164,  $46,527  and  $36,700  for the years ended
December 31, 2000, 1999 and 1998 respectively.

B. Mortgage Servicing Fees

Monthly  mortgage  servicing  fees are paid to Redwood  Mortgage up to 1/8 of 1%
(1.5%  annual) of the unpaid  principal,  or such lesser amount as is reasonable
and  customary in the  geographic  area where the property  securing the Loan is
located. Mortgage servicing fees of $48,557, $50,150, and $70,630, were incurred
for years ended December 31, 2000, 1999 and 1998, respectively.

C. Asset Management Fee

The General  Partners are  authorized  to receive  monthly fees for managing the
Partnership's  Loan  portfolio  and  operations  of up to  1/32 of 1% (3/8 of 1%
annually).  Management fees of $9,780, $10,626, and $6,640 were incurred for the
years 2000, 1999, and 1998, respectively.

D. Other Fees

The Partnership Agreement provides for other fees such as reconveyance, mortgage
assumption and mortgage  extension fees. These fees are paid by the borrowers to
parties related to the General Partners.

E. Income and Losses

All income and losses are  credited  or charged to partners in relation to their
respective  partnership  interests.  The  partnership  interest  of the  General
Partners (combined) is a total of 1%.



<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
F. Operating Expenses

The General Partners or their affiliate  (Redwood Mortgage Corp.) are reimbursed
by the  Partnership  for all  operating  expenses  actually  incurred by them on
behalf of the Partnership,  including without limitation,  out-of-pocket general
and administration expenses of the Partnership, accounting and audit fees, legal
fees and expenses,  postage and preparation of reports to Limited  Partners.  In
2000,  1999 and 1998,  clerical costs totaling  $19,647,  $21,748,  and $24,440,
respectively,  were  reimbursed to Redwood  Mortgage  Corp.  and are included in
expenses in the Statements of Income.

NOTE 4 - OTHER PARTNERSHIP PROVISIONS

A. Term of the Partnership

The term of the Partnership is approximately 40 years,  unless sooner terminated
as provided.  The  provisions  provided for no capital  withdrawal for the first
five years, subject to the penalty provision set forth in (D) below. Thereafter,
investors have the right to withdraw over a five-year period, or longer.

B. Election to Receive Monthly, Quarterly or Annual Distributions

Upon  subscriptions,  investors elected either to receive monthly,  quarterly or
annual distributions of earnings  allocations,  or to allow earnings to compound
for at least a period of 5 years.

C. Profits and Losses

Profits and losses are allocated monthly among the Limited Partners according to
their respective capital accounts after 1% is allocated to the General Partners.

D. Withdrawal From Partnership

A  Limited  Partner  had  no  right  to  withdraw,  without  penalty,  from  the
Partnership  or to obtain the return of his  capital  account  for at least five
years after such units are  purchased  which in all  instances  had  occurred by
December 31,  1994.  After that time,  at the  election of the Partner,  capital
accounts  can  be  returned  over  a  five-year  period  in 20  equal  quarterly
installments or such longer period as is requested.

Notwithstanding  the above, in order to provide a certain degree of liquidity to
the Limited  Partners,  the General Partners will liquidate a Limited  Partner's
entire capital account in four quarterly  installments beginning on the last day
of the calendar quarter  following the quarter in which the notice of withdrawal
is given. Such liquidations shall, however, be subject to a 10% early withdrawal
penalty  applicable  to any sums  withdrawn  prior to the time  when  such  sums
otherwise could have been withdrawn  pursuant to the  liquidation  procedure set
forth  above.  The  10%  early  withdrawal  penalty  will  be  received  by  the
Partnership, and a portion of the sums collected as such penalty will be applied
toward the next installment(s) of principal under the Formation Loan owed to the
Partnership by Redwood  Mortgage  Corp.  Such portion shall be determined by the
ratio between the initial amount of Formation Loan and the total amount of other
organization and syndication costs incurred by the Partnership in this offering.
The  balance of any such early  withdrawal  penalties  shall be  retained by the
Partnership for its own account and applied against syndication costs. Since the
syndication  costs have been fully  amortized as of December  31, 1993,  and the
formation loan was paid in 1998, the early  withdrawal  penalties  gained in the
future will be credited to income for the period received.


