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

                                December 31, 2002

                                     Part I

<TABLE>

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

                                     Part II

     Item 5   - Market for the Registrant's "Limited Partnership Units" and Related Unitholder Matters           7
     Item 6   - Selected Financial Data                                                                          7
     Item 7   - Management's Discussion and Analysis of Financial Condition and Results of Operations            9
     Item 7a  - Quantitative and Qualitative Disclosures About Market Risk                                      16
     Item 8   - Financial Statements and Supplementary Data                                                     17
     Item 9   - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure            38

                                    Part III

     Item 10 - Directors and Executive Officers of the Registrant                                               38
     Item 11 - Executive Compensation                                                                           38
     Item 12 - Security Ownership of Certain Beneficial Owners and Management                                   39
     Item 13 - Certain Relationships and Related Transactions                                                   39
     Item 14 - Controls and Procedures                                                                          39

                                     Part IV


     Item 15 - Exhibits, Financial Statements and Schedules, and Reports of Form 8-K                            40

     Signatures                                                                                                 41

     Certifications                                                                                             42

</TABLE>


                                       1
<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,  2002  Commission  File  number  33-12519
--------------------------------------------------------------------------------

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

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

900 Veterans Blvd., Suite 500, Redwood City, CA            94063
--------------------------------------------------------------------------------
(address of principal executive offices)               (zip code)

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

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

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

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

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

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

     At the close of the sale of Units in 1989,  the limited  partnership  Units
purchased by  non-affiliates  was 97,725.94 Units computed at $100.00 a Unit for
$9,772,594, excluding general partners' contribution of $9,772.

Documents incorporated by reference:

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




                                       2
<PAGE>



                                     Part I

Item 1 - Business

     Redwood  Mortgage  Investors VI is a California  Limited  Partnership  (the
"Partnership").  Michael R. Burwell,  an individual,  and Gymno  Corporation,  a
California  corporation,  are the general  partners.  The address of the general
partners is 900 Veterans Blvd.,  Suite 500, Redwood City,  California 94063. The
Partnership's primary purpose is to invest its capital in first and second deeds
of trust  secured by Northern  California  properties.  Loans are  arranged  and
serviced by Redwood  Mortgage Corp., an affiliate of the general  partners.  The
Partnership's  objectives  are to make  investments  which will: (i) provide the
maximum possible cash returns which limited partners may elect to (a) receive as
monthly, quarterly or annual cash distributions or (b) have earnings credited to
their capital  accounts and used to invest in Partnership  activities;  and (ii)
preserve  and protect  the  Partnership's  capital.  The  Partnership's  general
business  is  more  fully  described  under  the  section  entitled  "Investment
Objectives  and  Criteria",  pages  23-26  of  the  Prospectus,  a  part  of the
above-referenced Registration Statement, which is incorporated by reference.

     The  Partnership  was formed in September  1987,  with an approved  120,000
Units of $100 each  ($12,000,000).  The Units were  offered on a "best  efforts"
basis  through  broker/dealer  member  firms  of  the  National  Association  of
Securities Dealers,  Inc. It immediately began issuing Units and began investing
in loans in October 1987. The offering  terminated in September  1989, and as of
that date  97,725.94  Units  were sold  realizing  proceeds  of  $9,772,594.  At
December 31, 2002, the  Partnership  had a balance of loans totaling  $5,183,100
with interest rates thereon ranging from 6.50% to 14.75%.

     Currently  First Trust Deeds comprise 84.74% of the total amount of secured
loan portfolio.  Second Mortgage Trust Deeds comprise 15.26% of the secured loan
portfolio.  Owner-occupied  homes, combined with non-owner occupied homes, total
15.91% of the secured loans.  Secured loans to apartments  make up 10.93% of the
total secured loans portfolio.  Commercial  secured loan  origination  increased
from last year,  now comprising  73.16% of the  portfolio,  an increase of 3.04%
from 2001. The major  concentration of secured loans,  comprising  88.52% of the
total loans, are in five counties of the San Francisco Bay Area. The balance, as
stated on page 5 of this report, are primarily in Northern California. Currently
secured loan size is averaging  $235,595 per loan. Some of the secured loans are
fractionalized between affiliated  partnerships with objectives similar to those
of the Partnership to further reduce risk.  Average equity per loan transaction,
which is our loan plus any senior  loans,  divided by the  property's  appraised
value,  subtracted from 100%, stood at 20.32%.  Generally,  the more equity, the
more  protection  for  the  lender.  The  Partnership's  loan  portfolio  had no
properties in foreclosure as of the end of December 2002.

     Delinquencies  are discussed  under Item 7 -  Management's  Discussion  and
Analysis of Financial Condition and Results of Operations.

     The Partnership's  revenues  decreased from $477,929 in 2000 to $426,651 in
2001  and to  $369,983  in 2002.  This was due  largely  to the  decline  in the
Partnership's secured loan portfolio from $5,570,576 to $4,970,433 to $5,183,100
for the years  2000,  2001 and 2002,  respectively,  and an overall  lowering of
interest  rates on  loans.  Cash flow the  Partnership  generated  from  income,
mortgage  interest and loan pay-offs was used primarily to meet limited  partner
capital and earnings  liquidations.  For the three years ended December 31, 2002
withdrawals by limited  partners were  $1,079,696 in 2000,  $836,749 in 2001 and
$602,753 in 2002.

     During the year 2002,  the  Partnership's  annualized  yield on compounding
accounts was 5.40% and on monthly distributing accounts it was 5.30%.

Competition and General Economic Conditions.

     The Partnership's  major competitors in providing mortgage loans are banks,
savings and loan associates,  thrifts,  conduit lenders,  mortgage brokers,  and
other entities both larger and smaller than the Partnership.  The Partnership is
competitive  in large part  because the general  partners  generate all of their
loans.  The general partners have been in the business of making or investing in
mortgage  loans in Northern  California  since 1978 and have developed a quality
reputation and recognition within the field.



                                       3
<PAGE>




     Mortgage  interest rates have fallen during the last 18 to 24 months.  This
has been  partially  due to actions by the  Federal  Reserve  Bank to reduce the
discount rate on borrowings  charged to member banks, a slowing  economy and low
inflation  rates.  Although the general trend for interest  rates has been down,
many lenders have tightened  their credit and reduced their lending  exposure in
various  markets and  property  types.  This credit  tightening  from  competing
lenders  would  generally  provide  the  Partnership  with  additional   lending
opportunities at attractive rates.  However, as a result of the slowing economy,
there are now fewer  transactions in the  marketplace,  which could  potentially
reduce the number of lending  opportunities to the  Partnership.  Continued rate
reductions  by the Federal  Reserve  Bank,  a  continued  slowing  economy,  and
continued low inflation rates could have the effect of reducing mortgage yields.
In the future, when cash flow permits,  currently existing loans with relatively
high yields  could be  replaced  with loans with lower  yields as they  pay-off,
which in turn  could  reduce  the net yield  paid to the  limited  partners.  In
addition,  if there is less demand by borrowers for loans and, thus, fewer loans
for the Partnership to invest in, it will invest its excess cash in shorter-term
alternative  investments yielding  considerably less than the current investment
portfolio.

Loan Portfolio

     As of  December  31,  2002,  a summary of the  Partnership's  secured  loan
portfolio is set forth below.

   Loans as a Percentage of Appraised Value

   First Trust Deeds                                   $4,392,120
   Second Trust Deed Loans                                790,980
                                                  ----------------
        Total loans                                    $5,183,100

   Priority Positions due other Lenders                 2,779,170

        Total Debt                                     $7,962,270
                                                  ================

   Appraised Property Value at time of loan            $9,992,743

        Total Investments as a % of Appraisal              79.68%

   Number of Secured Loans Outstanding                         22

   Average Investment                                     235,595
   Average Investment as a % of Net Assets                  3.48%
   Largest Investment Outstanding                       2,103,300
   Largest Investment as a % of Net Assets                 31.05%

   Secured Loans as a Percentage of Total Loans                     Percent
   -----------------------------------------------------          -------------
   First Trust Deeds                                                    84.74%
   Second Trust Deeds                                                   15.26%
                                                                  -------------
   Total                                                               100.00%

   Secured Loans by Type of Property                Amount          Percent
   -----------------------------------------     -------------    -------------

   Owner Occupied Homes                              $ 49,707           14.47%
   Non-Owner Occupied Homes                            74,674            1.44%
   Apartments                                         566,600           10.93%
   Commercial                                       3,792,119           73.16%
                                                 -------------    -------------
   Total                                           $5,183,100          100.00%
                                                 =============    =============




                                       4
<PAGE>



     The following is a distribution of secured loans outstanding as of December
31, 2002 by Counties.

                                    Total Mortgage
           County                    Investments             Percent
  --------------------------       -----------------     -----------------

  Santa Clara                            $2,211,565                42.67%
  Alameda                                 1,203,972                23.23%
  San Francisco                             660,937                12.75%
  San Mateo                                 406,549                 7.84%
  Sacramento                                243,067                 4.69%
  Stanislaus                                176,558                 3.41%
  Marin                                     105,000                 2.03%
  Shasta                                     77,485                 1.49%
  San Joaquin                                76,250                 1.47%
  Sonoma                                     21,717                 0.42%
                                   -----------------     -----------------

  Total                                  $5,183,100               100.00%
                                   =================     =================


Statement of Condition of loans:
  Number of Loans in Foreclosure                                0


     Scheduled  maturity  dates of secured  loans as of December 31, 2002 are as
follows:

                         Year Ending
                         December 31,
                      -------------------
                             2003                  $  681,176
                             2004                     844,706
                             2005                     145,125
                             2006                      96,716
                             2007                   3,259,940
                          Thereafter                  155,437
                                               ---------------
                                                   $5,183,100
                                               ===============

     The  scheduled   maturities   for  2003  include  one  loan  for  $175,656,
representing 3.39% of the portfolio, was past maturity at December 31, 2002. Two
loans totaling  $207,648 (4.01% of the secured loan portfolio) were  categorized
as delinquent  over 90 days.  Several of these  borrowers were in the process of
selling their property or refinancing the loans through other  institutions,  as
this  was an  opportune  time  for  them to do so and  take  advantage  of lower
interest rates.  The Partnership  allows  borrowers to occasionally  continue to
make the regular  interest  payments on debt past  maturity for periods of time.
Interest payments on one of these loans were delinquent.




                                       5
<PAGE>




Item 2 - Properties

     During 2002,  the  Partnership  acquired  one piece of real estate  through
foreclosure. The Partnership,  together with other partnerships,  all affiliates
of the general partners,  own the property.  It is a 4 unit condominium complex.
Currently,  renovation work is being carried out and the property is expected to
be put on the market by June 2003. As of December 31, 2002, balance  outstanding
was $377,000.  The general  partners have examined the property with real estate
professionals,  reviewed the  appraisal and  concluded  the  collateral  appears
adequate to collect the amounts due.

     The Partnership also owns two other properties;  a commercial  property and
the other  land.  The land is located in East Palo Alto.  The land is owned with
two other affiliated partnerships.  The Partnership's net investment at December
31, 2002 is $130,215. Currently there is not an active market for land sale. The
general  partners  are  offering the property for sale but there has been little
activity,  although some negotiations have ensued.  The general partners believe
that the property is worth considerably more than its net investment.

     Our final  property  is a  commercial  property  located  in Walnut  Creek,
California.  The  property is currently  for sale,  but the market is soft and a
sale is not anticipated soon. Management has set aside loss reserves, which they
believe are adequate in amount to cover anticipated losses.


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 of trust, collect the
debt owed under  promissory notes or to  protect/recoup  its investment from the
real property  secured by the deeds.  The  Partnership is a defendant along with
numerous defendants,  including a developer, contractor, and other lenders, in a
lawsuit  involving the  Partnership's  attempt to recover its investment in real
estate acquired through foreclosure.  The plaintiff has not actively pursued the
case for some time and the statute of  limitations  will  expire next year.  The
general partners believe that the outcome of this litigation will have no effect
on the earnings of the Partnership.


