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

                                December 31, 1997

                                     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 Registrants Partners Capital and related            6
matters.
Item 6 - Selected Financial Data                                          7-8
Item 7 - Managements Discussion and Analysis of Financial Condition
         and Results of Operations                                       9-11
Item 8 - Financial Statements and Supplementary Data                    12-33
Item 9 - Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                          34

                                    Part III

Item 10 - Directors and Executive Officers of the Registrant               34
Item 11- Executive Compensation                                            35
Item 12 - Security Ownership of certain Beneficial Owners and Management   36
Item 13 - Certain Relationships and Related Transactions                   36

                                     Part IV


Item 14 - Exhibits, Financial Statement Schedules, and Reports of Form 8-K 36-37

Signatures                                                                 38
<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, 1997 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 incorporation  (I.R.S. Employer Identification)
            or organization)

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

Registrants telephone No. 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
-------------------------------------------------------------------------------
 Limited Partnership Units                                       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 97,715.94 units computed at $100.00 a unit for
$9,771,594, 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),  of which  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  Partnerships  primary  purpose is to invest its capital in Mortgage
Investments secured by Northern California properties.  Mortgage Investments are
arranged  and  serviced  by  Redwood  Home Loan Co,  dba  Redwood  Mortgage,  an
affiliate of the General  Partners.  The  Partnership's  objectives  are to make
investments,  as referred to above, 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 Partnerships  capital. The Partnerships 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 Mortgage
Investments in October, 1987. The offering terminated in September, 1989, and as
of that date 97,725.94  Units were sold  realizing a proceed of  $9,772,594.  At
December  31,  1997,  the  Partnership  had a balance  of  Mortgage  Investments
totalling $8,104,984 with interest rates thereon ranging from 4.00% to 17.25%.

     Currently  First Trust Deeds  comprise  56.61% of the  Mortgage  Investment
portfolio.  Second Mortgage Trust Deeds comprise  35.40% of Mortgage  Investment
portfolio,  third  Mortgage  Trust Deeds have 4.90% and 4th Mortgage Trust Deeds
have 3.09% of the Mortgage Investment portfolio.  Owner-occupied homes, combined
with  non-owner  occupied  homes,  total  17.73%  of the  Mortgage  Investments.
Mortgage  Investments  to  apartments  make  up  9.77%  of  the  total  Mortgage
Investments portfolio. Commercial Mortgage Investment origination increased from
last year, now comprising  72.50% of the  portfolio,  an increase of 6.89%.  The
past year brought many  outstanding low loan to value lending  opportunities  in
the  commercial  segment of the  market.  The major  concentration  of  Mortgage
Investments,  comprising of 81.28% of the total loans,  are in seven counties of
the Bay Area. The County of Stanislaus makes up 4.66% of the Mortgage Investment
portfolio  and the  balance,  as  stated  on page  six of  this  report,  are in
primarily Northern  California.  Currently Mortgage Investment size is averaging
$137,373  per  Mortgage  Investment.   Some  of  the  Mortgage  Investments  are
fractionalized between affiliated  partnerships with objectives similar to those
of the Partnership to further reduce risk.  Average equity per loan  transaction
stood  at  35.52%.  A 40%  equity  average  on  loan  origination  is  generally
considered very  conservative.  Generally,  the more equity, the more protection
for the lender.  The  Partnerships  Mortgage  Investment  portfolio  is in good
condition with six  properties in  foreclosure as of the end of December,  1997,
totalling $1,006,355.
<PAGE>

Item 2 - Properties

     As of December 31, 1997, a summary of the Partnership's Mortgage Investment
portfolio is set forth below.

Mortgage Investments as a Percentage of Total Mortgage Investments


First Trust Deeds                                   $4,588,168.52
Appraised Value of Properties                        6,828,071.00
   Total Investment as a % of Appraisal                    67.20%
Second Trust Deed Mortgage Investments               2,869,543.28
Third Trust Deed Mortgage Investments                  397,273.21
Fourth Trust Deed Mortgage Investments*                249,999.40
First Trust Deeds due other Lenders                  9,906,794.00
Second Trust Deeds due other Lenders                   990,064.00
Third Trust Deeds due other Lenders                    178,571.00

Total Debt                                         $19,180,413.41

   Appraised Property Value                        $28,422,684.00
   Total Investments as a % of Appraisal                   67.48%


Number of Mortgage Investments Outstanding                     59


Average Investment                                     137,372.62
Average Investment as a % of Net Assets                     1.46%
Largest Investment Outstanding                       1,376,117.03
Largest Investment as a % of Net Assets                    14.59%


Mortgage Investments  as a Percentage of Total Mortgage Investments

First Trust Deeds                                          56.61%
Second Trust Deeds                                         35.40%
Third Trust Deeds                                           4.90%
Fourth Trust Deeds                                          3.09%
                                              --------------------
                                                          100.00%
Total

Mortgage Investments by Type          Amount              Percent
of Property

Owner Occupied Homes                $1,057,067.24          13.04%
Non-Owner Occupied Homes               380,141.84           4.69%
Apartments                             791,755.61           9.77%
Commercial                           5,876,019.72          72.50%
                                 -----------------     -----------
Total                               $8,104,984.41         100.00%

*Footnote on following page
<PAGE>


     The following is a  distribution  of loans  outstanding  as of December 31,
1997 by Counties.

Santa Clara               $2,429,517.98           29.98%
Alameda                    1,411,853.00           17.42%
San Mateo                  1,251,050.75           15.44%
Contra Costa                 769,133.16            9.49%
Sacramento                   644,935.35            7.96%
San Francisco                403,829.99            4.98%
Stanislaus                   377,552.00            4.66%
Sonoma                       301,043.99            3.71%
El Dorado                    214,773.21            2.65%
Ventura                       91,000.00            1.12%
Shasta                        81,751.22            1.01%
Monterey                      71,428.57            0.88%
Santa Cruz                    36,159.93            0.44%
Solano                        20,955.26            0.26%
                     -------------------      -----------

Total                     $8,104,984.41          100.00%


     * Redwood Mortgage  Investors VI, together with other Redwood  partnerships
hold a second and a fourth trust deed against the secured property. In addition,
the principals behind the borrower corporation have given personal guarantees as
collateral.  The overall loan to value ratio on this loan is 76.52%. In addition
to the borrower  paying an interest rate of 12.25%,  the  Partnership  and other
lenders will also participate in profits. The General Partners have had previous
loan activity with this borrower  which had been  concluded  successfully,  with
extra earnings earned for the other partnerships involved.


Statement of Condition of Mortgage Investments:

         Number of Mortgage Investments in Foreclosure               6

<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.  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.  As of the date  hereof,  the
Partnership is not involved in any legal proceedings other than those that would
be considered part of the normal course of business.

Item 4 - Submission of matters to vote of Security Holders (Partners).