<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

The Partnership will not establish a reserve from which to fund withdrawals and,
accordingly,  the  Partnership's  capacity to return a Limited Partner's capital
account is restricted to the availability of Partnership cash flow. Furthermore,
no more than 20% of the total Limited Partners' capital accounts  outstanding at
the beginning of any year shall be liquidated during any calendar year.

NOTE  5 - NOTE RECEIVABLE - REDWOOD MORTGAGE CORP.

Redwood  Mortgage Corp., an affiliate of the General Partners which arranges and
services the loans of the Partnership, has subsidized certain loan losses of the
Partnership in the form of a note receivable.  The note bears interest at 8% and
will be paid over a  three-year  period to the extent  that  Partnership  losses
occur relative to certain identified  properties.  If the identified  properties
recover  from their  write-downs,  Redwood  Mortgage  Corp.  will be credited or
reimbursed up to the amount of the note receivable.

NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT

The  Partnership  had a bank line of credit  secured by its Loan portfolio up to
$2,000,000 at 1% over prime during 1999 which expired  December 31, 1999 and was
not  renewed  in  2000.  At  December  31,  2000  and  1999,  respectively,  the
partnership did not carry a balance.

NOTE 7 - LEGAL PROCEEDINGS

The Partnership is a defendant along with numerous other defendants, including a
developer,   contractor,   and  other  lenders,   in  a  lawsuit  involving  the
Partnership's  attempt to recover its investment in real estate acquired through
foreclosure.  Management  anticipates  that the  ultimate  outcome  of the legal
matters  will  not have a  material  adverse  effect  on the net  assets  of the
Partnership,  with  due  consideration  having  been  given in  arriving  at the
allowance for doubtful accounts.

NOTE 8 - INCOME TAXES

The following  reflects a  reconciliation  from net assets  (Partners'  Capital)
reflected in the financial statements to the tax basis of those net assets:
                                                          December 31,
                                            ------------------------------------
                                                2000                     1999
                                            -----------               ----------
Net assets - Partners' Capital
      per financial statements               $7,423,800               $8,030,346

Allowance for doubtful accounts                 261,452                  303,249
                                          -------------             ------------
Net assets tax basis                         $7,685,252               $8,333,595
                                          =============             ============

In 2000 and 1999, approximately 73% and 72%, respectively, of taxable income was
allocated to tax exempt organizations i.e.,  retirement plans. Such plans do not
have to file income tax returns unless their "unrelated business income" exceeds
$1,000.   Applicable  amounts  become  taxable  when  distribution  is  made  to
participants.


<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

(b) Loans - (see note 2 (c))  carrying  value were  $5,570,576  at December  31,
2000. The fair value of these investments of $5,639,252 was estimated based upon
projected cash flows discounted at the estimated current interest rates at which
similar loans would be made. The applicable amount of the allowance for doubtful
accounts along with accrued interest and advances related thereto should also be
considered in evaluating the fair value versus the carrying value.


NOTE 10 - ASSET CONCENTRATIONS AND CHARACTERISTICS

The loans are secured by recorded  deeds of trust.  At December 31, 2000,  there
were 31 loans outstanding with the following characteristics:

Number of loans outstanding                                                   31
Total loans outstanding                                               $5,570,576

Average Loan outstanding                                                $179,696
Average Loan as percent of total                                           3.23%
Average Loan as percent of Partners' Capital                               2.42%

Largest Loan outstanding                                              $1,376,117
Largest Loan as percent of total                                          24.70%
Largest Loan as percent of Partners' Capital                              18.54%

Number of counties where security is located (all California)                  9
Largest percentage of loans in one county                                 38.75%
Average Loan to appraised value of security at time
     Loan was consummated                                                 68.93%
Number of loans in foreclosure                                                 2



<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


The following categories of loans were held at December 31, 2000 and 1999:

                                                        December 31,
                                           -------------------------------------
                                                 2000                     1999
                                          -------------             ------------
First Trust Deeds                             4,011,117                3,810,670
Second Trust Deeds                            1,385,496                1,273,693
Third Trust Deeds                               173,963                  198,410
                                       ------------------       ----------------
  Total loans                                 5,570,576                5,282,773
Prior liens due other lenders                 8,467,477                6,705,986
                                       ------------------       ----------------
  Total debt                                 14,038,053              $11,988,759
                                       ==================       ================

Appraised property value at time of loan    $20,364,599              $18,027,960
                                       ==================       ================

Total investments as a percent of appraisals       68.93%                 66.50%
                                       ==================       ================

Investments by Type of Property

Owner occupied homes                            755,014                  264,673
Non-Owner occupied homes                        672,518                  403,809
Apartments                                      575,407                  730,934
Commercial                                    3,567,637                3,883,357
                                      ------------------        ----------------
                                             $5,570,576               $5,282,773
                                      ==================        ================


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

Scheduled maturity dates of loans as of December 31, 2000 are as follows:

                         Year Ending
                         December 31,
                      -------------------
                             2001                                    $3,836,158
                             2002                                       592,929
                             2003                                       643,704
                             2004                                        33,512
                             2005                                       161,357
                          Thereafter                                    302,916
                                                                  --------------
                                                                     $5,570,576
                                                                  ==============

The scheduled  maturities for 2000 include  $2,623,679  (47%) in loans which are
past  maturity  at  December  31,  2000.  $1,990,813  (35%) of those  loans were
categorized as delinquent over 90 days.

Five loans with  principal  outstanding  of  $2,168,651  had  interest  payments
overdue in excess of 90 days.

The cash  balance  at  December  31,  2000 of  $354,860  were in two banks  with
interest  bearing  balances  totaling  $327,996.   The  balances  exceeded  FDIC
insurance limits (up to $100,000 per bank) by $154,860.  As and when deposits in
the Partnership's bank accounts increase significantly beyond the insured limit,
the funds are  generally  either  placed in new loans or used to pay down on the
line of credit balance, if any.






<PAGE>


SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                          REDWOOD MORTGAGE INVESTORS VI
<TABLE>

Col. A              Col. B                    Col. C                Col. D              Col. E
Description         Balance                 Additions             Deductions           Balance at
                    Beginning                                       Describe          End of Period
                    of Period             (1)          (2)
                                       Charged     Charged to
                                         to          Other
                                       Costs  &    Accounts
                                       Expenses    Describe
Year Ended
12/31/00

Deducted from
Asset
Accounts:
Allowance for
Doubtful
<S>                     <C>             <C>            <C>       <C>                        <C>
Accounts                $303,249        $34,738        $0        $76,535 (b)                $261,452

Cumulative
write-down of
Real Estate
   held for
   Sale (REO)       $315,663 (a)        $158,689        $0          $642 (b)                $473,710
                    --------------     -----------              -------------        ------------------

Total               $618,912(a)         $193,427       $0       $77,177 (b)                 $735,162
                    ==============     ===========    =====     =============        ==================


</TABLE>

Note             (a) - The  beginning  balance (Col B) includes  $287,548  write
                 down of Real Estate in the process of becoming  REO at December
                 31,1999.

Note (b) - Write-offs of loans/properties during the year.




<PAGE>


SCHEDULE IV

                          MORTGAGE LOANS ON REAL ESTATE.
                         RULE 12-29 LOANS ON REAL ESTATE
<TABLE>

<S>       <C>      <C>         <C>          <C>             <C>            <C>            <C>        <C>
 Col. A   Col. B   Col. C      Col. D       Col. E          Col. F         Col. G         Col. H     Col. I       Col. J
  Desc     Int.   Final      Periodic     Prior Liens    Face Amt of      Carrying     Principal     Type       Geographic
           Rate   maturity   Pmt. Terms                      Loan         amount of    Amt. of       of Lien      County
            %       Date                                (original amt)      Loan         Loans                   Location
                                                                                       Subject to
                                                                                       Delinquent
                                                                                       Principal
                                                                                       or Interest
--------- ------- ---------- ----------- -------------- --------------- -------------- ------------- -------- ---------------