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

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



                                       6
<PAGE>





                                     Part II


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

     120,000  Units  at $100  each  (minimum  20  Units)  were  offered  through
broker-dealer  member firms of the National Association of Securities Dealers on
a "best  efforts"  basis (as indicated in Part I item 1). All Units were sold to
California  residents.  Investors have the option of  withdrawing  earnings on a
monthly,  quarterly  or annual basis or having  their  earnings  retained in the
Partnership.  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
38042 of the Prospectus, a part of the above-referenced  Registration Statement,
which is incorporated by reference.


Item 6 - Selected Financial Data

     Redwood  Mortgage  Investors  VI began  operations  in October,  1987.  Its
financial  condition and results of operation for the five years ended  December
31, 2002 were:

                                 Balance Sheets

<TABLE>
                                                                                  December 31,
                                               -----------------------------------------------------------------------------------
                                                    2002              2001             2000             1999             1998
<S>                                                 <C>              <C>              <C>            <C>                 <C>
                                               --------------    -------------    -------------     ------------    --------------
Cash                                                $341,127         $190,414         $354,860       $1,120,295          $299,775

Loans
    Loans, secured by deeds of trust               5,183,100        4,970,433        5,570,576        5,282,773         7,969,735

    Loans, unsecured                                 223,697           82,362           82,362                -            23,775

Interest and other receivables
    Accrued interest on loans                         61,384          797,105          664,292          706,841           717,719

    Advances on loans                                 31,007          197,946          133,647          137,930           162,083

Less allowances for loan losses                    (275,294)        (370,612)        (261,452)        (303,249)         (202,344)
Note receivable - Redwood Mortgage Corp                    -          178,200          125,000          300,000                 -
Real estate owned (REO), net                       1,234,541        1,093,503          767,583          133,300           169,922

Real estate owned in process                               -                -                -          668,132                 -
                                               --------------    -------------    -------------     ------------    --------------

       Total assets                                 $6,799,562     $7,139,351       $7,436,868       $8,046,022        $9,140,665
       ------------
                                               ==============    =============    =============     ============    ==============

</TABLE>



                                       7
<PAGE>




                        Liabilities and Partners' Capital
<TABLE>

                                                                                December 31,
                                              -----------------------------------------------------------------------------------
                                                  2002             2001              2000             1999              1998
                                              -------------    -------------     -------------    -------------     -------------
<S>                                                <C>              <C>               <C>               <C>            <C>
Liabilities
   Notes payable - bank line of credit             $     -          $     -           $     -           $    -         $ 390,000
   Accounts payable                                 11,953           20,261            13,068                -            22,668
   Deferred interest on loans                            -           74,022                 -           15,676            20,463
   Payable to affiliates                            14,643           35,632                 -                -                 -
                                              -------------    -------------     -------------    -------------     -------------
     Total liabilities                              26,596          129,915            13,068           15,676           433,131
                                              -------------    -------------     -------------    -------------     -------------

Partners' capital
  Limited partners' capital, subject to
    redemption                                   6,763,200        6,999,670         7,414,034        8,020,580         8,697,768
     General partners' capital                       9,766            9,766             9,766            9,766             9,766
                                              -------------    -------------     -------------    -------------     -------------

     Total partners' capital                     6,772,966        7,009,436         7,423,800        8,030,346         8,707,534
                                              -------------    -------------     -------------    -------------     -------------

     Total liabilities and partners' capital    $6,799,562       $7,139,351        $7,436,868       $8,046,022        $9,140,665
                                              =============    =============     =============    =============     =============


                              Statements of Income



Gross revenue                                    $ 574,171        $ 735,900         $ 785,209       $1,086,317         $ 871,861
Expenses                                           204,188          309,249           307,280          565,408           359,356
                                              -------------    -------------     -------------    -------------     -------------
Net income                                       $ 369,983        $ 426,651         $ 477,929        $ 520,909         $ 512,505
                                              =============    =============     =============    =============     =============

Net income:   to general partners (1%)             $ 3,700          $ 4,266           $ 4,779         $  5,209           $ 5,125
              to limited partners (99%)            366,283          422,385           473,150          515,700           507,380
                                              -------------    -------------     -------------    -------------     -------------

                                                 $ 369,983        $ 426,651         $ 477,929        $ 520,909         $ 512,505
                                              =============    =============     =============    =============     =============
Net income per $1,000 invested by limited partners for entire period:
    - where income is reinvested and
        compounded                                     $54              $59               $62              $62               $56
                                              =============    =============     =============    =============     =============

     - where partner receives income in
        monthly distributions                          $53              $58               $61              $61               $55
                                              =============    =============     =============    =============     =============
</TABLE>


     The annualized  yield for 1999 was 6.24%, for 2000 the annualized yield was
6.22%,  for 2001 the  annualized  yield was 5.95%,  and for 2002 the  annualized
yield was 5.40%. The average  annualized  yield from inception  through December
31, 2002 was 7.04%.



                                       8
<PAGE>



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


 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE PARTNERSHIP

Critical Accounting Policies.

     In  preparing  the  financial  statements,  management  is required to make
estimates based on the information available that affect the reported amounts of
assets and  liabilities  as of the balance  sheet date.  Such  estimates  relate
principally to the  determination of (1) the allowance for loan losses (i.e. the
amount of  allowance  established  against  loans  receivable  as an estimate of
potential  loan losses)  including  the accrued  interest and advances  that are
estimated to be unrecoverable based on estimates of amounts to be collected plus
estimates of the value of the property as  collateral  and (2) the  valuation of
real estate acquired through foreclosure. At December 31, 2002, there were three
Real Estate Owned properties all acquired through  foreclosure,  one in 2002 and
the other two in prior years.

     Loans and the related accrued interest, late fees and advances are analyzed
on a continuous  basis for  recoverability.  Delinquencies  are  identified  and
followed as part of the loan system.  Delinquencies  are  determined  based upon
contractual  terms.  A provision is made for loan losses to adjust the allowance
for loan losses to an amount  considered by management to be adequate,  with due
consideration  to  collateral  values,  to provide for  unrecoverable  loans and
receivables,  including impaired loans, other loans, accrued interest, late fees
and advances on loans and other accounts receivable (unsecured). The Partnership
charges  off  uncollectible  loans  and  related  receivables  directly  to  the
allowance account once it is determined that the full amount is not collectible.

     Statement of Financial  Accounting  Standards Nos. 114 and 118 provide that
if the probable  ultimate  recovery of the carrying  amount of a loan,  with due
consideration  for the fair  value  of  collateral,  is less  than  amounts  due
according to the  contractual  terms of the loan  agreement and the shortfall in
the amounts due are not  insignificant,  the carrying  amount of the  investment
shall be reduced to the  present  value of future cash flows  discounted  at the
loan's effective interest rate. If a loan is collateral dependent,  it is valued
at the estimated fair value of the related collateral.

     If events and or changes in circumstances  cause management to have serious
doubts  about the  collectibility  of the  contractual  payments,  a loan may be
categorized  as impaired  and  interest  is no longer  accrued.  Any  subsequent
payments on impaired loans are applied to reduce the outstanding  loan balances,
including accrued interest and advances.

     Recent  trends in the  economy  have been taken into  consideration  in the
aforementioned  process of arriving at the  allowance  for loan  losses.  Actual
results could vary from the aforementioned provisions for losses.

Forward Looking Statements.

     Some of the  information  in the Form  10-K  may  contain  forward  looking
statements.  Uses of words  such as  "will",  "may",  "anticipate",  "estimate",
"continue"  or other forward  looking  words,  discuss  future  expectations  or
predictions.  The foregoing analysis of 2002 includes forward looking statements
and predictions  about the  possibility of future events,  results of operations
and  financial  condition.  As such,  this  analysis may prove to be  inaccurate
because of assumptions made by the general partners or the actual development of
the future  events.  No assurance  can be given that any of these  statements or
predictions will ultimately prove to be correct or substantially correct.

Related Parties.

     The general  partners of the Partnership are Gymno  Corporation and Michael
R. Burwell.  Most  Partnership  business is conducted  through Redwood  Mortgage
Corp.,  an  affiliate  of the general  partner,  which  arranges,  services  and
maintains  the loan  portfolio  for the  benefit  of the  Partnership.  The fees
received by the affiliate are paid pursuant to the partnership agreement and are
determined at the sole  discretion of the  affiliate.  In the past the affiliate
has elected not to take the maximum  compensation.  The  following  is a list of
various Partnership activities for which related parties are compensated.


                                       9
<PAGE>


     o Mortgage  Brokerage  Commissions  For fees in connection with the review,
selection,  evaluation,  negotiation and extension of loans, the Partnership may
collect an amount  equivalent  to 12% of the loaned  amount until 6 months after
the termination date of the offering. Thereafter, the loan brokerage commissions
(points) will be limited to an amount not to exceed 4% of the total  Partnership
assets per year. The loan brokerage  commissions are paid by the borrowers,  and
thus,  are not an expense of the  Partnership.  For the years ended December 31,
2000,  2001 and 2002,  loan  brokerage  commissions  paid by the borrowers  were
$45,164, $46,581 and $22,611, respectively.

     o Mortgage  Servicing Fees Monthly mortgage  servicing fees of up to 1/8 of
1% (1.5% on an annual basis) of the unpaid principal of the Partnership's  loans
are paid to Redwood  Mortgage  Corp., or such lesser amount as is reasonable and
customary in the  geographic  area where the  property  securing the mortgage is
located.  Mortgage servicing fees of $48,556, $41,406 and $138,851 were incurred
for the years ended December 31, 2000, 2001 and 2002, respectively.

     o Asset  Management  Fees The general  partners  receive  monthly  fees for
managing the Partnership's portfolio and operations up to 1/32 of 1% of the `net
asset  value'  (3/8 of 1% on an annual  basis).  Management  fees to the general
partners of $9,780,  $9,115 and 8,677 were incurred by the  Partnership  for the
years ended December 31, 2000, 2001 and 2002, respectively.

     o Other Fees The Partnership  agreement  provides that the general partners
may receive other fees such as  reconveyance,  mortgage  assumption and mortgage
extension  fees.  Such fees are  incurred by the  borrowers  and are paid to the
general partners.

     o Income and Losses  All  income  and  losses  are  credited  or charged to
partners in relation to their respective Partnership  interests.  The allocation
to the general partners (combined) shall be a total of 1%.

     o Operating  Expenses An affiliate  of the  Partnership,  Redwood  Mortgage
Corp.,  is reimbursed by the  Partnership  for all operating  expenses  actually
incurred  by it on  behalf of the  Partnership,  including  without  limitation,
out-of-pocket general and administration expenses of the Partnership, accounting
and audit fees,  legal fees and expenses,  postage and preparation of reports to
limited partners.

     o Contributed  Capital The general  partners  jointly and severally were to
contribute 1/10 of 1% in cash  contributions  as proceeds from the offerings are
received from the limited partners.  As of December 31, 2001 and 2002, a general
partner, Gymno Corporation,  had contributed $9,772 and $9,772 respectively,  as
capital in accordance with Section 4.02(a) of the partnership agreement.

Results of Operations - For the years ended December 31, 2000, 2001 and 2002

     The net income  decrease of $42,980  (8%) for the year ended  December  31,
2000 versus December 31, 1999 was due primarily to a decrease in interest earned
on loans of  $145,323,  an increase  in  interest-interest  bearing  accounts of
$2,935,  an increase in interest on  promissory  note of $16,091,  a decrease in
mortgage servicer subsidy of $175,000;  offset by significant  expense increases
or  (decreases)  for the year ended  December  31,  2000  included a decrease in
interest and credit line costs of ($14,714), and a decrease in the provision for
losses on loans and real estate acquired through foreclosure of ($244,131).