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

                                     Part II

Item 5 - Market for the Registrants Partners Capital and Related 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 have been sold
only in  California.  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,  1997,  there  were  742  holders  of  record  of  the
Partnerships Units. A decrease of 19 from 1996.
<PAGE>

Item 6 - Selected Financial Data

     Redwood  Mortgage  Investors  VI began  operations  in  October  1987.  Its
financial  condition  and results of  operation  for three years to December 31,
1997 were:
<TABLE>


                                                            Balance Sheets
                                                                Assets
<CAPTION>

                                                                          December 31,
                                                      ------------------------------------------------------
                                                               1997                1996                1995
                                                      --------------      --------------      --------------
<S>                                                        <C>                 <C>                 <C>     
Cash                                                       $331,143            $180,597            $283,976
                                                      --------------      --------------      --------------
Accounts Receivable:
  Mortgage Investments, secured by Deeds of Trust         8,104,984           9,313,924          10,402,491
  Accrued Interest on Mortgage Investments                  617,456             405,783             445,816
  Advances on Mortgage Investments                          127,519             108,019             131,936
  Accounts receivables, unsecured                           161,414             251,531             322,913
                                                      --------------      --------------      --------------
                                                         $9,011,373         $10,079,257         $11,303,156

Less allowance for doubtful accounts                         28,614             252,850             283,284
                                                      --------------      --------------      --------------
                                                          8,982,759          $9,826,407         $11,019,872
                                                      --------------      --------------      --------------

Real estate owned, held for sale, acquired through
    foreclosure                                             309,319           1,441,007           1,501,712
Investment in Partnership                                   708,141             496,040             456,821
                                                      --------------      --------------      --------------
                                                        $10,331,362         $11,944,051         $13,263,316
                                                      ==============      ==============      ==============

                                                   Liabilities and Partners Capital

Liabilities:
  Notes Payable - Bank Line of Credit                      $899,011          $1,530,511          $2,041,011
  Deferred interest on Mortgage Investments                     898              18,522                   0
                                                      --------------      --------------      --------------
          Total Liabilities                                 899,909           1,549,033           2,041,011
                                                      --------------      --------------      --------------

Partners Capital:
     Limited Partners  capital, subject to                9,421,687          10,385,252          11,212,539
redemption
     General Partners  capital                                9,766               9,766               9,766
                                                      --------------      --------------      --------------

          Total Partners  Capital                         9,431,453          10,395,018          11,222,305
                                                      --------------      --------------      --------------

          Total Liabilities and Partners  Capital       $10,331,362         $11,944,051         $13,263,316
                                                      ==============      ==============      ==============
</TABLE>
<PAGE>

<TABLE>

                                                         Statements of Income
<CAPTION>

                                                               1997                1996                1995
                                                      --------------      --------------      --------------

<S>                                                      <C>                 <C>                 <C>       
Gross Revenue                                            $1,036,596          $1,167,859          $1,277,782
Expenses                                                    507,409             579,697             659,434
                                                      ==============      ==============      ==============
Net Income                                                  529,187             588,162             618,348
                                                      ==============      ==============      ==============


Net Income: to General Partners (1%)                         $5,292              $5,882              $6,183
                     to Limited Partners (99%)              523,895             582,280             612,165
                                                      --------------      --------------      --------------

                                                           $529,187            $588,162            $618,348
                                                      ==============      ==============      ==============


Net Income per $1,000 invested by Limited
 Partners for entire period:
  - where income is reinvested and compounded                   $53                 $54                 $53
                                                      ==============      ==============      ==============

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

<FN>
     In 1995 the annualized  yield was 5.30%. In 1996, the annualized  yield was
5.35% and in 1997 the annualized  yield was 5.29%.  The  annualized  yield since
inception through December 31, 1997, was 7.71%.
</FN>
</TABLE>
<PAGE>

     Item 7 -  Managements  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 totalled  $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, 1997, the Partnerships net capital totalled $9,431,453.

     The  Partnership  began funding  Mortgage  Investments in October 1987. The
Partnerships Mortgage Investments  outstanding for the years ended December 31,
1995, 1996 and 1997 were $10,402,491,  $9,313,924 and $8,104,984,  respectively.
The decrease in Mortgage Investments outstanding of $1,088,567 from December 31,
1995 to December  31,  1996,  was due  primarily  to the  Partnership  utilizing
Mortgage  Investment payoffs to meet Limited Partner capital  liquidations.  The
decrease in Mortgage  Investments  outstanding  of $1,208,940  from December 31,
1996 to December 31, 1997, was again due primarily to the Partnership  utilizing
Mortgage Investment payoffs to meet Limited Partner capital liquidations. During
the years 1996 and 1997,  Mortgage  Investment  principal  collections  exceeded
Limited Partner liquidations.

     Currently,  mortgage  interest rates are lower than those  prevalent at the
inception of the  Partnership.  New Mortgage  Investments  will be originated at
these lower  interest  rates.  The result is to reduce the average return across
the entire Mortgage Investment portfolio held by the Partnership. 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 is borrowers will change  significantly
from the beginning of 1998 over the next 12 months. Based upon the rates payable
in  connection  with  the  existing  Mortgage   Investments,   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
next year will range only slightly higher from its current rate.

     Each year,  the  Partnership  negotiates a line of credit with a commercial
bank which is secured by its  Mortgage  Investment  portfolio.  The  outstanding
balance of the bank line of credit was  $2,041,011,  $1,530,511 and $899,011 for
the years ended December 1995, 1996, and 1997 respectively. The interest rate on
the bank line of credit has remained at Prime plus one percent for the preceding
three years.  For the years ended December 31, 1997, 1996 and 1995,  interest on
Note Payable-Bank was $133,577, $158,175 and $212,915 respectively.  The primary
reason for this decrease was that the  Partnership  had a lower  overall  credit
facility utilization from 1995 to 1996 and from 1996 to 1997. As of December 31,
1997, the  Partnership  has borrowed  $899,011 at an interest rate of Prime plus
one percent.  This added source of funds will help in maximizing the Partnership
yield by allowing the Partnership to minimize the amount of funds in lower yield
investment  accounts when  appropriate  Mortgage  Investments  are not currently
available and because the Mortgage  Investments 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.

     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 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,  1997,
there were six properties 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  principal  payout   requirements.   As  Mortgage  Investment
opportunities become available,  excess cash and available funds are invested in
new Mortgage Investments.

     The General Partners  regularly review the Mortgage  Investment  portfolio,
examining the status of delinquencies,  the underlying collateral securing these
Mortgage  Investments,  REO expenses,  sales activities,  and borrowers payment
records and other data relating to the Mortgage  Investment  portfolio.  Data on
the local real estate market, and on the national and local economy are studied.
<PAGE>
Based upon this  information  and more,  Mortgage  Investment  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  $344,807,  $312,684 and $268,101 as provision for doubtful
accounts for the years ended  December 31, 1995,  December 31, 1996 and December
31, 1997,  respectively.  The decrease in the provision reflects the decrease in
the  amount  of  REO,  unsecured   receivables  and  the  decreasing  levels  of
delinquency within the portfolio.  Additionally,  the General Partners felt that
the bottom of the real estate  cycle had been  reached,  reflecting a decreasing
need to set aside reserves for the continuously  declining real estate values as
had been the case in the  early  1990s in the  California  real  estate  market.
During the year 1997, the Partnership reduced the REO balance from $1,501,712 as
of December 31, 1995, to $306,319 through December 31, 1997. This reduction will
assist the Partnership in increasing  yields in 1998, as assets previously lying
idle, may now produce current income.