Comm      14.75   09/01/95    $2,241.96    $250,000.00     $185,000.00    $178,005.59         $0.00   2nd      San Mateo
Apts      6.50    05/01/06      $540.83     $89,904.00     $100,000.00     $96,716.11    $21,092.37   2nd      Sacramento
Comm      10.00   12/01/98    $5,046.04          $0.00     $575,000.00    $565,496.28   $116,058.92   1st       Alameda
Comm      7.00    12/01/03    $1,151.48    $562,500.00      $99,172.75     $81,121.58    $33,392.92   2nd       Alameda
Comm      12.00   02/01/99   $14,025.12          $0.00   $1,376,117.03  $1,376,117.03   $271,151.68   1st     Santa Clara
Apts      7.00    02/10/05      $234.06     $80,250.00      $40,125.00     $40,125.00         $0.00   2nd      San Fran.
Comm      9.00    05/10/02      $670.52          $0.00      $83,333.33     $79,538.11         $0.00   1st        Shasta
Comm      12.00   02/01/11      $756.11          $0.00      $63,000.00     $53,840.28         $0.00   1st       Alameda
Res       8.00    09/18/03      $166.58          $0.00      $22,701.51     $21,730.12         $0.00   1st        Sonoma
Res       8.00    09/30/03      $170.67          $0.00      $23,259.09     $22,312.59         $0.00   1st        Sonoma
Comm      12.00   02/01/99      $508.40  $1,279,200.00      $49,200.00     $49,200.00    $14,129.36   2nd     Santa Clara
Apts      7.00    08/01/02    $1,545.83          $0.00     $265,000.00    $263,391.41         $0.00   1st      Sacramento
Apts      7.00    08/01/03    $1,022.35          $0.00     $153,660.00    $149,839.55         $0.00   1st      Sacramento
Apt.      9.00    02/01/99       $38.42    $153,534.00       $5,122.00      $3,834.50         $0.00   2nd      Sacramento
Comm      12.00   06/01/01    $1,000.00          $0.00     $100,000.00    $100,000.00         $0.00   1st      San Fran.
Apts      13.00   11/01/03      $759.15    $341,094.00      $60,000.00     $21,500.51         $0.00   2nd      San Fran.
Res       13.75   11/01/03    $2,202.61          $0.00     $167,500.00     $47,910.34         $0.00   1st       Alameda
Comm      11.50   05/01/99    $3,113.39          $0.00     $314,000.00    $300,854.39         $0.00   1st       Alameda
Res       14.25   07/01/04      $984.46     $78,672.00      $73,000.00     $33,512.23         $0.00   2nd      San Fran.
Res       14.50   04/01/05      $546.20    $150,804.00      $40,000.00     $21,603.56         $0.00   3rd      San Fran.
Comm      10.00   08/01/00    $1,428.14     $59,402.00     $160,000.00    $154,005.61         $0.00   2nd      San Mateo
Comm      12.00   06/01/01      $993.53    $100,000.00     $120,952.39    $120,930.88         $0.00   2nd      San Fran.
Res       12.00   05/01/01    $2,086.91          $0.00     $600,000.00    $553,882.50         $0.00   1st        Placer
Res       11.00   02/01/05      $952.32    $259,845.00     $100,000.00     $99,628.35         $0.00   2nd      San Mateo
Res       12.00   05/01/01      $745.93    $600,000.00      $74,592.87     $74,592.87         $0.00   2nd        Placer
Res       11.50   08/01/02    $2,395.83  $1,616,716.00     $250,000.00    $250,000.00         $0.00   2nd     Santa Clara
Res       12.50   08/01/03    $1,562.50    $768,830.00     $150,000.00    $150,000.00         $0.00   2nd      San Mateo
Comm      10.00   12/01/03    $1,276.47          $0.00     $145,454.55    $145,454.55         $0.00   1st      Stanislaus
Comm      10.00   12/01/01      $283.66    $224,335.00      $32,323.23     $32,323.23         $0.00   2nd      Stanislaus
Land      12.00   12/01/01    $3,307.50          $0.00     $330,750.00    $330,750.00         $0.00   1st     Santa Clara
Res       14.50   01/01/06    $2,658.33  $1,868,714.00     $220,000.00    $152,359.21         $0.00   3rd     Santa Clara
                            ------------------------------------------------------------------------
                              54,415.30   8,483,800.00    5,979,263.75   5,570,576.38    455,825.25
                            ========================================================================
</TABLE>