     The net income  decrease of $51,278  (11%) for the year ended  December 31,
2001 versus December 31, 2000 was due primarily to a decrease in interest earned
on loans of  $85,613,  a  decrease  in late  charges of  $4,094,  a decrease  in
interest on  promissory  note of $11,179,  and an increase of mortgage  servicer
subsidy of $53,200;  offset by significant  expense increases or (decreases) for
the year ended  December  31, 2001 versus  December  31, 2000 of lower  mortgage
servicing fees of ($7,150), and an increase in the provision for losses on loans
and real estate acquired through foreclosure of $7,609.



                                       10
<PAGE>




     The income  decrease of $56,668 (13%) for the year ended  December 31, 2002
versus  December  2001 was due  primarily  to an increase in interest  earned on
loans of  $40,515,  a decrease  in late  charges of  $18,480,  and a decrease in
mortgage servicer subsidy of $178,200;  offset by significant  expense increases
or (decreases)  for the year ended December 31, 2002 versus December 31, 2001 of
higher  mortgage  servicing  fees of $97,445,  a decrease in the  provision  for
losses on loans and real estate acquired through foreclosure of ($206,900),  and
an increase in professional fees of $11,594.

     The  decrease in  interest  on loans of $145,323  and $85,613 for the years
ended December 31, 2000 and 2001 was due to less loans outstanding. The increase
in interest on loans of $40,515 for the year ended  December 31, 2002 was due to
a  higher  average  loan  portfolio  balance;  offset  by a lower  average  loan
portfolio interest rate.

     The increase in  interest-interest  bearing accounts of $2,936 for the year
ended December 31, 2000 versus December 31, 1999 is due to increased cash during
2000 held in  interest  bearing  accounts.  The  decrease  in  interest-interest
bearing  accounts of $4,094 and $7,780 for the years ended December 31, 2001 and
2002 is due to lower interest rates being earned on interest bearing accounts.

     The increase of $16,091 in interest on promissory note for 2000 versus 1999
is due to no  promissory  note being held in 1999.  The  decrease in interest on
promissory  note of $11,179 for 2001  versus 2000 is due to a lower  outstanding
balance in 2001 versus  2000.  The increase in interest on  promissory  note for
2002 versus 2001 is due to a higher average  balance  outstanding in 2002 versus
2001.

     The decrease in mortgage  servicer subsidy of $175,000 for 2000 versus 1999
was due to lower  subsidies by the mortgage  servicer.  The increase in mortgage
servicer  subsidy of $53,200 in 2001 versus 2000 is due to an increased  subsidy
by the mortgage  servicer in 2001. The decrease in mortgage  servicer subsidy of
$178,200  in 2002 versus  2001 is due to no subsidy  being  provided by mortgage
servicer in 2002.

     The increase in late charge revenue of $189 for the year ended December 31,
2000 versus 1999 is  reflective of more loans  delinquent.  The decrease in late
charge  revenue of $1,623 and $18,480 for the year ended  December  31, 2001 and
2002  reflects  greater  collection  of past  due  borrower  payments  and  less
delinquency.

     Professional  fees paid were  $25,462,  $19,866  and  $31,460 for the years
2000,  2001 and  2002,  respectively.  The  fluctuations  relate  mainly  to the
increased costs and timing of services for audits,  financial report writing and
tax filing.

     The decrease in mortgage  servicing fees of $1,594 and $7,150 for the years
ended December 31, 2000 and December 31, 2001 is primarily  attributable  to the
lower  average loan  portfolio  balances  during 2000 and 2001.  The increase in
mortgage  servicing  fees  of  $97,445  in  2002  is due to  the  collection  of
previously  past due payments on impaired  loans,  which were collected in 2002.
The  Partnership  does not accrue  servicing  fees to Redwood  Mortgage Corp. on
impaired  loans.  Rather,  servicing fees are incurred as borrower  payments are
received.

     The decrease of $244,131 in  provision  for losses on loans and real estate
acquired  through  foreclosure  for the year  ended  December  31,  2000  versus
December 31, 1999  reflects  the general  partners'  estimate of an  appropriate
allowance for anticipated losses. The increase of $7,609 in provision for losses
on  loans  and real  estate  acquired  through  foreclosure  for the year  ended
December  31, 2001 versus 2000  reflect  the  general  partners'  estimate  that
reserves  needed to be  slightly  increased  to cover  anticipated  losses.  The
decrease of $206,900 in provision  for losses on loans and real estate  acquired
through  foreclosure  for the year ended  December 31, 2002 versus 2001 reflects
the general  partners'  estimate  that the  existing  reserves  are  adequate as
complemented by a guarantee received from Redwood Mortgage Corp. relating to the
collectibility of certain Partnership loans.

     As of September 2, 1989, the  Partnership  had sold 97,725.94 Units and its
contributed  capital totaled  $9,772,594 of the approved  $12,000,000  issue, in
Units of $100  each.  As of that  date the  offering  was  formally  closed.  On
December 31, 2002, the Partnership's net capital totaled $6,772,966.


                                       11
<PAGE>



     The  Partnership  began funding loans in October  1987.  The  Partnership's
secured loans  outstanding for the years ended December 31, 2000, 2001, and 2002
were $5,570,576, $4,970,433, and $5,183,100,  respectively. The overall decrease
in loans  outstanding  from  December  31, 2000 to December  31,  2002,  was due
primarily to the  Partnership  utilizing  loan  payoffs to meet limited  partner
capital liquidations, and an increase in Real Estate Owned or in process. During
the years 2000,  2001, and 2002,  loan principal  collections  exceeded  limited
partner liquidations.

     Since January 2001, the Federal Reserve has been  dramatically  cutting its
core interest rates with eleven successive cuts,  ranging from .25% to .50%. The
latest cut of .50% was made on November 7, 2002, which reduced the Federal Funds
Rate to 1.25% and the prime rate to 4.25%.  The  effect of the cuts has  greatly
reduced  short-term  interest  rates and to a lesser  extent  reduced  long-term
interest rates. New loans will be originated at then existing interest rates. In
the future,  the general  partners  anticipate  that 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.  The  general
partners  anticipate  that new loans  will be placed at rates  approximately  1%
lower than  similar  loans  during  2002.  The  lowering of  interest  rates has
encouraged  those  borrowers  that hold  higher  interest  rate loans than those
currently  available to seek  refinancing of their existing  obligations to take
advantage of these lower rates.  The  Partnership  may face  prepayments  in the
existing  portfolio  from  borrowers  taking  advantage  of these  lower  rates.
However, demand for loans from qualified borrowers continues to be strong and as
prepayments occur, we expect to replace these loans with loans at somewhat lower
interest rates. At this time, the general partners believe that the average loan
portfolio  interest rate will decline  approximately  .25% to .50% over the year
2003.  Nevertheless,  based  upon the  rates  expected  in  connection  with the
existing loans, and anticipated  interest rates to be charged by the Partnership
and the general partners'  experience,  the general partners anticipate that the
annualized  yield for compounding  limited partners will range between 4.75% and
5.00% for the year 2003.

     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-four 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, 2002,
there were no properties in foreclosure. As of December 31, 2000, 2001 and 2002,
the Partnership's real estate owned account balance was $767,583, $1,093,503 and
$1,234,541, respectively. The increase was due to the acquisition of security on
delinquent loans. The Partnership intends to sell these properties.

     Cash is continually being generated from interest  earnings,  late charges,
prepayment   penalties,   and  amortization  of  principal  and  loan  pay-offs.
Currently,  this amount  exceeds  Partnership  expenses and earnings and partner
liquidation  requirements.  As loan opportunities become available,  excess cash
and available funds are invested in new loans.

Allowance for Losses.

     The general  partners  regularly  review the loan portfolio,  examining the
status of  delinquencies,  the underlying  collateral  securing these loans, REO
expenses,  sales  activities,  and  borrower's  payment  records  and other data
relating to the loan portfolio. Data on the local real estate market, and on the
national and local economy are studied.  Based upon this  information  and more,
loan loss  reserves are  increased or  decreased.  Borrower  foreclosures  are a
normal aspect of Partnership  operations.  The Partnership is not a credit based
lender and hence  while it reviews the credit  history and income of  borrowers,
and if  applicable,  the income from income  producing  properties,  the general
partners expect that we will on occasion take back real estate security.  During
2001, and continuing in 2002, the Northern  California real estate market slowed
and the national and local economies have slipped into recession. As of December
31, 2002, no notices of default were filed.  The  Partnership  also entered into
workout  agreements  with borrowers who are past maturity or delinquent in their
regular  payments.  The  Partnership had workout  agreements on  approximately 2
loans totaling  $176,560  (3.41% of the loan portfolio) as of December 31, 2002.
Typically,  a workout  agreement allows the borrower to extend the maturity date
of the balloon payment and allows the borrower to make current monthly  payments
while  deferring for periods of time,  past due payments,  or allows time to pay
the loan in full.  These workout  agreements and  foreclosures  generally  exist
within our loan portfolio to greater or lesser degrees,  depending  primarily on
the health of the economy.  The number of  foreclosures  and workout  agreements
will rise during difficult times and conversely fall during good economic times.
The number  and  amount of  foreclosures  existing  at  December  31,  2002,  in
management's  opinion,  does  not  have a  material  effect  on our  results  of
operations or liquidity.  These workouts have been  considered  when  management
arrived at  appropriate  loan loss  reserves  and based on our  experience,  are
reflective of our loan marketplace  segment.  Because of the number of variables
involved, the magnitude of possible swings and the general partners inability to


                                       12
<PAGE>


     control many of these factors,  actual results may and do sometimes  differ
significantly from estimates made by the general partners.  Management  provided
$193,427,  $201,036,  and  ($5,864) as  provision  for loan losses for the years
ended December 31, 2000, 2001, and 2002, respectively. The increase in allowance
for 2000 and 2001 was to build up reserve for any potential  loss in the future.
During 2002, the Partnership  restructured  four previously  impaired loans into
two  new  loans  with  a  lower  interest  rate.  The  amount  restructured  was
$3,060,100.  Had the loans been current in accordance  with their original terms
and had they been outstanding  throughout the entire year, the Partnership would
have  recognized  gross interest  income of $267,946 for 2002.  The  Partnership
recognized $172,131 of interest income on the restructured loans for 2002. As of
December 31, 2002,  there is a collateral  shortfall on the  restructured  loans
ranging from approximately  $194,000 to $337,000 that has not been reserved for.
Redwood  Mortgage  Corp.  has  guaranteed  to cover any losses  sustained by the
Partnership  related  to these  restructured  loans.  Management  believes  that
reserves previously set aside are adequate.

     As  of  December  31,  2002,  there  is  a  collateral   shortfall  on  the
certain loans ranging from approximately  $194,000 to $337,000 that has not
been reserved for.  Redwood  Mortgage  Corp.  has guaranteed to cover any losses
sustained  by the  Partnership  related to these  loans.

Borrower Liquidity and Capital Resources.

     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, 2000, 2001, and 2002, the Partnership  made  distributions of
earnings to limited partners after allocation of syndication  costs of $192,356,
$164,787,  and  $130,296,  respectively.  Distribution  of  earnings  to limited
partners  for the years ended  December  31, 2000,  2001,  and 2002,  to limited
partners'  capital  accounts and not  withdrawn,  was  $280,794,  $257,598,  and
$235,987,  respectively.  As of  December  31,  2000,  2001,  and 2002,  limited
partners  electing  to  withdraw   earnings   represented  37%,  37%,  and  35%,
respectively, of the limited partners outstanding capital accounts.