     The Northern  California  recession reached bottom in 1993. Since then, the
California  economy  has  been  improving,   slowly  at  first,  but  now,  more
vigorously.  A wide variety of indicators suggest that the economy in California
was strong in 1997,  and the State is well - positioned  for fast  growth.  This
improvement is reflective in increasing property values, in job growth, personal
income growth,  etc., which should  translate into more loan activity.  Which of
course, is healthy for the Partnerships lending activity.

     The Partnerships interest in land, acquired through foreclosure, located in
East Palo Alto with costs  totalling  $708,141  and $496,040 for the years ended
December  31, 1997 and 1996,  respectively  has been  invested  with that of two
other  Partnerships  in a  partnership  which  is in the  process  of  obtaining
approval for  constructing  approximately  63 single family homes for sale. (The
Development).  The proposed Development has gained significant public awareness.
Incorporated into the proposed  Development are various mitigation  measures not
limited  to,  mitigation  of  hazardous  materials  existing  on  the  property,
endangered species,  and proximity to the San Francisco Baylands.  The preceding
issues and others have sparked significant public  controversy.  Opposition both
for and against the proposed Development exists.  Notwithstanding the above, the
General Partners believe that pursuit of the proposed Development approval to be
in the interest of the  Partnership.  This investment has been classified in the
financial statements as Investment in 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, 1995,  December 31, 1996,  and 1997,  the  Partnership  made
distributions  of earnings to Limited  Partners after  allocation of syndication
costs of, $296,915, $288,796 and $252,378 respectively. Distribution of Earnings
to Limited  Partners after  allocation of syndication  costs for the years ended
December 31, 1995, December 31, 1996 and December 31, 1997, to Limited Partners
capital  accounts  and  not  withdrawn  was  $315,250,   $293,484  and  $271,517
respectively.  As of December 31, 1995, December 31, 1996 and December 31, 1997,
Limited Partners electing to withdraw earnings represented 50 %, 49 % and 46% 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,  1995,  December 31,
1996, and December 31, 1997, $43,364,  $96,362 and $159,732  respectively,  were
liquidated  subject to the 10% penalty for early  withdrawal.  These withdrawals
are within the normally anticipated range that the General Partners would expect
in their experience in this and other Partnerships.  The General Partners expect
that a small  percentage  of  Limited  Partners  will elect to  liquidate  their
capital  accounts  over  one  year  with  a 10%  early  withdrawal  penalty.  In
originally  conceiving the  Partnership,  the General Partners wanted to provide
Limited   Partners  needing  their  capital  returned  a  degree  of  liquidity.
Generally, Limited Partners electing to withdraw over one year need to liquidate
investment  to  raise  cash.  The  trend  the  Partnership  is  experiencing  in
withdrawals  by  Limited  Partners  electing  a  one  year  liquidation  program
represents  a small  percentage  of Limited  Partner  capital as of December 31,
1995,  December 31, 1996 and December 31, 1997,  respectively and is expected by
the General Partners to commonly occur at these levels.
<PAGE>

     Additionally,  for the years ended  December 31, 1995 and December 31, 1996
and December 31, 1997, $849,589,  $1,086,737 and $1,137,677  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  (which  has),  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.

     Actual  liquidation  of both  capital  and  earnings  from year five (1992)
through year ten (1997) is shown hereunder:
<TABLE>

                                                       Years ended December 31,
<CAPTION>

                  1992           1993            1994             1995            1996             1997
            -----------     ----------    ------------    -------------    ------------    -------------
<S>           <C>             <C>             <C>              <C>             <C>              <C>    
Earnings      $323,037        377,712         303,014          303,098         294,678          257,670
Capital      *$232,370        528,737         729,449          892,953       1,183,099        1,297,410
            ===========     ==========    ============    =============    ============    =============
Total         $555,407       $906,449      $1,032,463       $1,196,051      $1,477,777       $1,555,080
            ===========     ==========    ============    =============    ============    =============
<FN>
*These amounts represent gross of early withdrawal penalties.
</FN>
</TABLE>
<PAGE>

              Item 8 - Financial Statements and Supplementary Data

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

A- Financial Statements

Independent Auditors Report,
Balance Sheets - December 31, 1997, and December 31, 1996,
Statements of Income for the three years ended December 31, 1997,
Statements of Changes in Partners Capital for the three years ended December 31,
1997,
Statements of Cash Flows for the three years ended December 31, 1997,
Notes to Financial Statements - December 31, 1997.

B. - Financial Statement Schedules

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

Schedule II     Amounts receivable from related parties and underwriters, 
                promoters, and employees other than related parties
Schedule VIII   Valuation of Qualifying Accounts
Schedule IX     Short Term Borrowings
Schedule XII    Mortgage Investments 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, 1997
                         (with Auditors Report Thereon)


<PAGE>
                                PARODI & CROPPER
                          CERTIFIED PUBLIC ACCOUNTANTS
                       3658 Mount Diablo Blvd., Suite #205
                           Lafayette California 94549
                                 (510) 284-3590




                           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, 1997 and 1996 and the
statements of income,  changes in partners capital and cash flows for the three
years ended December 31, 1997. These financial statements are the responsibility
of the Partnerships 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, 1997 and 1996,  and the results of its operations and cash
flows for the three years ended  December 31, 1997 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/ Parodi & Cropper
                                PARODI & CROPPER






Lafayette, California
February 27, 1998

<PAGE>
<TABLE>

                                                     REDWOOD MORTGAGE INVESTORS VI
                                                  (A California Limited Partnership)
                                                            BALANCE SHEETS
                                                      DECEMBER 31, 1997 AND 1996

                                                                ASSETS

                                                                          1997                 1996
                                                                     ---------------      ---------------
<CAPTION>

<S>                                                                        <C>                  <C>     
Cash                                                                       $331,143             $180,597
                                                                     ---------------      ---------------

Accounts receivable:
  Mortgage Investments, secured by deeds of trust                         8,104,984            9,313,924
  Accrued Interest on Mortgage Investments                                  617,456              405,783
  Advances on Mortgage Investments                                          127,519              108,019
  Accounts receivables, unsecured                                           161,414              251,531
                                                                     ---------------      ---------------
                                                                          9,011,373           10,079,257
  Less allowance for doubtful accounts                                       28,614              252,850
                                                                     ---------------      ---------------
                                                                          8,982,759            9,826,407
                                                                     ---------------      ---------------

Real estate owned, held for sale, acquired through foreclosure              309,319            1,441,007
Investment in Partnership                                                   708,141              496,040
                                                                     ---------------      ---------------

          Total Assets                                                  $10,331,362          $11,944,051
                                                                     ===============      ===============