Notes:
         Loans   classified   as  impaired  had  principal   balances   totaling
         $2,469,505.  Impaired  loans are  defined  as loans  where the costs of
         related  balances  exceeds  the  anticipated  fair  value less costs to
         collect. Interest is no longer accrued thereon.

         Amounts  reflected  in column G (carrying  amount of loans)  represents
both costs and the tax basis of the loans.


<PAGE>


Schedule IV

Reconciliation of carrying amount (cost) of loans at close of periods

                                              Year ended December 31,
                               -------------------------------------------------
                                      2000            1999               1998
                                   ---------       --------             -------

Balance at beginning of year      $5,282,773       $7,969,735         $8,104,984
                               --------------    -------------      ------------
Additions during period:
  New loans                        2,434,422          922,936          1,798,822
  Other                                    0                0                  0
                               --------------    -------------      ------------
            Total Additions       $2,434,422         $922,936        $1,798,822
                               --------------    -------------      ------------


Deductions during period:
  Collections of principal         2,058,681        2,859,900          1,934,071
  Foreclosures                             0          499,999                  0
  Cost of loans sold                       0                0                  0
  Amortization of Premium                  0                0                  0
  Other                               87,938          249,999                  0
                                --------------   -------------      ------------
       Total Deductions            2,146,619        3,609,898          1,934,071
                                --------------   -------------      ------------

Balance at close of year          $5,570,576       $5,282,773         $7,969,735
                                ==============   =============      ============


<PAGE>




Item 9 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

Bruce  and/or  John  Cropper  (the  Croppers)  have  been  performing  audit and
accounting  services  to the  General  Partners  of the  Partnership  and  their
affiliates for over 16 years through the following CPA firms: 1993-1998 Parodi &
Cropper, CPA's, 1999 Caporicci,  Cropper & Larson, LLP and 2000 Armanino McKenna
LLP.

Bruce and  John Cropper were  shareholders in Cropper  Accountancy Corp. through
December 31, 2000.

Cropper  Accountancy  was a partner  in the firm of  Parodi & Cropper  from 1993
until  April  of 1998.  In May of  1998,  Cropper  Accountancy  Corp.,  formed a
partnership  with Caporicci & Larson  creating a new firm with offices in Irvine
and Walnut Creek, California. The Parodi & Cropper firm was dissolved.

Effective  January  1,  2001,  Cropper  Accountancy  Corp.,  withdrew  from  the
Caporicci,  Cropper & Larson,  LLP  partnership.  John Cropper joined the larger
regional firm of Armanino  McKenna LLP as a partner and Bruce Cropper  continues
to provide  services  through  Cropper  Accountancy.  The  Croppers  continue to
perform audit and accounting services to the General Partners of the partnership
and their affiliates.

As a result, the Partnership has retained the firm of Armanino McKenna,  LLP, to
provide its audit and financial services. Thus, although there has been a change
in accounting  firms,  there has not been a change in accountants and there have
not been any disagreements on any matter of accounting principals,  practices or
financial status disclosures.


                                    Part III

Item 10 - Directors and Executive Officers of the Registrant.

The  Partnership  has  no Officers or Directors.  Rather, the activities of  the
Partnership  are managed by the three General  Partners of which two individuals
are D. Russell  Burwell and Michael R.  Burwell.  The third  General  Partner is
Gymno Corporation,  a California  corporation,  formed in 1986. The Burwells are
the two shareholders of Gymno Corporation, a California corporation, on an equal
(50-50) basis.