     The Partnership  also allows the limited partners to withdraw their capital
account  subject  to  certain   limitations  (see   liquidation   provisions  of
Partnership  Agreement).  For the years ended December 31, 2000, 2001, and 2002,
$200,417,  $187,804, and $78,674,  respectively,  were liquidated subject to the
10% and/or 8% penalty for early  withdrawal.  These  withdrawals  are within the
normally  anticipated  range that the  general  partners  would  expect in their
experience in this and other  partnerships.  The general  partners expect that a
small  percentage  of limited  partners  will elect to liquidate  their  capital
accounts  over one  year  with a 10%  and/or  8% early  withdrawal  penalty.  In
originally  conceiving the  Partnership,  the general partners wanted to provide
limited   partners  needing  their  capital  returned  a  degree  of  liquidity.
Generally, limited partners electing to withdraw over one year need to liquidate
investments  to raise  cash.  The  demand 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,
2000, 2001, and 2002,  respectively,  and is expected by the general partners to
commonly occur at these levels.

     Additionally,  for the years  ended  December  31,  2000,  2001,  and 2002,
$686,923,  $484,158,  and  $393,784,  respectively,  were  liquidated by limited
partners who have elected a  liquidation  program over a period of five years or
longer.  Once the initial five-year hold period has passed, the general partners
expect to see an increase in liquidations due to the ability of limited partners
to  withdraw  without  penalty.  This  ability to  withdraw  after five years by
limited  partners has the effect of providing  limited  partner  liquidity.  The
general  partners expect a portion of the limited  partners to take advantage of
this  provision.  This has the anticipated  effect of the  Partnership  growing,
primarily  through  reinvestment  of  earnings in years one  through  five.  The
general partners expect to see increasing numbers of limited partner withdrawals
in years five through eleven,  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.



                                       13
<PAGE>




Actual liquidation of both capital and earnings from year five (1992) through
year fourteen (2002), is shown hereunder:

                            Years ended December 31,
<TABLE>
<S>               <C>               <C>              <C>                <C>                 <C>               <C>

                  1992              1993             1994               1995                1996              1997
               --------------    --------------    -------------    ---------------    ----------------    --------------
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
               ==============    ==============    =============    ===============    ================    ==============

                   1998              1999              2000              2001               2002
               --------------    -------------     -------------    ---------------    ---------------
Earnings          $  235,837       $  217,526        $  192,356         $  164,787          $ 130,296
Capital           *1,060,109         *975,362          *887,340           *671,962           *472,457
               --------------    -------------     -------------    ---------------    ---------------
Total             $1,295,946       $1,192,888        $1,079,696         $  836,749          $ 602,753
               ==============    =============     =============    ===============    ===============
</TABLE>

*These amounts represent gross of early withdrawal penalties.

     In some  cases in order to  satisfy  Broker  Dealers  and  other  reporting
requirements, the general partners have valued the limited partners' interest in
the  Partnership  on a basis which  utilizes a per Unit  system of  calculation,
rather than based upon the investors' capital account. This information has been
reported  in this manner in order to allow the  Partnership  to  integrate  with
certain  software used by the Broker Dealers and other  reporting  entities.  In
those cases, the Partnership will report to Broker Dealers,  Trust Companies and
others a  "reporting"  number of Units based upon a $1.00 per Unit  calculation.
The number of reporting Units provided will be calculated based upon the limited
partner's  capital  account  value  divided by $1.00.  Each  investor's  capital
account balance is set forth  periodically on the Partnership  account statement
provided  to  investors.  The  reporting  Units are solely  for  Broker  Dealers
requiring such information for their software programs and do not reflect actual
Units owned by a limited  partner or the limited  partners' right or interest in
cash flow or any other  economic  benefit in the  Partnership.  Each  investor's
capital  account balance is set forth  periodically  on the Partnership  account
statement  provided  to  investors.  The  amount of  Partnership  earnings  each
investor is entitled to receive is determined by the ratio that each  investor's
capital account bears to the total amount of all investor  capital accounts then
outstanding.  The capital account balance of each investor should be included on
any NASD member client account statement in providing a per Unit estimated value
of the client's investment in the Partnership in accordance with NASD Rule 2340.

     While the general  partners have set an estimated value for the Partnership
Units,  such  determination  may not be  representative  of the  ultimate  price
realized  by an  investor  for such Units upon sale.  No public  trading  market
exists for the Partnership's Units and none is likely to develop. Thus, there is
no certainty  that the Units can be sold at a price equal to the stated value of
the capital account. Furthermore, the ability of an investor to liquidate his or
her investment is limited subject to certain  liquidation rights provided by the
Partnership,  which may include early  withdrawal  penalties (See the section of
the  Prospectus  entitled  "Risk  Factors  -  Purchase  of Units is a long  term
investment").

Current Economic Conditions.

     The  Partnership  makes  loans  primarily  in  Northern  California.  As of
December 31, 2002,  approximately 88.52%,  ($4,588,023) of the loans held by the
Partnership  were in five San Francisco Bay Area Counties.  The remainder of the
loans held were secured primarily by Northern California real estate outside the
San Francisco Bay Area. Like the rest of the nation,  the San Francisco Bay Area
has also felt the recession and  accompanying  slow down in economic  growth and
increasing unemployment. The technology companies of Silicon Valley, the airline
industry,  the tourism  industry and other industries are feeling the effects of
the overall United States recession,  which includes lower earnings,  losses and
layoffs.

     As contained in a collection  of real estate  statistics  listed in the San
Francisco  Chronicle  dated December 20, 2002 Bay Area home prices rose again in
November 2002. The article  states,  "Despite a struggling  economy,  the median
home  price in the Bay Area in  November  rose  13% on a  year-over-year  basis,
though the price has leveled since its all-time high this summer,  a real estate
information firm reported  Thursday.  Driven by historically low interest rates,


                                       14
<PAGE>


     the number of homes sold increased 24.4% between November 2001 and November
2002; however, that comparison is somewhat skewed given that sales plunged after
September  11,  2001.  The median home price in the nine Bay Area  counties  was
$416,000 in November,  compared  with  $368,000 last  November,  said  DataQuick
Information Systems in La Jolla (San Diego County).  Compared with October,  the
median rose 2%, and the number of sales fell 12.8%. In July and August,  the Bay
Area  median hit a record  high  $417,000.  Last fall,  in the wake of a sagging
economy and the terrorist  attacks,  home prices and sales cooled  considerably.
But  beginning  in  January,  prices  and sales  shot up around  the  country as
interest rates plummeted and consumers looked for an alternative to the gyrating
stock market.  At the same time, many economists have suggested a housing bubble
is brewing and predict home prices may fall,  particularly in expensive  markets
such as San  Francisco  and Boston.  The median  price of a  single-family  home
nationwide  is  $159,600,  according to the  National  Association  of Realtors.
(DataQuick's  figures include both single-family homes and condos.) `The days of
rapid  appreciation  have  ended,' said Ken Rosen,  a real estate and  economics
professor at UC Berkeley.  He noted that home prices have appreciated far faster
than personal  income in the Bay Area in recent years.  `Next year, we may see a
small rise (in home  prices),  but there could be some  significant  weakness if
interest rates go up and the economy gets worse,' Rosen said. On the other hand,
DataQuick researcher John Karevoll said he sees no evidence of a major price dip
in the Bay Area despite an uptick in the number of notices of default, the first
step in the foreclosure  process.  `Housing is in a fairly good state,' Karevoll
said.  `Default  activity  would  have to double  for it to be a  concern.'  The
typical monthly mortgage payment Bay Area residents committed to in November was
$1,843.  The peak was $2,124 in May 2000. Marin County posted the highest median
home price - $602,000 - in November. Solano County had the lowest median price -
$291,000  - but it  experienced  the  biggest  year-over-year  percentage  price
increase. In November 2001, the county's median was $247,000.  The median is the
price at which half of sales are above and half are below.  Sales in Santa Clara
County,  where the high-tech tumble has pushed  unemployment to 7.8%, showed the
largest jump, from 1,284 last November to 1,894 last month. But that falls short
of the county's typical November sales count of between 1,900 and 2,300.  Re/Max
real estate agent Bruce Scheer in Cupertino said DataQuick's  numbers don't tell
the whole story.  Although sales in the county are up nearly 48% year over year,
the  number of homes on the  market is up more  than  60%.  `There's  a lot more
inventory, and sales have slowed,' Scheer said, `I think people are worried that
the  economy  is going to get  worse,  and they  think that if they wait to sell
their home, they'll get less for it.'"

     The San Francisco  Chronicle  dated December 20, 2002 further  analyzed the
home sale price by county  comparing sales of November 2001 versus November 2002
as follows:
<TABLE>

                                Homes sold              Percent                  Median*                 Percent
      County              Nov. `01      Nov. `02         Change         Nov. `01        Nov. `02          Change
--------------------     -----------    ----------    -------------    -----------    -------------    ------------
<S>                           <C>           <C>              <C>             <C>              <C>            <C>
Alameda                       1,309         1,771            35.3%           $352             $407           15.6%
Contra Costa                  1,464         1,599              9.2            308              352             4.3
Marin                           309           334              8.1            513              602            17.3
Napa                            159           171              7.5            341              398            16.7
San Francisco                   355           493             38.9            492              568            15.4
San Mateo                       531           620             16.8            490              522             6.5
Santa Clara                   1,284         1,894             47.5            421              446             5.9
Solano                          635           733             15.4            247              291            17.8
Sonoma                          598           650              8.7            319              342             7.2
                         ===========    ==========    =============    ===========    =============    ============
Bay Area                      6,644         8,265            24.4%           $368             $416           13.0%

</TABLE>

*in thousands

     For the  Partnership,  these  statistics  imply  that the  values  of homes
secured by  mortgages  should  remain firm and assist in reducing  losses if the
take back of collateral through the foreclosure process should eventuate.



                                       15
<PAGE>



     Opportunities  exist which the Partnership may advantage  itself of. Office
vacancy is very high.  The San Francisco  Business  Times dated October 10, 2002
states  "Grubb & Ellis has reported a slight  decrease in office  vacancy in San
Francisco  for the  third  quarter,  breaking  a  two-year  losing  streak.  The
commercial  real estate firm said vacancy  dropped to 21.9% with 127,000  square
feet of  positive  absorption.  Colin  Yasukochi,  research  director of Grubb &
Ellis' San  Francisco  office,  said office  demand has turned  positive for the
first time in two years.  He reported 1.3 million  square feet of gross  leasing
activity in the quarter. The five biggest deals of the quarter:

o Zurich Insurance took 77,000 square feet at 560 Mission street;
o Gensler Architecture signed a 57,000-square-foot lease at 2 Harrison Street;
o Law firm Clifford Chance opening its Bay Area headquarters at One market with
47,000 square feet;
o Bank of the West and PayMap each signed leases of at least 50,000
square feet.

     `The sustained gross leasing  activity bodes well for more positive news in
the fourth  quarter,'  Yasukochi  said.  `However,  over 650,000  square feet of
mostly vacant new space  scheduled for delivery in that same quarter will likely
cause  vacancy to rise.' He predicts a sustained  recovery is two to three years
away."

     To the  Partnership,  stabilizing  vacancy  rates  may  mean  we are at the
vacancy rate  bottom.  High levels of space exist and as tenants  leases  expire
they may be able to negotiate lower rental rates.  This could lead to lower cash
flows for owners,  which may mean we could  experience  higher  delinquencies or
foreclosures on commercial properties.

     On or about  March  19,  2003,  the  United  States  entered  into an armed
conflict  with Iraq.  While the  general  partners do not  anticipate  that this
conflict will affect the real estate market in Northern California,  a prolonged
military  conflict  could  have  adverse  effects  on the  economy of the Untied
States, which could eventually impact the local real estate market.

     For Partnership loans outstanding, as of December 31, 2002, the Partnership
had an average loan to value ratio  computed as of the date the loan was made of
79.68%.  This  percentage  does not account for any  increases  or  decreases in
property  values  since  the date the loan was  made,  nor does it  include  any
reductions  in principal  through  amortization  of payments  after the loan was
made.