                                                   LIABILITIES AND PARTNERS CAPITAL


Liabilities:
  Deferred Interest                                                            $898              $18,522
  Note payable - bank line of credit                                        899,011            1,530,511
                                                                     ---------------      ---------------
          Total Liabilities                                                 899,909            1,549,033
                                                                     ---------------      ---------------



Partners Capital:
  Limited Partners capital, subject to redemption, (note 4D):
      net of Formation Loan receivable of $59,521 and $121,849,
          for 1997 and 1996, respectively                                 9,421,687           10,385,252

  General Partners  Capital:                                                  9,766                9,766
                                                                     ---------------      ---------------
    Total Partners  capital                                               9,431,453           10,395,018
                                                                     ---------------      ---------------
          Total Liabilities and Partners  capital                       $10,331,362          $11,944,051
                                                                     ===============      ===============

<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
                                                     REDWOOD MORTGAGE INVESTORS VI
                                                  (A California Limited Partnership)
                                                         STATEMENTS OF INCOME
                                              FOR THE THREE YEARS ENDED DECEMBER 31, 1997

<CAPTION>

                                                                          YEARS ENDED DECEMBER 31,
                                                             ---------------------------------------------------
                                                                 1997               1996               1995
                                                             -------------      --------------     -------------
Revenues:
<S>                                                            <C>                 <C>               <C>       
  Interest on Mortgage Investments                             $1,011,621          $1,135,218        $1,256,499
  Interest on bank deposits                                         6,563               4,750             5,206
  Late charges, prepayment penalties, and fees                     18,412              27,891            16,077
                                                             -------------      --------------     -------------
                                                                1,036,596           1,167,859         1,277,782
                                                             -------------      --------------     -------------

Expenses:
  Mortgage servicing fees                                          39,918              44,565            42,056
  Clerical costs through Redwood Mortgage                          27,786              31,838            23,341
  Interest and line of credit costs                               133,577             158,175           212,915
  Provision for doubtful accounts and losses
      on real estate acquired through foreclosure                 268,101             312,684           344,807
  Professional services                                            23,517              17,825            19,452
  Other                                                            14,510              14,610            16,863
                                                             -------------      --------------     -------------
                                                                  507,409             579,697           659,434
                                                             -------------      --------------     -------------

Net Income                                                       $529,187            $588,162          $618,348
                                                             =============      ==============     =============

Net income:  To General Partners(1%)                               $5,292              $5,882            $6,183
                      To Limited Partners (99%)                  $523,895            $582,280          $612,165
                                                             =============      ==============     =============
                                                                 $529,187            $588,162          $618,348
                                                             =============      ==============     =============

Net income per $1,000 invested by Limited
 Partners for entire period:
  -where income is reinvested and compounded                          $53                 $54               $53
                                                             =============      ==============     =============

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

<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>

                                                     REDWOOD MORTGAGE INVESTORS VI
                                                  (A California Limited Partnership)
                                              STATEMENTS OF CHANGES IN PARTNERS CAPITAL
                                              FOR THE THREE YEARS ENDED DECEMBER 31, 1997


                                                                    PARTNERS CAPITAL
                                   -------------------------------------------------------------------------------------
                                               LIMITED PARTNERS CAPITAL
                                   --------------------------------------------------
                                      Capital
                                      Account         Formation                            General
                                      Limited            Loan                             Partners
                                     Partners         Receivable          Total            Capital            Total
                                   --------------    -------------    ---------------    ------------     --------------
<CAPTION>
<S>                                  <C>               <C>               <C>                  <C>           <C>        
Balances at December 31, 1994        $11,974,419       $(246,505)        $11,727,914          $9,766        $11,737,680

Formation Loan collections                     0           59,581             59,581               0             59,581
Net income                               612,165                0            612,165           6,183            618,348
Early withdrawal penalties               (4,336)            2,747            (1,589)               0            (1,589)
Partners  withdrawals                (1,185,532)                0        (1,185,532)         (6,183)        (1,191,715)
                                   --------------    -------------    ---------------    ------------     --------------

Balances at December 31, 1995         11,396,716        (184,177)         11,212,539          $9,766         11,222,305

Formation Loan collections                     0           56,803             56,803               0             56,803
Net income                               582,280                0            582,280           5,882            588,162
Early withdrawal penalties               (8,721)            5,525            (3,196)               0            (3,196)
Partners  withdrawals                (1,463,174)                0        (1,463,174)         (5,882)        (1,469,056)
                                   --------------    -------------    ---------------    ------------     --------------

Balances at December 31, 1996         10,507,101        (121,849)         10,385,252           9,766         10,395,018

Formation Loan collections                     0           53,833             53,833                0            53,833
Net Income                               523,895                0            523,895            5,292           529,187
Early withdrawal penalties              (13,409)            8,495            (4,914)                0           (4,914)
Partners  withdrawals                (1,536,379)                0        (1,536,379)          (5,292)       (1,541,671)
                                   --------------    -------------     --------------    -------------    --------------

Balances at December 31, 1997         $9,481,208        ($59,521)         $9,421,687           $9,766        $9,431,453
                                   ==============    =============     ==============    =============    ==============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>

<TABLE>
                                                     REDWOOD MORTGAGE INVESTORS VI
                                                  (A California Limited Partnership)
                                                       STATEMENTS OF CASH FLOWS
                                              FOR THE THREE YEARS ENDED DECEMBER 31, 1997


                                                                      YEARS ENDED DECEMBER 31,
                                                        -----------------------------------------------------
                                                             1997                1996               1995
<CAPTION>
                                                        ---------------      -------------      -------------
Cash flows from operating activities:
<S>                                                           <C>                <C>                <C>     
  Net income                                                  $529,187           $588,162           $618,348
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Provision for doubtful accounts                            264,484             65,804             74,718
    Provision for Losses on real estate held for sale            3,617            246,880            270,089
    Early withdrawal penalty credited to income                (4,914)            (3,196)            (1,589)
    (Increase) decrease in assets:
       Accrued interest & advances                           (231,173)             63,950          (225,306)
       Prepaid expenses and other assets                             0                935              (935)
     Increase (decrease) in liabilities:
       Accounts payable and accrued expenses                         0                  0                  0
       Deferred Interest on Mortgage Investments              (17,624)             18,522                  0
                                                         --------------      -------------      -------------

      Net cash provided by operating activities                543,577            981,057            735,325
                                                         --------------      -------------      -------------

Cash flows from investing activities:
  Principal collected on Mortgage Investments                1,634,128          3,295,834          2,273,233
  Mortgage Investments made                                  (557,796)        (2,474,843)        (2,062,626)
  Additions to real estate held for sale                      (47,415)          (242,869)          (169,015)
  Dispositions of real estate held for sale                    909,491            299,414            526,889
  Investment in Partnership                                  (212,101)           (39,219)                  0
                                                         --------------      -------------      -------------

    Net cash provided by (used in) investing activities      1,726,307            838,317            568,481
                                                         --------------      -------------      -------------

Cash flows from financing activities:
 Net increase (decrease) in note payable-bank                (631,500)          (510,500)          (335,500)
 Partners withdrawals                                      (1,541,671)        (1,469,056)        (1,191,715)
  Formation Loan collections                                    53,833             56,803             59,581
                                                         --------------      -------------      -------------

    Net cash provided by (used in) financing activities    (2,119,338)        (1,922,753)        (1,467,634)
                                                         --------------      -------------      -------------

Net increase (decrease) in cash                                150,546          (103,379)          (163,828)

Cash - beginning of period                                     180,597            283,976            447,804
                                                         --------------      -------------      -------------

Cash - end of period                                          $331,143           $180,597           $283,976
                                                         ==============      =============      =============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

     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  Mortgage  Investments  secured by Deeds of Trust on
California real estate.  Mortgage Investments are being arranged and serviced by
Redwood  Home Loan Co. (RHL Co.),  dba Redwood  Mortgage,  an  affiliate  of the
General  Partners.  The offering was closed with  contributed  capital  totaling
$9,781,366.