After 25 years of active  participation  in the  mortgage  business,  D. Russell
Burwell,  our founder and a General  Partner of the  Partnership  has decided to
retire  effective  September 30, 2001.  "Russ" has enjoyed a long and successful
career.  His original  business model, upon which our Partnership has its roots,
has withstood the test of time through varying  economic  cycles.  Collectively,
the various Redwood Mortgage Investors  Partnerships (I-VIII) have grown from an
idea to over  $110,000,000  in assets and  produced  excellent  results  for the
Limited  Partners.  Under  Russ'  stewardship  Redwood  Mortgage  Investor's  VI
originally  raised  $9,772,594 in Limited Partner Capital  contributions  and at
December 31, 2000 had $7,414,034 in remaining Limited Partner Capital.

Over  the  last  few  years,   Russ  has  been  passing  along  his  duties  and
responsibilities  to the  remaining  General  Partners.  The  remaining  General
Partners  are  Mr.  Michael   Burwell  and  Gymno   Corporation,   a  California
Corporation.  Mr. Michael Burwell has been a General Partner of Redwood Mortgage
Investors VI since its inception and has been employed by Redwood Mortgage Corp,
an  affiliate  of the  Partnership,  since  1979.  The  Partnership  through the
remaining  General Partners and the employees of its affiliate  Redwood Mortgage
Corp., is well prepared for Russ's  departure and looks forward to emulating the
steady  consistent  returns that the Limited  Partners have enjoyed during Russ'
tenure.

Mr. D. Russell  Burwell is  providing this  notification  pursuant  to Article 8
Section  8.02  of the  Limited  Partnership  Agreement.  The  remaining  General
Partners have elected to continue the business of the  Partnership  as described
in Article 9 Section 9.01(d) of the Limited Partnership Agreement.



<PAGE>


Item 11 - Executive Compensation

   COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP

As indicated above in item 10, the Partnership has no officers or directors. The
Partnership is managed by the General Partners. There are certain fees and other
items paid to management  and related  parties.  A more complete  description of
management  compensation  is found in the  Prospectus,  pages  11-12,  under the
section  "Compensation  of the General  Partners and the  Affiliates",  which is
incorporated by reference. Such compensation is summarized below.

The following  compensation has been paid to the General Partners and affiliates
for  services  rendered  during  the year  ended  December  31,  2000.  All such
compensation  is in compliance  with the guidelines and limitations set forth in
the Prospectus.

Entity Receiving               Description of Compensation
   Compensation                   and Services Rendered                Amount
--------------------      ------------------------------------      ------------
I.
Redwood Mortgage
   Corp.                      Loan Servicing Fee for servicing
                               loans  Investments                      $48,556

General Partners
   &/or Affiliates            Asset Management Fee
                                 for managing assets                    $9,780

General Partners              1% interest in profits                    $4,779


II. FEES PAID BY BORROWERS ON LOANS PLACED BY COMPANIES  RELATED TO THE GENERAL
    PARTNERS WITH THE PARTNERSHIP(EXPENSES OF BORROWERS NOT OF THE PARTNERSHIP):

Redwood Mortgage       Mortgage Brokerage Commissions for services
    Corp.              in connection with the review, selection,
                       evaluation, negotiation, and extension of the
                       Loans paid by the borrowers and not by the
                       Partnership                                     $45,164

Redwood Mortgage       Processing and Escrow Fees for services in
    Corp.              connection with notary, document preparation,
                       credit investigation, and escrow fees payable
                       by the borrowers and not by the Partnership      $3,286

Gymno
 Corporation, Inc.     Reconveyance Fee                                   $579


III. IN ADDITION, THE GENERAL PARTNER  AND/OR RELATED COMPANIES PAY CERTAIN
     EXPENSES ON BEHALF OF THE PARTNERSHIP  FOR WHICH IT IS REIMBURSED AS NOTED
     IN THE STATEMENT OF INCOME                                        $19,647




<PAGE>



Item 12 - Security Ownership of Certain Beneficial Owners and Management

The General  Partners  receive a combined  total of a 1% interest in Partnership
income and losses and distributions of cash available for distribution.