Item 7a - Quantitative and Qualitative Disclosures About Market Risk

     The  following  table  contains  information  about  the cash held in money
market  accounts,  and secured loans held in the  Partnership's  portfolio as of
December  31,  2002.  The  presentation,   for  each  category  of  information,
aggregates  the assets and  liabilities  by their  maturity dates for maturities
occurring in each of the years 2003 through 2007 and  separately  aggregates the
information for all maturities  arising after 2007. The carrying values of these
assets and liabilities  approximate  their fair market values as of December 31,
2002:
<TABLE>

                                  2003         2004         2005         2006        2007      Thereafter      Total
                               ------------ ----------- ------------ ----------- ------------ ------------ -------------
<S>                               <C>          <C>          <C>          <C>       <C>            <C>        <C>
Interest earning assets:
Money market accounts             $322,722                                                                   $  322,722
Average interest rate                1.00%                                                                        1.00%
Loans secured by deeds
    of trust                      $681,176     844,706      145,125      96,716    3,259,940      155,437    $5,183,100
Average interest rate               10.69%      10.66%        9.35%       6.50%        7.68%       10.61%         8.68%

</TABLE>

Market Risk.

     The Partnership's  primary market risk in terms of its profitability is the
exposure to  fluctuations  in earnings  resulting from  fluctuations  in general
interest  rates.  The majority of the  Partnership's  mortgage loans (100% as of
December 31, 2002) earn interest at fixed rates.  Changes in interest  rates may
also affect the value of the Partnership's  investment in mortgage loans and the
rates at which the Partnership reinvests funds obtained from loan repayments and
new capital contributions from limited partners. If interest rates increase, the
interest  rates the  Partnership  obtains from  reinvested  funds will generally
increase,  but the value of the Partnership's existing loans at fixed rates will
generally  tend to  decrease.  The  risk  is  mitigated  by the  fact  that  the


                                       16
<PAGE>


     Partnership  does not intend to sell its loan portfolio,  rather such loans
are held  until they are paid off.  If  interest  rates  decrease,  the  amounts
becoming  available  to the  Partnership  for  investment  due to  repayment  of
Partnership loans may be reinvested at lower rates than the Partnership had been
able to obtain in prior  investments,  or than the rates on the repaid loans. In
addition,  interest rate  decreases may encourage  borrowers to refinance  their
loans with the Partnership at a time where the Partnership is unable to reinvest
in loans of comparable value.

     The  Partnership  does not hedge or otherwise seek to manage  interest rate
risk. The Partnership does not enter into risk sensitive instruments for trading
purposes.


Item 8 - Financial Statements and Supplementary Data

A - Financial Statements

     The following  financial  statements of Redwood  Mortgage  Investors VI are
included in Item 8:

o      Independent Auditors' Report
o      Balance Sheets - December 31, 2002, and December 31, 2001
o      Statements of Income for the years ended December 31, 2002, 2001 and 2000
o      Statements of Changes in Partners' Capital for the years ended December
       31, 2002, 2001 and 2000
o      Statements of Cash Flows for the years ended December 31, 2002, 2001 and
       2000
o      Notes to Financial Statements

B - Financial Statement Schedules

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

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

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



                                       17
<PAGE>














                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 2002 AND 2001
                         AND FOR EACH OF THE THREE YEARS
                      IN THE PERIOD ENDED DECEMBER 31, 2002








                                       18
<PAGE>



                              ARMANINO McKENNA LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                       12667 Alcosta Boulevard, Suite 500
                               San Ramon, CA 94583
                                 (925) 790-2600




                          INDEPENDENT AUDITORS' REPORT


To the Partners
Redwood Mortgage Investors VI
Redwood City, California

     We have  audited  the  accompanying  balance  sheets  of  Redwood  Mortgage
Investors VI (a California limited partnership) as of December 31, 2002 and 2001
and the related  statements  of income,  changes in  partners'  capital and cash
flows for each of the three years in the period ended  December 31, 2002.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audits 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, 2002 and 2001,  and the results of its operations and cash
flows for each of the three years in the period  ended  December  31,  2002,  in
conformity with accounting principles generally accepted in the United States of
America.

     Our  audits  were  conducted  for the  purpose of forming an opinion on the
basic financial  statements taken as a whole.  Schedules II and IV are presented
for purposes of  additional  analysis  and are not a required  part of the basic
financial  statements.  Such  information  has been  subjected  to the  auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.



                                    ARMANINO McKENNA LLP

San Ramon, California
February 21, 2003



                                       19
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001

                                     ASSETS
                                                          2002            2001
                                                       -----------   -----------

Cash and cash equivalents                                $ 341,127     $ 190,414
                                                       -----------   -----------

Loans
   Loans, secured by deeds of trust                      5,183,100     4,970,433
   Loans, unsecured, net discount of $131,352 in 2002      223,697        82,362
   Allowance for loan losses                             (275,294)     (370,612)
                                                       -----------   -----------
     Net loans                                           5,131,503     4,682,183
                                                       -----------   -----------

Interest and advances
   Accrued interest and late fees                           61,384       797,105
   Advances on loans                                        31,007       197,946
                                                       -----------   -----------
                                                            92,391       995,051
                                                       -----------   -----------

Note receivable - Redwood Mortgage Corp.                         -       178,200
Real estate held for sale, net                           1,234,541     1,093,503
                                                       -----------   -----------

        Total assets                                   $ 6,799,562   $ 7,139,351
                                                       ===========   ===========


                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities
   Accounts payable                                    $    11,953   $    20,261
   Payable to affiliate                                     14,643        35,632
   Deferred interest                                             -        74,022
                                                       -----------   -----------
     Total liabilities                                      26,596       129,915
                                                       -----------   -----------

Partners' capital
   Limited partners' capital, subject to redemption
     120,000 Units authorized in 2002 and 2001,
      97,725.94 Units outstanding in 2002 and 2001       6,763,200     6,999,670
   General partners' capital                                 9,766         9,766
                                                       -----------   -----------
     Total partners' capital                             6,772,966     7,009,436
                                                       -----------   -----------

     Total liabilities and partners' capital           $ 6,799,562   $ 7,139,351
                                                       ===========   ===========

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



                                       20
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<TABLE>

                                                                                  YEARS ENDED DECEMBER 31,
                                                                       ------------------------------------------------
                                                                            2002            2001             2000
                                                                       --------------- ---------------- ---------------
<S>                                                                           <C>              <C>             <C>
Revenues
   Interest on loans                                                       $  552,898       $  512,383      $  597,996
   Interest - interest bearing accounts                                         5,147           12,927          17,021
   Interest on promissory note                                                  7,128            4,912          16,091
   Late fees, prepayment penalties, and fees                                    8,998           27,478          29,101
   Mortgage servicer subsidy                                                        -          178,200         125,000
                                                                       --------------- ---------------- ---------------
                                                                              574,171          735,900         785,209
                                                                       --------------- ---------------- ---------------

Expenses
   Mortgage servicing fees                                                    138,851           41,406          48,556
   Asset management fees                                                        8,677            9,115           9,780
   Clerical costs from Redwood Mortgage Corp.                                  22,872           28,156          19,647
   Provisions for (recovery of) losses on loans and real estate               (5,864)          201,036         193,427
   Professional services                                                       31,460           19,866          25,462
   Other                                                                        8,192            9,670          10,408
                                                                       --------------- ---------------- ---------------
                                                                              204,188          309,249         307,280
                                                                       --------------- ---------------- ---------------

Net income                                                                  $ 369,983       $  426,651       $ 477,929
                                                                       =============== ================ ===============

Net income
   General partners (1%)                                                    $   3,700       $    4,266       $   4,779
   Limited partners (99%)                                                     366,283          422,385         473,150
                                                                       --------------- ---------------- ---------------
                                                                            $ 369,983        $ 426,651       $ 477,929
                                                                       =============== ================ ===============

Net income per $1,000 invested by limited partners for entire period
   Where income is reinvested and compounded                                 $     54         $     59        $     62
                                                                       =============== ================ ===============
   Where partner receives income in monthly distributions                    $     53         $     58        $     61
                                                                       =============== ================ ===============

</TABLE>

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



                                       21
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

<TABLE>

                                                             Limited              General
                                                             Partners            Partners              Total
                                                        -------------------  ------------------  ------------------
<S>                                                              <C>                     <C>             <C>
    Balances at December 31, 1999                             $  8,020,580         $     9,766        $  8,030,346

       Net income                                                  473,150               4,779             477,929

       Early withdrawal penalties                                 (16,335)                   -            (16,335)

       Partners' withdrawals                                   (1,063,361)             (4,779)         (1,068,140)
                                                        -------------------  ------------------  ------------------

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

       Net income                                                  422,385               4,266             426,651

       Early withdrawal penalties                                 (15,024)                   -            (15,024)

       Partners' withdrawals                                     (821,725)             (4,266)           (825,991)
                                                        -------------------  ------------------  ------------------

    Balances at December 31, 2001                                6,999,670               9,766           7,009,436

       Net income                                                  366,283               3,700             369,983

       Early withdrawal penalties                                  (6,287)                   -             (6,287)

       Partners' withdrawals                                     (596,466)             (3,700)           (600,166)
                                                        -------------------  ------------------  ------------------

    Balances at December 31, 2002                             $  6,763,200         $     9,766        $  6,772,966
                                                        ===================  ==================  ==================
</TABLE>

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



                                       22
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED December 31, 2002, 2001 AND 2000
<TABLE>

                                                                          2002                2001                2000
                                                                    ------------------  ------------------  ------------------
<S>                                                                           <C>                 <C>                 <C>
Cash flows from operating activities
   Net income                                                             $   369,983         $   426,651         $   477,929
   Adjustments to reconcile net income to net cash provided
     by operating activities
     Provision (recovery) for loan losses and real estate                     (5,864)             201,036             193,427
     Early withdrawal penalties credited to income                            (6,287)            (15,024)            (16,335)
     Mortgage servicer subsidy                                                      -           (178,200)           (125,000)
       Change in operating assets and liabilities
       Loans, unsecured                                                        82,362                   -            (82,362)
       Accrued interest and late fees                                       (162,674)           (168,444)              42,549
       Advances on loans                                                       74,251            (28,667)            (67,318)
       Accounts payable                                                       (8,308)               7,192              13,068
       Payable to affiliate                                                  (20,989)              35,632                   -
       Deferred interest                                                     (74,022)              74,022            (15,676)
                                                                    ------------------  ------------------  ------------------
Net cash provided by operating activities                                     248,452             354,198             420,282
                                                                    ------------------  ------------------  ------------------

Cash flows from investing activities
   Principal collected on loans                                             1,265,798           2,548,178           2,058,681
   Loans originated                                                         (900,418)         (1,838,265)         (2,352,060)
   Note receivable payments                                                   178,200             125,000             300,000
   Payments on real estate                                                   (41,153)              60,872           (129,557)
   Proceeds from disposition of real estate                                         -           (588,438)               5,359
                                                                    ------------------  ------------------  ------------------
Net cash provided by (used in) investing activities                           502,427             307,347           (117,577)
                                                                    ------------------  ------------------  ------------------

Cash flows from financing activities
   Partners' withdrawals                                                    (600,166)           (825,991)         (1,068,140)
                                                                    ------------------  ------------------  ------------------
Net cash used in financing activities                                       (600,166)           (825,991)         (1,068,140)
                                                                    ------------------  ------------------  ------------------

Net increase (decrease) in cash and cash equivalents                          150,713           (164,446)           (765,435)

Cash and cash equivalents at beginning of year                                190,414             354,860           1,120,295
                                                                    ------------------  ------------------  ------------------

Cash and cash equivalents at end of year                                  $   341,127         $   190,414         $   354,860
                                                                    ==================  ==================  ==================
</TABLE>

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



                                       23
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 1 - organization and General

     Redwood Mortgage  Investors VI (the  "Partnership"),  a California  limited
partnership, was organized in 1987. The general partners are Michael R. Burwell,
an  individual,  and  Gymno  Corporation,  a  California  corporation  owned and
operated on an equal 50/50% basis by Michael R. Burwell and Russell  Burwell,  a
former general partner. The Partnership was organized to engage in business as a
mortgage  lender for the  primary  purpose of making  loans  secured by deeds of
trust on  California  real  estate.  Loans are being  arranged  and  serviced by
Redwood  Mortgage Corp., an affiliate of the general  partners.  The offering of
Partnership  Units  was  closed  in  1989,  with  contributed  capital  totaling
$9,772,594.