     Each  months   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.,  an affiliate of the General  Partners that arranges and services the
Mortgage Investments.  To finance the sales commissions,  the Partnership loaned
to Redwood  Mortgage  $623,255 (the  Formation  Loan)  relating to contributed
capital of  $9,781,366.  The Formation  Loan is unsecured,  and is being repaid,
without interest,  in ten annual installments of principal,  commencing December
31, 1989.

     The following  reflects  transactions in the Formation Loan account through
December 31, 1997:

       Amount loaned during 1987,1988 and 1989                         $623,255
       Less:
         Cash repayments                               $513,295
         Allocation of early withdrawal penalties        50,439         563,734
                                                      ============     ---------

       Balance December 31, 1997                                        $59,521
                                                                       ========


     The Formation Loan, which is receivable from Redwood Mortage,  an affiliate
of the General Partners,  has been deducted from Limited Partners capital in the
balance  sheet.  As amounts are collected from Redwood  Mortgage,  the deduction
from capital will be reduced.

     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 Mortgage  Investment is  categorized  as impaired,  interest is no longer
accrued thereon.
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

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
mortgage  investments,  and  the  valuation  of  real  estate  acquired  through
foreclosure. Actual results could differ significantly from these estimates.

C. Mortgage Investments, Secured by Deeds of Trust

     The  Partnership  has both the  intent  and  ability  to hold the  Mortgage
Investments 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 simple 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 Mortgage  Investment,  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.  The adoption of these  statements did not have a material
effect on the  financial  statements  of the  Partnership  because  that was the
valuation method previously used on impaired loans.

     At December 31,  1997,  1996 and 1995,  reductions  in the cost of Mortgage
Investments  categorized as impaired by the Partnership totalled $0, $13,006 and
$45,933,  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,
1997, the average mortgage investment to appraised value of security at the time
the loans were  consummated  was  67.48%.  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 propertys  estimated fair
value, less estimated costs to sell.
<PAGE>
                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


     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, 1997 and 1996:
<TABLE>

                                                                        December 31,
                                                       -----------------------------------------------
                                                            1997                            1996
                                                       ---------------                 ---------------
<CAPTION>

<S>                                                          <C>                           <C>       
Costs of properties                                          $449,319                      $1,743,382
Reduction in value                                            140,000                         302,375
                                                       ---------------                 ---------------

Fair value reflected in financial statements                 $309,319                      $1,441,007
                                                       ===============                 ===============
</TABLE>

     Effective  January 1, 1996,  the  Partnership  adopted  the  provisions  of
statement  No 121  (SFAS  121)  of the  Financial  Accounting  Standards  Board,
Accounting  for the Impairment of Long Lived Assets and for Long Lived Assets to
be disposed of. The  adoption of SFAS 121 did not have a material  impact on the
Partnerships  financial  position because the methods indicated were essentially
those previously used by the Partnership.

F. Investment in Partnership (see note 5)

     The  Partnership  accounts  for  its  investment  in a  partnership  as  an
investment  in real estate,  which is at the lower of costs or fair value,  less
estimated costs to sell. At December 31, 1997, cost is considered less than fair
value and the investment is stated at cost in the financial statements.

G. 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.

H. 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.  Organizational  costs of $14,750 were capitalized and were
amortized  over a five year period.  Syndication  costs of $346,135 were charged
against partners capital and were allocated to individual  partners  consistent
with the Partnership Agreement.

I. Allowance for Doubtful Accounts

     Mortgage  Investments 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 Mortgage  Investment  system. A provision
is made for doubtful  accounts 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  Mortgage  Investments,   unspecified  mortgage  investments,   accrued
interest and advances on Mortgage  Investments,  and other  accounts  receivable
(unsecured).  The  composition  of the  allowance  for  doubtful  accounts as of
December 31, 1997 and 1996 was a follows:
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


                                               December 31,
                            -----------------------------------------------
                                    1997                            1996
                            ---------------                 ---------------

Impaired Mortgage Investments      $0                         $13,006
Unspecified Mortgage Investments   13,432                      59,844
Accounts receivable, unsecured     15,182                     180,000
                               --------------               ---------------
                                  $28,614                        $252,850
                              ===============                 ===============

J. 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 have 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. However, the net income per $1,000 average invested has
approximated  those  reflected  for those whose  investments  and  options  have
remained constant.

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 Mortgage  Investments
were limited up 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.

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 Mortgage
Investment is located.  Mortgage servicing fees of $39,918, $44,565, and $42,056
were incurred for years 1997, 1996 and 1995, respectively.
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

C. Asset Management Fee

     The General  Partners are  authorized to receive  monthly fees for managing
the Partnerships  Mortgage Investment portfolio and operations of up to 1/32 of
1% (3/8 of 1% annual).  There were no  management  fees incurred for years 1997,
1996 and 1995, 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 is  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%.

F. Operating Expenses

     The General Partners or their affiliate  (Redwood  Mortgage) 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
1995,  1996,  and 1997,  clerical costs  totaling  $23,341,  $31,838 and $27,786
respectively,  were reimbursed to Redwood  Mortgage 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  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, 1997.
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.
<PAGE>
                                             
                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

     Notwithstanding  the  above,  in order  to  provide  a  certain  degree  of
liquidity to the Limited Partners, the General Partners will liquidate a Limited
Partners 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.  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, the early
withdrawal  penalties  gained in the future will be applied on the same basis as
before with the amount  otherwise being credited to the syndication  costs being
credited to income for the period.

     The Partnership will not establish a reserve from which to fund withdrawals
and,  accordingly,  the  Partnerships  capacity  to return a Limited  Partners
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 - INVESTMENT IN PARTNERSHIP

     The Partnerships interest in land acquired through foreclosure,  located in
East Palo Alto with costs totalling  $708,141 has been invested with that of two
other  Partnerships  (total cost to date,  primarily  land, of  $1,458,721) in a
partnership  which is in the  process of  constructing  approximately  63 single
family  homes for sale.  Redwood  Mortgage  Investors  V, VI, and VII have first
priority on return of investment plus interest  thereon,  in addition to a share
of profits realized.

NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT

     The  Partnership  has a  bank  line  of  credit  secured  by  its  Mortgage
Investment  portfolio  up to  $2,500,000  at 1% over prime.  The  balances  were
$1,530,511  and  $899,011 at December 31, 1996 and 1997,  respectively,  and the
interest  rate at December  31, 1997 was 9.5%  (8.50%  prime + 1%).  The line of
credit expires December 31, 1998.

NOTE 7 - LEGAL PROCEEDINGS

     The  Partnership  is not a defendant in any legal actions.  However,  legal
actions against  borrowers and other involved parties have been initiated by the
Partnership  to help  assure  payments  against  unsecured  accounts  receivable
totaling $161,414.

     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.
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997
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:
<TABLE>

                                                                        December 31,
                                                       -----------------------------------------------
                                                             1997                           1996
                                                        ----------------               ---------------
<CAPTION>

<S>                                                          <C>                          <C>        
Net assets - Partners  Capital per financial                 $9,431,453                   $10,395,018
statements

Formation Loan receivable                                        59,521                       121,849
Allowance for doubtful accounts                                  28,614                       252,850
                                                        ----------------               ---------------
Net assets tax basis                                         $9,519,588                   $10,769,717
                                                        ================               ===============
</TABLE>

     In 1997,  approximately  72% 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.

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, are subject to immediate withdrawal.

     (b) The  Carrying  Value  of  Mortgage  Investments  - (see  note 2 (c)) is
$8,104,984.  The December 31, 1997 fair value of these investments of $8,110,440
is 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.
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS

     The  Mortgage  Investments  are  secured  by  recorded  deeds of trust.  At
December  31,  1997,  there were 59 Mortgage  Investments  outstanding  with the
following characteristics:

Number of Mortgage Investments outstanding                              59
Total Mortgage Investments outstanding                          $8,104,984

Average Mortgage Investment outstanding                           $137,373
Average Mortgage Investment as percent of total                       1.69%
Average Mortgage Investment as percent of Partners Capital            1.46%

Largest Mortgage Investment outstanding                         $1,376,117
Largest Mortgage Investment as percent of total                      16.98%
Largest Mortgage Investment as percent of Partners Capital           14.59%

Number of counties where security is located (all California)           14
Largest percentage of Mortgage Investments in one county             29.98%
Average Mortgage Investment to appraised value of security at time
     Mortgage Investment was consummated                             67.48%
Number of Mortgage Investments in foreclosure                            6



     The following  categories of mortgage investments are pertinent at December
31, 1997 and 1996:
<TABLE>

                                                                          December 31,
                                                            ------------------------------------------
                                                                  1997                      1996
                                                            -----------------          ---------------
<S>                                                               <C>                      <C>       
First Trust Deeds                                                 $4,588,169               $4,928,794
Second Trust Deeds                                                 2,869,543                3,729,581
Third Trust Deeds                                                    397,273                  405,567
Fourth Trust Deeds                                                   249,999                  249,982
                                                            -----------------          ---------------
  Total mortgage investments                                       8,104,984                9,313,924
Prior liens due other lenders                                     11,075,429               17,200,385
                                                            -----------------          ---------------
  Total debt                                                     $19,180,413              $26,514,309
                                                            =================          ===============

Appraised property value at time of loan                         $28,422,684              $40,225,303
                                                            =================          ===============

Total investments as a percent of appraisals                          67.48%                   65.91%
                                                            =================          ===============

Investments by Type of Property

Owner occupied homes                                              $1,057,067               $1,443,835
Non-Owner occupied homes                                             380,142                  973,498
Apartments                                                           791,755                  786,362
Commercial                                                         5,876,020                6,110,229
                                                            =================          ===============
                                                                  $8,104,984               $9,313,924
                                                            =================          ===============
</TABLE>
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

     Scheduled  maturity  dates of mortgage  investments as of December 31, 1997
are as follows:

                        Year Ending
                        December 31,
                     -------------------

                            1998                                    $3,799,251
                            1999                                     2,004,478
                            2000                                       276,160
                            2001                                       493,558
                            2002                                       424,620
                         Thereafter                                  1,106,917
                                                               ================
                                                                    $8,104,984
                                                               ================

     The  scheduled   maturities   for  1998  include   $1,545,198  in  Mortgage
Investments  which are past  maturity at  December  31,  1997.  $54,493 of those
Mortgage Investments were categorized as delinquent over 90 days.

     Five  Mortgage  Investments  with  principal  outstanding  of $365,982  had
interest payments overdue in excess of 90 days.

     The cash  balance at December  31,  1997 of  $331,143  was in one bank with
interest  bearing  balances  totalling  $290,650.  The  balances  exceeded  FDIC
insurance limits (up to $100,000 per bank) by $231,143. And when deposits in the
Partnerships  bank accounts increases  significantly  beyond the insured limit,
the funds are either placed in new Mortgage  Investments  or used to pay down on
the line of credit balance.
<PAGE>
<TABLE>

SCHEDULE II

                                       AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
                                    PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES. RULE 12-03

        Column A          Column B       Column C       Column D             Column E
     Name of Debtor       Balance Beg.   Additions           Deductions        Balance at end of period
                          of period
                          12/31/96
                                                         (1)        (2)        (1)              (2)
                                                      Amounts     Amounts   Current         Not Current
                                                      collected   written   12/31/97          12/31/97
                                                                  off *
<CAPTION>

<S>                         <C>             <C>        <C>         <C>        <C>             <C>    
Redwood Mortgage.           $121,849        $0.00      $53,833     $8,495     $0.00           $59,521

</TABLE>

     The above  schedule  represents  the  Formation  Loan  borrowed  by Redwood
Mortgage from the Partnership to pay for the selling commissions on units. It is
an unsecured loan and bears no interest.  It is being repaid to the  Partnership
in ten equal  annual  installments  of principal  only which began  December 31,
1989.

     * The amount  written  off  represents  the  proportionate  amount of early
withdrawal  penalties  allocated to the  Formation  Loan, as provided for in the
Prospectus.
<PAGE>
<TABLE>

SCHEDULE VIII

                        VALUATION AND QUALIFYING ACCOUNTS
                          REDWOOD MORTGAGE INVESTORS VI

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 to       Charged     to
                                 Costs            Other
                                 & Expenses       Accounts -
                                                  Describe
Year Ended
12/31/97
<CAPTION>

Deducted from
Asset Accounts:

Allowance for
<S>                  <C>             <C>                <C>            <C>                <C>    
Doubtful Accounts    $252,850        $3,617             0              $227,853           $28,614

Cumulative
write-down of
Real Estate held
for sale (REO)      $302,375        $264,484             0             $426,859          $140,000
                    ----------     -----------      ------------     --------------    --------------

Total               $555,225        $268,101             0           (a) $654,712        $168,614
                    ==========     ===========      ============     ==============    ==============
<FN>
(a) represents loss on Mortgage Investments and Real Estate held for sale.
</FN>
</TABLE>
<PAGE>
<TABLE>