Item 13 - Certain Relationships and Related Transactions

Refer to footnote 3 of the notes to Financial Statements in Part II item 8 which
describes related party fees and data.

Also refer to sections of the Prospectus  "Compensation  of General Partners and
Affiliates",  page 11,  and  "Conflicts  of  Interest",  page 13, as part of the
above-referenced Registration Statement which is incorporated by reference.


                                     Part IV

Item 14 - Exhibits, Financial Statements Schedules, and Reports on Form 8-K

(A)      Documents filed as part of this report:

         1.  The Financial Statements are listed in Part II
             Item 8 under A-Financial Statements.

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


(B) No reports on Form 8-K were filed  during the last quarter of the period for
which this report is filed.


<PAGE>


         3. Exhibits.

Exhibit No.                Description of Exhibits

      3.1        Limited Partnership Agreement
      3.2        Form of Certificate of Limited Partnership Interest
      3.3        Certificate of Limited Partnership
     10.1        Escrow Agreement (1)
     10.2        Servicing Agreement (1)
     10.3        (a) Form of Note secured by Deed of Trust which provides for
                     principal and interest payments (1)
                 (b) Form of Note secured by Deed of Trust which provides
                     principal and interest payments and right of assumption (1)
                 (c) Form of Note secured by Deed of Trust which provides for
                     interest only payments (1)
                 (d) Form of Note (1)
     10.4        (a) Deed of Trust and Assignment of Rents to accompany Exhibits
                     10.3 (a) and (c) (1)
                 (b) Deed of Trust and Assignment of Rents to accompany Exhibits
                     10.3 (b) (1)
                 (c) Deed of Trust to accompany Exhibit 10.3 (d) (1)
     10.5        Promissory Note for Formation Loan (1)
     10.6        Agreement to Seek a Lender (1)
     24.1        Consent of Armanino McKenna, LLP
     24.3        Consent of  McCutchen, Doyle, Brown & Enersen, LLP

         All  of  these  exhibits  were  previously  filed  as the  exhibits  to
Registrant's Statement on Form S-11 (Registration No. 33-12519) and incorporated
by reference herein.

(B)      Reports on form 8-K

         No reports on Form 8-K have been filed  during the last  quarter of the
period covered by this report. A Form 8-K was filed on February 7, 2000 relating
to a change in accounting firm. Another Form 8-K was filed on February 13, 2001,
relating to the subsequent change in accounting firm (see Item 9 above).
(C)      See (A) 3 above

(D) See (A) 2 above.  Additional  reference is made to  prospectus  (S-11) dated
September  3, 1987 to pages 56 through 59 and  supplement  #6 dated May 16, 1989
pages 16-18, for financial data related to Gymno corporation, a General Partner.



<PAGE>


                                   Signatures

         Pursuant to the  requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934 the  registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on the 26th day of March,
2001.

REDWOOD MORTGAGE INVESTORS VI

By:       /S/ D. Russell Burwell
          -----------------------------------
          D. Russell Burwell, General Partner


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


By:       Gymno Corporation, General Partner


          By:     /S/ D. Russell Burwell
                  -------------------------------
                  D. Russell Burwell, President


          By:     /S/ Michael R. Burwell
                  ---------------------------------------
                  Michael R. Burwell, Secretary/Treasurer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity indicated on the 26th day of March, 2001.

Signature                                  Title                    Date


/S/ D. Russell Burwell
------------------------
D. Russell Burwell                   General Partner              March 26, 2001


/S/ Michael R. Burwell
------------------------
Michael R. Burwell                   General Partner              March 26, 2001


/S/ D. Russell Burwell
------------------------
D. Russell Burwell          President of Gymno Corporation,       March 26, 2001
                            (Principal Executive Officer);
                            Director of Gymno Corporation


/S/ Michael R. Burwell
-----------------------
Michael R. Burwell          Secretary/Treasurer of Gymno          March 26, 2001
                            Corporation (Principal Financial
                                 and Accounting Officer);
                            Director of Gymno Corporation