     The  Partnership  is scheduled  to  terminate on December 31, 2027,  unless
sooner terminated as provided.


note 2 - Summary of Significant Accounting Policies

Management estimates

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management  to make  estimates  and  assumptions  about the reported  amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses during the reported period.  Such estimates  relate  principally to the
determination  of the  allowance  for loan losses,  including  the  valuation of
impaired  loans and the valuation of real estate held for sale.  Actual  results
could differ significantly from these estimates.

Loans, secured by deeds of trust

     Loans generally are stated at their  outstanding  unpaid principal  balance
with interest thereon being accrued by the effective interest method.

     Statement of Financial  Accounting  Standards Nos. 114 and 118 provide that
if the probable  ultimate  recovery of the carrying  amount of a loan,  with due
consideration  for the fair  value  of  collateral,  is less  than  amounts  due
according to the  contractual  terms of the loan  agreement and the shortfall in
the amounts due are not  insignificant,  the carrying  amount of the  investment
shall be reduced to the  present  value of future cash flows  discounted  at the
loan's effective interest rate. If a loan is collateral dependent,  it is valued
at the estimated fair value of the related collateral.

     If events and or changes in circumstances  cause management to have serious
doubts  about the  collectibility  of the  contractual  payments,  a loan may be
categorized  as impaired  and  interest  is no longer  accrued.  Any  subsequent
payments on impaired loans are applied to reduce the outstanding  loan balances,
including  accrued  interest and advances.  At December 31, 2002 and 2001, loans
categorized  as  impaired  by  the  Partnership  were  $96,716  and  $2,467,891,
respectively,  with a reduction in the carrying  value of the impaired  loans of
$6,620, and $287,985,  respectively.  The reduction in the carrying value of the
impaired loans is included in the allowance for loan losses.  The impaired loans
have accrued  interest,  late charges and advances totaling $10,973 and $828,967
at December 31, 2002 and 2001. The average  recorded  investment in the impaired
loans was $1,282,304,  $2,468,698 and $2,470,686 for the three years ended 2002,
2001 and 2000, respectively.




                                       24
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 2 - Summary of Significant Accounting Policies (continued)

Loans, secured by deeds of trust (continued)

     At December 31, 2002 and 2001,  the  Partnership  had two loans past due 90
days or more totaling $207,648 and $144,916 (4.01% and 2.92% of the secured loan
portfolio),  respectively.  The Partnership  does not consider these loans to be
impaired because there is sufficient  collateral to cover the amount outstanding
to the Partnership,  and is still accruing  interest on these loans. At December
31, 2002 and 2001, as presented in Note 10, the average loan to appraised  value
of  security  at the time the loans were  consummated  was  79.68%  and  75.20%,
respectively.  When loans are considered impaired, the allowance for loan losses
is updated  to  reflect  the change in the  valuation  of  collateral  security.
However, a low loan to value ratio tends to minimize reductions for impairment.

     During 2002, the Partnership  restructured  four previously  impaired loans
into two new loans  with a lower  interest  rate.  The amount  restructured  was
$3,060,100.  Had the loans been current in accordance  with their original terms
and had they been outstanding  throughout the entire year, the Partnership would
have  recognized  gross interest  income of $267,946 for 2002.  The  Partnership
recognized $172,131 of interest income on the restructured loans for 2002. As of
December 31, 2002, there is a collateral  shortfall on the certain loans ranging
from approximately  $194,000 to $337,000 that has not been reserved for. Redwood
Mortgage Corp. has guaranteed to cover any losses  sustained by the  Partnership
related to these loans.

Allowance for loan losses

     Loans and the related accrued interest, late fees and advances are analyzed
on a continuous  basis for  recoverability.  Delinquencies  are  identified  and
followed as part of the loan system.  Delinquencies  are  determined  based upon
contractual  terms.  A provision is made for loan losses to adjust the allowance
for loan losses to an amount  considered by management to be adequate,  with due
consideration  to  collateral  values,  to provide for  unrecoverable  loans and
receivables,  including impaired loans, other loans, accrued interest, late fees
and advances on loans and other accounts receivable (unsecured). The Partnership
charges  off  uncollectible  loans  and  related  receivables  directly  to  the
allowance account once it is determined that the full amount is not collectible.

     The  composition  of the  allowance for loan losses as of December 31, 2002
and 2001 was as follows:

                                                     2002              2001
                                               ---------------    --------------
   Impaired loans                                     $  6,620         $ 287,985
   Specified loans                                      44,977                 -
   General                                                   -               265
   Unsecured loans                                     223,697            82,362
                                               ---------------    --------------
                                                     $ 275,294         $ 370,612
                                               ===============    ==============




                                       25
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 2 - Summary of Significant Accounting Policies (continued)

Allowance for loan losses (continued)

     Activity in the allowance for loan losses is as follows for the years ended
December 31:

                                 2002               2001               2000
                              ------------        ------------       -----------
   Beginning balance             $ 370,612           $ 261,452         $ 303,249
   Provision for loan losses         3,083             109,160            34,738
   Recoveries                      (8,947)                   -                 -
   Restructures                   (48,009)                   -                 -
   Write-offs                     (41,445)                   -          (76,535)
                              ------------        ------------       -----------
                                 $ 275,294           $ 370,612         $ 261,452
                              ============        ============       ===========

Cash and cash equivalents

     The  Partnership  considers all highly liquid  financial  instruments  with
maturities  of  three  months  or  less  at the  time  of  purchase  to be  cash
equivalents.

Real estate held for sale

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

     In accordance  with  Statement of Financial  Accounting  Standards No. 144,
"Accounting  for the  Impairment  or  Disposition  of Long  Lived  Assets,"  the
Partnership  periodically compares the carrying value of real estate to expected
future  undiscounted cash flows for the purpose of assessing the  recoverability
of the recorded amounts.  If the carrying value exceeds future undiscounted cash
flows,  the assets  are  reduced to  estimated  fair  value.  During  2002,  the
Partnership  transferred  $249,999  from the  allowance  for loan  losses to the
allowance for losses on real estate held for sale.

Income taxes

     No provision for federal and state income taxes, except for a minimum state
tax of $800,  is made in the  financial  statements  since  income taxes are the
obligation of the partners if and when income taxes apply.

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 amounts  allocated  to
limited  partners  who held  their  investment  throughout  the  period and have
elected to either  leave their  earnings to compound or have  elected to receive
periodic 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.




                                       26
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 2 - Summary of Significant Accounting Policies (continued)

Late fee revenue

     Late fees are generally  charged at 6% of the monthly  installment  payment
past due. During 2002, 2001 and 2000, late fee revenue of $1,947,  $10,959,  and
$5,219, respectively, was recorded. The Partnership has a late fee receivable at
December 31, 2002 and 2001 of $968 and $9,800, respectively.

Reclassification

     Certain reclassifications,  not affecting previously reported net income or
total  partners'  capital,  have been made to the  previously  issued  financial
statements to conform to the current year classification.

Recently issued accounting pronouncements

     In January 2003,  the Financial  Accounting  Standards  Board (FASB) issued
FASB  Interpretation  46  "Consolidation  of  Variable  Interest  Entities,   an
Interpretation of ARB No. 51" (FIN 46). FIN 46 is effective  immediately for any
variable  interest  entities  created  after  January 31, 2003 and is  effective
beginning in the third quarter of 2002 to any variable interest entities created
prior to the issuance of the interpretation.  FIN 46 provides a new framework to
identify  variable  interest  entities  and to determine  when an entity  should
include the assets,  liabilities,  non-controlling  interests and the results of
activities  of a  variable  interest  entity in its  financial  statements.  The
implementation  of FIN 46 is not anticipated to have any  significant  effect on
the Partnership.


note 3 - Other Partnership Provisions

     The Partnership is a California limited partnership. The rights, duties and
powers of the general and limited  partners of the  Partnership  are governed by
the limited  partnership  agreement and Sections 15611 et seq. of the California
Corporations Code.

     The general partners are in complete  control of the Partnership  business,
subject to the voting rights of the limited partners on specified  matters.  Any
one of the general  partners acting alone has the power and authority to act for
and bind the Partnership.

     A majority of the outstanding  limited  partnership  interests may, without
the permission of the general partners,  vote to: (i) terminate the Partnership,
(ii) amend the limited  partnership  agreement,  (iii) approve or disapprove the
sale of all or  substantially  all of the  assets  of the  Partnership  and (iv)
remove or replace one or all of the general partners.

     The  approval  of all  limited  partners is required to elect a new general
partner to continue the Partnership business where there is no remaining general
partner  after a general  partner  ceases to be a general  partner other than by
removal.

Election to receive monthly, quarterly or annual distributions

     At subscription,  investors elected to receive monthly, quarterly or annual
distributions of earnings allocations, or to allow earnings to compound. Subject
to certain  limitations,  a  compounding  investor may  subsequently  change his
election, but an investor's election to have cash distributions is irrevocable.




                                       27
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 3 - Other Partnership Provisions (continued)

Profits and losses

     Profits and losses are allocated  among the limited  partners  according to
their respective capital accounts monthly after 1% of the profits and losses are
allocated to the general partners.

Liquidity, capital withdrawals and early withdrawals

     There are substantial  restrictions on transferability of Partnership Units
and accordingly an investment in the Partnership is non-liquid. Limited partners
had no right to withdraw from the  Partnership  or to obtain the return of their
capital  account for at least one year from the date of purchase of  Partnership
Units, which in all instances had occurred as of December 31, 2002.

     In order to provide a certain  degree of liquidity to the limited  partners
after the one-year  period,  limited  partners may withdraw all or part of their
capital accounts from the Partnership in four quarterly  installments  beginning
on the last day of the  calendar  quarter  following  the  quarter  in which the
notice of withdrawal is given,  subject to a 10% early withdrawal  penalty.  The
10% penalty is  applicable  to the amount  withdrawn  as stated in the notice of
withdrawal and will be deducted from the capital account.

     After five years from the date of purchase of the Units,  limited  partners
have the  right to  withdraw  from the  Partnership,  on an  installment  basis.
Generally,   this  is  done  over  a  five-year   period  in  twenty   quarterly
installments. Once a limited partner has been in the Partnership for the minimum
five-year  period,  no penalty will be imposed if  withdrawal  is made in twenty
quarterly  installments  or longer.  Notwithstanding  the  five-year (or longer)
withdrawal  period,  the general partners may liquidate all or part of a limited
partner's 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.  This  withdrawal  is  subject  to a 10% early  withdrawal
penalty  applicable to any sums withdrawn prior to the time when such sums could
have been withdrawn without penalty.

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


note 4 - General Partners and Related Parties

     The  following  are  commissions  and fees  that  are  paid to the  general
partners and affiliates.

Mortgage brokerage commissions

     For fees in connection with the review, selection, evaluation,  negotiation
and extension of loans, the Partnership may collect an amount  equivalent to 12%
of the loaned amount until 6 months after the termination  date of the offering.
Thereafter, loan brokerage commissions (points) will be limited to an amount not
to exceed 4% of the  total  Partnership  assets  per  year.  The loan  brokerage
commissions  are paid by the  borrowers,  and thus,  are not an  expense  of the
Partnership.  In 2002,  2001 and 2000,  loan brokerage  commissions  paid by the
borrowers were $22,611, $46,581, and $45,164, respectively.