SCHEDULE IX

                                                         SHORT-TERM BORROWINGS
                                              REDWOOD MORTGAGE INVESTORS VI - RULE 12-10

Col. A             Col. B            Col. C            Col. D            Col. E            Col. F
Category of        Balance at end    Weighted          Maximum Amount    Average Amount    Weighted
Aggregate          of Period         Average           Outstanding       Outstanding       Average
Short-Term                           Interest Rate     During the        During the        Interest Rate
Borrowings                                             Period            Period            During the
                                                                                           Period
================== ================= ================= ================= ================= =================
<CAPTION>

Year-Ended
<S>                <C>               <C>               <C>               <C>               <C>  
12/31/97           $899,011          9.58%             $1,530,511        $1,393,838        9.58%

</TABLE>
<PAGE>
<TABLE>

SCHEDULE XII

                                                    MORTGAGE LOANS ON REAL ESTATE.
                                            RULE 12-29 MORTGAGE INVESTMENTS ON REAL ESTATE

Col. A    Col. B    Col. C    Col. D     Col. E     Col. F       Col. G         Col. H     Col. I    Col. J
Descp.    Interest  Final     Periodic   Prior      Face Amt.    Carrying     Principal    Type of   Geographic
          Rate      Maturity  Payment    Liens      of           amount of    amount of    Lien      County
                    Date      Terms                 Mortgage     Mortgage     Mortgage               Location
                                                    Investment   Investment   Investments
                                                    (original                 subject to
                                                    amount)                   Delinq.
                                                                              Principal
                                                                              or Interest
--------- --------- --------- ---------- ---------- ------------ ------------ ------------ --------- --------------
<CAPTION>

<S>        <C>      <C>          <C>          <C>     <C>          <C>           <C>       <C>       <C>      
Res.       13.500%  03/01/03     467.39       0.00    36,000.00    20,955.26     0.00      1st Mtg   Solano
Res.       10.000%  08/01/03     576.96    262,720    49,000.00    29,505.67     0.00      2nd Mtg   San Mateo
Comm       13.000%  09/01/98     807.53       0.00    73,000.00    65,491.48     0.00      1st Mtg   Alameda
Apts.      13.000%  11/01/03     759.15    341,094    60,000.00    37,118.04     0.00      2nd Mtg   San Francisco
Res.       13.750%  11/01/03   2,202.61       0.00   167,500.01    96,574.79     0.00      1st Mtg   Alameda
Apts.      14.000%  03/01/92   1,184.87    960,000   100,000.00    96,286.30     0.00      2nd Mtg   Santa Clara
Comm       14.500%  05/01/04   4,233.05    532,392   310,000.00   209,695.23     0.00      2nd Mtg   San Mateo
Comm       11.500%  05/01/99   3,113.39       0.00   314,000.00   310,254.30  310,254.30   1st Mtg   Alameda
Comm       17.250%  11/20/95   2,533.19    185,351   200,000.00   193,387.36  193,387.36   3rd Mtg   San Mateo
Apts       14.000%  06/01/92     473.95  1,060,000    40,000.00    38,586.36     0.00      3rd Mtg   Santa Clara
Res.       14.250%  07/01/04     984.46     78,672    73,000.00    50,990.79     0.00      2nd Mtg   San Francisco
Comm       14.750%  09/01/95   2,241.96    250,000   185,000.00   181,634.83     0.00      2nd Mtg   San Mateo
Res.       14.500%  04/01/05     546.20    150,804    40,000.00    30,049.49     0.00      3rd Mtg   San Francisco
Res.       14.500%  07/01/92   2,416.67    340,827   200,000.00   179,758.33     0.00      2nd Mtg   San Francisco
Apts       11.000%  06/29/98   2,004.26       0.00   210,459.34   195,423.81     0.00      1st Mtg   Sacramento
Comm.      10.000%  08/01/00   1,428.14     59,402   160,000.00   158,458.34     0.00      2nd Mtg   San Mateo
Res.       13.750%  10/01/96     275.00     55,374    24,000.00    24,000.00     0.00      2nd Mtg   San Mateo
Comm.      13.750%  10/01/96     644.53       0.00    56,250.00    56,250.00     0.00      1st Mtg   San Mateo
Res.       12.500%  02/01/07     554.63       0.00    45,000.00    36,159.93     0.00      1st Mtg   Santa Cruz
Res.        6.000%  04/01/96     106.81     10,470    20,000.00    21,361.99     0.00      2nd Mtg   Sacramento
Res.        4.000%  04/01/97     113.30       0.00    22,500.00    23,130.86     0.00      1st Mtg   Sacramento
Res.        4.000%  04/01/97     120.00       0.00    24,000.00    23,302.58     0.00      1st Mtg   Sacramento
Comm.      12.500%  01/01/08   1,343.45     64,620   109,000.00    92,163.74   92,163.74   2nd Mtg   Santa Clara
Comm       12.250%  01/01/98   5,104.16    442,592   170,874.59   499,998.81     0.00      2nd Mtg   Contra Costa
Comm       12.000%  06/01/98     497.08       0.00    58,500.00    47,509.78     0.00      1st Mtg   Sonoma
Apts        6.500%  05/01/06     540.83     89,904    75,000.00    96,716.11     0.00      2nd Mtg   Sacramento
Res        12.000%  07/01/98   2,417.24     67,312   235,000.00   214,773.21  214,773.21   2nd Mtg   El Dorado
Res.       13.500%  09/01/08     280.90     18,085    21,635.32    19,134.95     0.00      2nd Mtg   Contra Costa
Comm       12.000%  11/01/98   2,057.23     11,864   200,000.00    53,288.35     0.00      2nd Mtg   San Francisco
Comm       10.000%  12,01/98   1,755.14       0.00   200,000.00   197,552.12     0.00      1st Mtg   Stanislaus
Comm       12.250%  01/01/98   2,601.02  1,126,508   142,856.80   249,999.40     0.00      4th Mtg   Contra Costa
Comm       10.000%  12/01/98   5,046.04       0.00   575,000.00   566,694.43     0.00      1st Mtg   Alameda
Comm.       7.000%  12/01/03   1,151.48    562,500    99,172.75    81,121.58     0.00      2nd Mtg   Alameda
Comm.      12.000%  02/01/99  14,025.08       0.00  1,376,117.03 1,376,117.03    0.00      1st Mtg   Santa Clara
Land       12.000%  07/01/96   1,352.50    494,979   135,250.00   135,250.00  135,250.00   3rd Mtg   Sonoma
Comm.       8.500%  11/07/99     515.73       0.00    72,809.59    72,809.59     0.00      1st Mtg   Sonoma
Land       13.750%  12/20/96   5,524.55     54,724   567,856.74   179,999.88     0.00      2nd Mtg   Stanislaus
Res         8.000%  12/01/00     500.00    148,004    52,500.00    46,272.91     0.00      2nd Mtg   Santa Clara
Apts.       7.000%  02/10/05     234.06     80,250    40,125.00    40,125.00     0.00      2nd Mtg   San Francisco
Res.       12.000%  06/25/94     100.00       0.00    10,000.00    10,000.00     0.00      1st Mtg   Sacramento
Res        12.000%  03/01/98   1,562.62       0.00   280,000.00   153,320.98     0.00      1st Mtg   Alameda
Apts       11.500%  04/01/05     123.79       0.00   150,000.00    12,499.99     0.00      1st Mtg   San Francisco
Comm       12.000%  02/01/11     756.11       0.00    63,000.00    60,526.43   60,526.43   1st Mtg   Alameda
Comm       11.875%  02/01/06   1,566.00       0.00   150,000.00   148,105.17     0.00      1st Mtg   San Mateo