                                       28
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 4 - General Partners and Related Parties (continued)

Mortgage servicing fees

     Monthly  mortgage  servicing  fees of up to 1/8 of 1% (1.5%  annual) of the
unpaid  principal  are paid to  Redwood  Mortgage  Corp.,  based  on the  unpaid
principal balance of the loan portfolio,  or such lesser amount as is reasonable
and customary in the geographic area where the property securing the mortgage is
located. Once a loan is categorized as impaired,  mortgage servicing fees are no
longer  accrued.  Additional  service fees are recorded  upon the receipt of any
subsequent  payments on impaired  loans.  Mortgage  servicing  fees of $138,851,
$41,406, and $48,556, were incurred for 2002, 2001 and 2000,  respectively.  The
Partnership  has a payable to  Redwood  Mortgage  Corp.  for  servicing  fees of
$14,643 and $35,632 at December 31, 2002 and 2001, respectively.

Asset management fee

     The general  partners  receive monthly fees for managing the  Partnership's
loan  portfolio and operations of up to 1/32 of 1% of the "net asset value" (3/8
of 1%  annually).  Asset  management  fees of $8,677,  $9,115,  and $9,780  were
incurred for 2002, 2001 and 2000, respectively.

Other fees

     The  partnership  agreement  provides for other fees such as  reconveyance,
mortgage  assumption and mortgage extension fees. These fees are incurred by the
borrowers and paid to the general partners.

Operating expenses

     The general  partners  or their  affiliate,  Redwood  Mortgage  Corp.,  are
reimbursed by the  Partnership  for all operating  expenses  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.
During 2002, 2001 and 2000,  operating  expenses totaling  $22,872,  $28,156 and
$19,647, respectively, were reimbursed to Redwood Mortgage Corp.


note 5 - Real Estate Held for Sale

     The following  schedule  reflects the costs of real estate acquired through
foreclosure  and the recorded  reductions  to estimated  fair values,  including
estimated costs to sell, as of December 31, 2002 and 2001:

                                                  2002                2001
                                            ----------------    ----------------
      Costs of properties                         $2,018,732          $1,627,696
      Reduction in value                           (784,191)           (534,193)
                                            ----------------    ----------------
      Real estate held for sale                   $1,234,541          $1,093,503
                                            ================    ================







                                       29
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 6 - Note Receivable - Redwood Mortgage Corp.

     In 2001 and 2000,  Redwood  Mortgage  Corp.,  an  affiliate  of the general
partners, which arranges and services the loans of the Partnership, committed to
subsidize  certain loan losses of the  Partnership.  At December 31, 2001,  this
commitment  was  evidenced  by a note  receivable  of  $178,200.  The note bears
interest at 8% and was repaid in 2002.  Mortgage servicer subsidies for 2001 and
2000,  were $178,200 and $125,000,  respectively.  There was no subsidy in 2002;
however,  Redwood  Mortgage Corp. has guaranteed the  recoverability  of certain
loan amounts to the Partnership as of December 31, 2002 (see Note 2).


note 7 - Income Taxes

     The following  reflects a reconciliation  of partners' capital reflected in
the financial statements to the tax basis of Partnership capital:

                                                    2002              2001
                                                --------------    --------------
  Partners' capital per financial statements        $6,772,966        $7,009,436
  Allowance for loan losses and real estate          1,059,485           904,804
                                                --------------    --------------
  Partners' capital tax basis                       $7,832,451        $7,914,240
                                                ==============    ==============

     In 2002 and 2001,  approximately  73% of taxable  income was  allocated  to
tax-exempt  organizations (e.g., retirement plans). Such organizations generally
do not have to file income tax returns.


note 8 - Fair Value of Financial Instruments

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

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

     (b) Secured loans  carrying value was $5,183,100 and $4,970,433 at December
31, 2002 and 2001, respectively. The fair value of these loans of $4,862,646 and
$5,036,556,   respectively,  was  estimated  based  upon  projected  cash  flows
discounted at the estimated  current interest rates at which similar loans would
be made.  The  applicable  amount of the  allowance  for loan losses  along with
accrued  interest and advances  related  thereto  should also be  considered  in
evaluating the fair value versus the carrying value.







                                       30
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 9 - Non-cash Transactions

     During 2002, the  Partnership  restructured  four loans that resulted in an
increase to loans  receivable  of $920,346 and a decrease to the  allowance  for
loan losses,  accrued  interest  and advances of $21,707,  $849,365 and $92,688,
respectively.

     During 2002, the  Partnership  foreclosed on a property that resulted in an
increase  to real  estate  held for sale of  $349,883  and a  decrease  to loans
receivable and accrued interest of $300,853 and $49,030, respectively.

     During 2002, the Partnership originated two unsecured, non-interest bearing
loans,  which  resulted in an increase to unsecured  loans and the allowance for
loan losses of $355,049 and  $223,697,  respectively.  The  Partnership  imputed
interest  on these  loans at 10.5% per annum,  which  resulted  in a decrease to
unsecured loans of $131,352 and an increase to discount on loans of $131,352.


note 10 - Asset Concentrations and Characteristics

     Most loans are secured by recorded deeds of trust. At December 31, 2002 and
2001,  there were 22 and 27 secured  loans  outstanding  respectively,  with the
following characteristics:
<TABLE>

                                                                          2002               2001

                                                                     ---------------    ----------------
<S>                                                                              <C>                 <C>
  Number of secured loans outstanding                                            22                  27
  Total secured loans outstanding                                        $5,183,100          $4,970,433

  Average secured loan outstanding                                       $  235,595          $  184,090
  Average secured loan as percent of total                                    4.55%               3.70%
  Average secured loan as percent of partners' capital                        3.48%               2.63%

  Largest secured loan outstanding                                       $2,103,300          $1,376,117
  Largest secured loan as percent of total                                   40.58%              27.69%
  Largest secured loan as percent of partners' capital                       31.05%              19.63%

  Number of counties where security is located (all California)                  10                  10
  Largest percentage of secured loans in one county                          42.67%              40.75%
  Average secured loan to appraised value of security at time
     loan was consummated                                                    79.68%              71.27%

  Number of secured loans in foreclosure                                          -                   3
  Amounts of secured loans in foreclosure                                 $       -           $ 439,311

</TABLE>



                                       31
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 10 - Asset Concentrations and Characteristics (continued)

     The  following  categories  of secured loans were held at December 31, 2002
and 2001:
<TABLE>

                                                                              2002               2001
                                                                         ---------------    ----------------
<S>                                                                           <C>                 <C>
      First trust deeds                                                     $ 4,392,120         $ 3,770,088
      Second trust deeds                                                        790,979           1,136,481
      Third trust deeds                                                                              63,864
                                                                                      -
                                                                         ---------------    ----------------
          Total loans                                                         5,183,100           4,970,433
      Prior liens due other lenders                                           2,779,170           5,627,002
                                                                         ---------------    ----------------

          Total debt                                                        $ 7,962,270         $10,597,435
                                                                         ===============    ================

      Appraised property value at time of loan                              $ 9,992,743         $14,868,548
                                                                         ===============    ================

      Total investments as a percent of appraisals                               79.68%              71.27%
                                                                         ===============    ================

      Investments by type of property
          Owner occupied homes                                              $   749,707         $   741,154
          Non-owner occupied homes                                               74,674             181,952
          Apartments                                                            566,600             562,015
          Commercial                                                          3,792,119           3,485,312
                                                                         ---------------    ----------------
                                                                            $ 5,183,100         $ 4,970,433
                                                                         ===============    ================
</TABLE>

     Scheduled  maturity  dates of secured  loans as of December 31, 2002 are as
follows:

            Year Ending December 31,
      -------------------------------------
                      2003                          $ 681,176
                      2004                            844,706
                      2005                            145,125
                      2006                             96,716
                      2007                          3,259,940
                   Thereafter                         155,437
                                            ------------------
                                                   $5,183,100
                                            ==================

     The  remaining  scheduled  maturities  for 2003  include one loan  totaling
$175,656  (3.39%),  which was past maturity at December 31, 2002.  This loan was
categorized as delinquent over 90 days.

     Cash deposits at December 31, 2002 of $563,965, before clearing deposits in
transit and  outstanding  checks,  were in one bank. The balances  exceeded FDIC
insurance limits (up to $100,000 per bank) by $463,965.

     The  Partnership has a substantial  amount of its loan  receivable  balance
from one borrower at December 31, 2002 and 2001.  This  borrower  accounted  for
approximately  62% and 42% of the loan  balances  at such dates.  This  borrower
accounted for  approximately  31%, 35% and 21% of interest revenue for the years
ended December 31, 2002, 2001 and 2000, respectively.




                                       32
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


note 11 - Commitments and Contingencies

Workout agreements

     The Partnership has negotiated various  contractual workout agreements with
borrowers.  The  Partnership  is not  obligated to fund  additional  money as of
December  31,  2002.  There are  approximately  two loans  totaling  $176,560 in
workout agreements as of December 31, 2002.

Legal proceedings

     The  Partnership is involved in various legal actions arising in the normal
course of business.  In the opinion of management,  such matters will not have a
material effect upon the financial position of the Partnership.




                                       33
<PAGE>



                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          Notes to Financial Statements
                        December 31, 2002, 2001 and 2000


Note 12 - Selected Financial Information (Unaudited)
<TABLE>

                                                                 Calendar Quarter
                                       ---------------------------------------------------------------------
                                           First             Second            Third             Fourth            Annual
                                       --------------    ---------------   ---------------    --------------    -------------
<S>                                         <C>                <C>               <C>               <C>              <C>
  Revenues
      2002 as previously stated             $275,176           $120,559          $125,341          $113,750         $634,826
      Adjustment                            (60,655)                  -                 -                 -         (60,655)
                                       --------------    ---------------   ---------------    --------------    -------------
      2002 restated                          214,521            120,559           125,341           113,750          574,171
      2001                                   143,077            142,581           134,603           315,639          735,900
      2000                                   150,583            172,579           158,243           303,804          785,209

  Expenses
      2002 as previously stated              177,383             26,094            34,988            26,378          264,843
      Adjustment                            (60,655)                  -                 -                 -         (60,655)
                                       -------------     ---------------   ---------------    --------------    -------------
      2002 restated                          116,728             26,094            34,988            26,378          204,188
      2001                                    30,562             34,253            29,249           215,185          309,249
      2000                                    25,204             52,044            41,218           188,814          307,280

  Net income allocated to
    general partners
      2002                                       978                945               903               874            3,700
      2001                                     1,125              1,083             1,054             1,004            4,266
      2000                                     1,254              1,205             1,170             1,150            4,779

  Net income allocated to
    limited partners
      2002                                    96,815             93,520            89,450            86,498          366,283
      2001                                   111,390            107,245           104,300            99,450          422,385
      2000                                   124,125            119,330           115,855           113,840          473,150

  Net income per $1,000 invested
    Where income is reinvested
      2002                                        14                 13                13                19               59
      2001                                        15                 15                14                15               59
      2000                                        15                 15                15                17               62
    Where income is withdrawn
      2002                                        14                 13                13                18               58
      2001                                        15                 15                14                14               58
      2000                                        15                 15                15                16               61
</TABLE>

The adjustments above represent correction of amounts missposted to interest
revenue and the provision for loan losses in the first quarter of 2002.



                                       34
<PAGE>



SCHEDULE II

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                        VALUATION AND QUALIFYING ACCOUNTS
                                December 31, 2002

<TABLE>


        Col A                Col B                     Col. C                       Col. D              Col E.
     Description           Balance at                Additions                    Deductions          Balance at
                                          ---------------------------------
                           Beginning         Charged           Charged                              End of Period
                           of Period           to                to
                                             Costs &            Other
                                            Expenses          Accounts
--------------------------------------------------------------------------------------------------------------------
<S>                          <C>             <C>                <C>                  <C>                  <C>
Year ended
   12/31/02

Deducted from
 asset accounts

Allowance for
 loan losses                  $ 370,612       $ (5,864)         $ (48,009)(a)        $ (41,445)(b)        $ 275,294

Cumulative
 write-down of
 real estate
 held for
 sale (REO)                     534,193               -            249,998(a)                 -             784,191
                         ---------------  --------------   ----------------    -----------------   -----------------
                              $ 904,805       $ (5,864)          $ 210,936           $ (41,445) (b)      $1,059,485
                         ===============  ==============   ================    =================   =================
</TABLE>

Note (a) - Represents restructuring of loans.