</TABLE>
<PAGE>
<TABLE>

Col. A    Col. B    Col. C    Col. D     Col. E      Col. F       Col. G        Col. H     Col. I    Col. J
Descp.    Interest  Final     Periodic   Prior       Face Amt.    Carrying    Principal    Type of   Geographic
          Rate      Maturity  Payment    Liens       of           amount of   amount of    Lien      County
                    Date      Terms                  Mortgage     Mortgage    Mortgage               Location
                                                     Investment   Investment  Investments
                                                     (original                subject to
                                                     amount)                  Delinq.
                                                                              Principal
                                                                              or Interest
--------- --------- --------- ---------- ----------- ------------ ----------- ------------ --------- --------------
<CAPTION>

<S>        <C>      <C>        <C>        <C>         <C>         <C>            <C>       <C>       <C>           
Comm       12.000%  12/31/01   3,486.42   1,955,550   348,641.64  348,641.64     0.00      2nd Mtg   Santa Clara
Land       12.000%  02/01/97   3,822.50        0.00   382,250.00  382,250.00     0.00      1st Mtg   Santa Clara
Comm       12.000%  02/01/99     508.40   1,279,200    49,200.00   49,200.00     0.00      2nd Mtg   Santa Clara
Res.       13.000%  12/01/99     704.17        0.00    65,000.00   65,000.00     0.00      1st Mtg   Ventura
Res.       13.000%  12/01/99     140.83         0.0    65,000.00   13,000.00     0.00      1st Mtg   Ventura
Res.       13.000%  12/01/99     140.83        0.00    65,000.00   13,000.00     0.00      1st Mtg   Ventura
Apts.       7.000%  02/01/98      58.33     265,000    10,000.00   10,000.00     0.00      2nd Mtg   Sacramento
Comm.       9.000%  08/06/02     657.42      30,802    82,873.25   77,869.01     0.00      2nd Mtg   Alameda
Res         7.000%  12/01/99     926.44        0.00   115,140.00  105,097.62     0.00      1st Mtg   San Mateo
Comm        9.000%  05/10/02     670.52        0.00    83,333.33   81,751.22     0.00      1st Mtg   Shasta
Res         8.000%  09/27/00     482.54      96,429    72,380.95   71,428.57     0.00      2nd Mtg   Monterey
Res.        7.000%  05/15/01     850.00        0.00   145,000.00  144,916.53     0.00      1st Mtg   San Mateo
Res         8.000%  09/18/03     166.58        0.00    22,701.51   22,460.90     0.00      1st Mtg   Sonoma
Res         8.000%  09/30/03     170.67        0.00    23,259.09   23,013.72     0.00      1st Mtg   Sonoma
Apts        7.000%  08/01/02   1,545.83        0.00   265,000.00  265,000.00     0.00      1st Mtg   Sacramento

Total                       $91,174.54  $11,075,429  $8,989,186.94 $8,104,984.41  $106,355.04
<FN>
     Notes:  Mortgage Investments  calssified as impaired had principal balances
totalling  $523,300.  Impaired  Mortgage  Investments  are  defined as  Mortgage
Investments  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 Mortgage  Investments)
represents both costs and the tax basis of the Mortgage Investments.
</FN>
</TABLE>
<PAGE>
<TABLE>

Schedule XII

     Reconciliation  of carrying amount (cost) of Mortgage  Investments at close
of periods

                                                             Year ended December 31,
                                            ----------------------------------------------------------

                                                 1997                  1996                 1995
                                            ---------------       ---------------      ---------------
<CAPTION>

<S>                                             <C>                  <C>                  <C>        
Balance at beginning of year                    $9,313,924           $10,402,491          $10,993,996
                                            ---------------       ---------------      ---------------
Additions during period:
  New Mortgage Investments                         557,796             2,474,843            2,062,626
  Other                                                  0                     0                    0
                                            ---------------       ---------------      ---------------
                  Total Additions                 $557,796            $2,474,843           $2,062,626
                                            ---------------       ---------------      ---------------


Deductions during period:
  Collections of principal                       1,634,128             3,295,834            2,273,233
  Foreclosures                                           0               267,576              357,461
  Cost of Mortgage Investments sold                      0                     0                    0
  Amortization of Premium                                0                     0                    0
  Other                                            132,608                     0               23,437
                                            ---------------       ---------------      ---------------
                  Total Deductions               1,766,736             3,563,410            2,654,131
                                            ---------------       ---------------      ---------------

Balance at close of year                        $8,104,984            $9,313,924          $10,402,491
                                            ===============       ===============      ===============
</TABLE>
<PAGE>



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

     The  Partnership  has neither  changed its accountants nor does it have any
disagreement  on any matter of accounting  principles or practices and financial
statement 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  this  corporation  on  an  equal  (50-50)  basis.  A
description  of the General  Partners is set forth on page 22 of the  Prospectus
under the section Management.
<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, 1997. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus.

Entity Receiving   Description of Compensation and Services Rendered      Amount
Compensation
--------------------------------------------------------------------- ----------
I.
Redwood Mortgage   Mortgage Servicing Fee for servicing Mortgage
                   Investments                                          $39,918

General Partners
&/or Affiliates    Asset Management Fee for managing assets             $0

General Partners   1% interest in profits                               $5,292


     II. FEES PAID BY  BORROWERS  ON MORTGAGE  INVESTMENTS  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
                   in connection with the review, selection,
                   evaluation, negotiation, and extension of the
                   Mortgage Investments paid by the borrowers
                   and not by the Partnership                          $10,000

Redwood Mortgage   Processing and Escrow Fees for services in
                   connection with notary, document preparation,
                   credit investigation, and escrow fees payable by
                   the borrowers and not by the Partnership               $273


     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....................................................$27,786

<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 and 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.
<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 Parodi & Cropper (1)
    24.2           Consent of Stephen C. Ryan & Associates (1)


     All of these exhibits were previously filed as the exhibits to Registrants
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.

(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 25th day of March,
1998.

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 25th day of March, 1998.


Signature                      Title                                Date


/S/ D. Russell Burwell
-----------------------
D. Russell Burwell          General Partner                       March 25, 1998


/S/ Michael R. Burwell
-----------------------
Michael R. Burwell          General Partner                       March 25, 1998



/S/ D. Russell Burwell
-----------------------
D. Russell Burwell          President of Gymno Corporation,       March 25, 1998
                            (Principal Executive Officer);
                            Director of Gymno Corporation


/S/ Michael R. Burwell
-----------------------
Michael R. Burwell           Secretary/Treasurer of Gymno         March 25, 1998
                             Corporation (Principal Financial
                             and Accounting Officer);
                             Director of Gymno Corporation