Note (b) - Represents write-offs of loans.


                                       35
<PAGE>



SCHEDULE IV

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          mortgage loans on real estate
                         rule 12-29 loans on real estate
                                December 31, 2002
<TABLE>
<S>       <C>         <C>        <C>         <C>        <C>        <C>        <C>        <C>        <C>
Col. A    Col. B      Col. C     Col. D      Col. E     Col. F     Col. G     Col. H     Col. I     Col. J
Desc.    Interest     Final      Period      Prior     Face Amt.  Carry Amt. Principal    Type    Geographic
           Rate       Maturity   Payment     Liens      Mortgage   Mortgage  or interest  Lien     Location
                                                                              Amount
                                                                            Delinquent
--------------------------------------------------------------------------------------------------------------------
Apts       7.00%     08/01/03    $ 1,022      $    -   $ 153,660   $ 146,029    $    -      1st    Sacramento
Apts.      10.50%    06/01/03        667           -      76,250      76,250                1st    San Joaquin
Apts.      10.50%    12/01/04      1,750           -     200,000     200,000                1st    Alameda
Apts.      6.50%     05/01/06        541      89,904     100,000      96,716    34,072      2nd    Sacramento
Apts.      7.00%     02/10/05        234      80,250      40,125      40,125                2nd    San Francisco
Apts.      9.00%     02/01/99         38     153,534       5,122         322                2nd    Sacramento
Apts.      13.00%    11/01/03        759     341,094      60,000       7,158                2nd    San Francisco
Comm.      9.00%     05/10/02        671           -      83,333      77,485                1st    Shasta
Comm.      10.00%    12/01/03      1,276           -     145,455     144,566                1st    Stanislaus
Comm.      10.00%    07/01/11        997           -     109,769     108,265                1st    Santa Clara
Comm.      7.50%     02/28/07     13,146           -   2,103,300   2,103,300                1st    Santa Clara
Comm.      7.50%     02/28/07      5,980           -     956,800     956,800                1st    Alameda
Comm.      10.50%    10/01/07      1,345           -     147,000     146,883                1st    San Mateo
Comm.      12.00%    02/01/11        756           -      63,000      47,172                1st    Alameda
Comm.      14.75%    09/01/95      2,242     250,000     185,000     175,656   189,108      2nd    San Mateo
Comm.      10.00%    12/01/01        284     208,012      32,323      31,992     1,986      2nd    Stanislaus
Res.       8.00%     09/30/03        171           -      23,259      21,716                1st    Sonoma
Res.       11.00%    02/01/04      3,380           -     363,700     363,654                1st    San Francisco
Res.       11.00%    11/01/04        485     394,955     285,000      31,053                2nd    San Mateo
Res.       10.25%    08/01/04      2,135     714,286     250,000     250,000                2nd    San Francisco
Res.       10.50%    10/01/07        485      81,786      53,000      52,958                2nd    San Mateo
Res.       10.25%    12/01/05        897     465,349     105,000     105,000                2nd    Marin
                              ---------------------------------------------------------------
Total                            $39,262  $2,779,170  $5,541,096  $5,183,100   $225,166
                              ===============================================================
</TABLE>

     Notes:  Loans  classified  as  impaired  had  principal  balances  totaling
$96,716. Impaired loans are defined as loans where the costs of related balances
exceeds the anticipated fair value less costs to collect.  Interest is no longer
accrued thereon.

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






                                       36
<PAGE>





Schedule IV

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          mortgage loans on real estate
                   rule 12-29 loans on real estate (continued)
                                December 31, 2002


Reconciliation of carrying amount (cost) of loans at close of periods
<TABLE>

                                                                   Year ended December 31,
                                              -------------------------------------------------------------------
                                                    2002                    2001                     2000
                                              ------------------      ------------------      -------------------
<S>                                                  <C>                     <C>                      <C>
Balance at beginning of year                         $4,970,433              $5,570,576               $5,282,773
                                              ------------------      ------------------      -------------------
Additions during period:
  New loans                                             900,418               1,838,265                2,352,060
  Other                                                 920,346                 109,770                   82,362
                                              ------------------      ------------------      -------------------
           Total Additions                            1,820,764               1,948,035                2,434,422
                                              ------------------      ------------------      -------------------

Deductions during period:
  Collections of principal                            1,265,798               2,548,178                2,058,681
  Foreclosures                                          300,854                       -                        -
  Cost of loans sold                                          -                       -                        -
  Amortization of Premium                                     -                       -                        -
  Other                                                  41,445                       -                   87,938
                                              ------------------      ------------------      -------------------
           Total Deductions                           1,608,097               2,548,178                2,146,619
                                              ------------------      ------------------      -------------------

Balance at close of year                             $5,183,100              $4,970,433               $5,570,576
                                              ==================      ==================      ===================
</TABLE>




                                       37
<PAGE>



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

None


                                    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  two  general  partners,  one of  whom  is an
individual,  is  Michael  R.  Burwell.  The  second  general  partner  is  Gymno
Corporation, a California corporation, formed in 1986. Mr. Burwell is one of the
two shareholders of Gymno Corporation,  a California corporation,  and has a 50%
interest in the corporation.


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, 2002. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus.
<TABLE>
<S>     <C>                               <C>                                                            <C>
        Entity Receiving Compensation     Description of Compensation and Services Rendered              Amount
        ----------------------------------------------------------------------------------------------------------
        I. Redwood Mortgage Corp.         Loan Servicing Fee for servicing loans..........................$138,851

        General Partners &/or Affiliates  Asset Management Fee for managing assets..........................$8,677

        General Partners                  1% interest in profits............................................$3,700
</TABLE>


II. FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED WITH THE PARTNERSHIP BY
COMPANIES RELATED TO THE GENERAL PARTNERS (EXPENSES OF BORROWERS NOT OF THE
PARTNERSHIP)
<TABLE>
<S>                               <C>                                                                      <C>
        Redwood Mortgage Corp.    Mortgage Brokerage Commissions for services in connection
                                  with the review, selection, evaluation, negotiation, and extension
                                  extension of the loans paid by the borrowers and not by the
                                  Partnership..............................................................$22,611

        Redwood Mortgage Corp.    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..................$1,389

        Gymno Corporation         Reconveyance Fee............................................................$288
</TABLE>


                                       38
<PAGE>



     III. IN ADDITION, THE GENERAL PARTNERS AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT  OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $22,872


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 footnotes 3 and 4 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.


Item 14 - Controls and Procedures

     Based  on  their  evaluation  of the  effectiveness  of  the  Partnership's
disclosure  controls  and  procedures,  as of a date within 90 days prior to the
date of the filing of this report,  the President and Chief Financial Officer of
Gymno Corporation,  the Partnership's  corporate general partner,  has concluded
that the  Partnership's  disclosure  controls and  procedures  are effective and
sufficient to ensure that the Partnership record, process, summarize, and report
information  required to be disclosed in its  periodic  reports  filed under the
Securities  Exchange Act within the time periods specified by the Securities and
Exchange Commission's rules and forms.

     Subsequent  to the  date  of such  evaluation,  there  have  not  been  any
significant  changes in the Partnership's  internal controls or in other factors
that could significantly affect these controls,  including any corrective action
with regard to significant deficiencies and material weaknesses.



                                       39
<PAGE>




                                     Part IV


Item 15 - Exhibits, Financial Statements Schedules, and Reports on Form 8-K

(A)      Documents filed as part of this report:

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

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

     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)


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

(B)  Reports on form 8-K

     No reports on Form 8-K have been filed during the last quarter of the
     period covered by this report.

(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.




                                       40
<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 31st day of March,
2003.

REDWOOD MORTGAGE INVESTORS VI


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


By:       Gymno Corporation, General Partner



          By:     /S/ Michael R. Burwell
                  -------------------------------------------
                  Michael R. Burwell, President, Secretary &
                  Chief Financial Officer

     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 31st day of March, 2003.

Signature                                Title                      Date



/S/ Michael R. Burwell
-------------------------------
Michael R. Burwell                  General Partner              March 31, 2003





/S/ Michael R. Burwell
-------------------------------
Michael R. Burwell              President, Secretary & Chief     March 31, 2003
                                 Financial Officer of Gymno
                               Corporation (Principal Financial
                                    and Accounting Officer);
                                Director of Gymno Corporation




                                       41
<PAGE>



                                                                    Exhibit 99.1

                          GENERAL PARTNER CERTIFICATION


I, Michael R. Burwell, General Partner, certify that:

     1. I have  reviewed  this  annual  report on Form 10-K of Redwood  Mortgage
Investors VI, a California Limited Partnership (the "Registrant");

     2. Based on my  knowledge,  this annual  report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

     4. The  Registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
material  information  relating to the  Registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

     (b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     (c) presented in this annual report our conclusions about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date.

     5. The Registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  Registrant's  auditors  and the  audit
committee  of  Registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     (a) all  significant  deficiencies  in the design or  operation of internal
controls  which  could  adversely  affect  the  Registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
Registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the Registrant's internal controls.

     6. The Registrant's other certifying  officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



/s/ Michael R. Burwell
-----------------------------------
Michael R. Burwell, General Partner
March 31, 2003



                                       42
<PAGE>



                                                                    Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of Redwood Mortgage  Investors VI (the
"Partnership")  on Form 10-K for the period  ending  December  31, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
pursuant  to 18  U.S.C.  (S)  1350,  as  adopted  pursuant  to  (S)  906  of the
Sarbanes-Oxley  Act of 2002,  I,  Michael  R.  Burwell,  General  Partner of the
Partnership, certify that to the best of my knowledge:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership.


/s/ Michael R. Burwell
-----------------------------------
Michael R. Burwell, General Partner
March 31, 2003




                                       43
<PAGE>



                                                                    Exhibit 99.2


               PRESIDENT AND CHIEF FINANCIAL OFFICER CERTIFICATION

     I,  Michael R.  Burwell,  President  and Chief  Financial  Officer of Gymno
Corporation, General Partner, certify that:

     1. I have  reviewed  this  annual  report on Form 10-K of Redwood  Mortgage
Investors VI, a California Limited Partnership (the "Registrant");

     2. Based on my  knowledge,  this annual  report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

     4. The  Registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
material  information  relating to the  Registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

     (b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     (c) presented in this annual report our conclusions about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date.

     5. The Registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  Registrant's  auditors  and the  audit
committee  of  Registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     (a) all  significant  deficiencies  in the design or  operation of internal
controls  which  could  adversely  affect  the  Registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
Registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the Registrant's internal controls.

     6. The Registrant's other certifying  officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



/s/ Michael R. Burwell
---------------------------------
Michael R. Burwell, President and
Chief Financial Officer of Gymno
Corporation, General Partner
March 31, 2003



                                       44
<PAGE>




                                                                    Exhibit 99.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of Redwood Mortgage  Investors VI (the
"Partnership")  on Form 10-K for the period  ending  December  31, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
pursuant  to 18  U.S.C.  (S)  1350,  as  adopted  pursuant  to  (S)  906  of the
Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, President and Chief Financial
Officer of Gymno Corporation,  General Partner of the Partnership,  certify that
to the best of my knowledge:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership.


/s/ Michael R. Burwell
---------------------------------
Michael R. Burwell, President and
Chief Financial Officer of Gymno
Corporation, General Partner
March 31, 2003




                                       45
<PAGE>