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

                                December 31, 1998

                                     Part I

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

                                     Part II

Item 5 - Market for the Registrants Partners Capital and related              
         matters.                                                             6
Item 6 - Selected Financial Data                                            7-8
Item 7 - Managements Discussion and Analysis of Financial Condition
         and Results of Operations                                         9-13
Item 8 - Financial Statements and Supplementary Data                      14-35
Item 9 - Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                            36

                                     Part III

Item 10 - Directors and Executive Officers of the Registrant                 36
Item 11 - Executive Compensation                                             37
Item 12 - Security Ownership of certain Beneficial Owners and Management     38
Item 13 - Certain Relationships and Related Transactions                     38

                                     Part IV


Item 14 -Exhibits, Financial Statement Schedules, and Reports of Form 8-K 38-39

Signatures                                                                   40
<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, 1998 Commission File number 33-12519
  -----------------------------------------------------------------------------

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

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

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

Registrants telephone No. Including area code                    (650) 365-5341
-----------------------------------------------       -------------------------

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

 Title of each class                  Name of each exchange on which registered
---------------------------          ------------------------------------------
 Limited Partnership Units                                                 None
---------------------------          ------------------------------------------

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

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

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

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

Documents incorporated by reference:

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

<PAGE>


                                Part I

Item 1 - Business

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

     The  Partnership was formed in September,  1987,  with an approved  120,000
Units of $100 each  ($12,000,000).  The Units were  offered on a best  efforts
basis  through  broker/dealer  member  firms  of  the  National  Association  of
Securities Dealers,  Inc. It immediately began issuing Units and began investing
in Mortgage Investments in October,  1987. The offering terminated in September,
1989,  and as of that date  97,725.94  Units  were sold  realizing  proceeds  of
$9,772,594.  At December 31,  1998,  the  Partnership  had a balance of Mortgage
Investments  totalling $7,969,735 with interest rates thereon ranging from 4.00%
to 17.25%.

     Currently First Trust Deeds comprise 55.61% of the total amount of Mortgage
Investment  portfolio.  Second  Mortgage Trust Deeds comprise 36.30% of Mortgage
Investment  portfolio,  third  Mortgage  Trust Deeds have 4.95% and 4th Mortgage
Trust  Deeds have 3.14% of the  Mortgage  Investment  portfolio.  Owner-occupied
homes,  combined with  non-owner  occupied  homes,  total 16.55% of the Mortgage
Investments.  Mortgage  Investments  to  apartments  make up 10.26% of the total
Mortgage  Investments  portfolio.  Commercial  Mortgage  Investment  origination
increased from last year, now comprising 73.19% of the portfolio, an increase of
0.95%  from  1997.  The past year  brought  many  outstanding  low loan to value
lending  opportunities  in the  commercial  segment  of the  market.  The  major
concentration of Mortgage Investments,  comprising of 74.71% of the total loans,
are in six  counties of the San  Francisco  Bay Area.  The County of  Stanislaus
makes up 10.93% of the Mortgage  Investment  portfolio.  Stanislaus  County is a
fringe county to the San Francisco  Bay Area. In 1998 the  Partnership  received
many good lending opportunities from this county. The balance, as stated on page
five of this report,  are primarily in Northern  California.  Currently Mortgage
Investment  size is  averaging  $142,317 per  Mortgage  Investment.  Some of the
Mortgage  Investments are fractionalized  between  affiliated  partnerships with
objectives  similar to those of the Partnership to further reduce risk.  Average
equity  per loan  transaction  stood at  34.73%.  A 40%  equity  average on loan
origination  is generally  considered  very  conservative.  Generally,  the more
equity,  the  more  protection  for  the  lender.  The  Partnerships   Mortgage
Investment  portfolio is in good  condition with no properties in foreclosure as
of the end of December, 1998.
<PAGE>

Item 2 - Properties

As of December 31, 1998, a summary of the Partnerships Mortgage Investment
portfolio is set forth below.

Mortgage Investments as a Percentage of Total Mortgage Investments


First Trust Deeds                                   $4,432,245.77
Appraised Value of Properties                        6,301,807.00
   Total Investment as a % of Appraisal                    70.33%
First Trust Deeds                                    4,432,245.77
Second Trust Deed Mortgage Investments               2,892,870.54
Third Trust Deed Mortgage Investments                  394,619.60
Fourth Trust Deed Mortgage Investments*                249,999.40
                                              --------------------
                                                     7,969,735.31
First Trust Deeds due other Lenders                 11,180,298.00
Second Trust Deeds due other Lenders                   990,064.00
Third Trust Deeds due other Lenders                    178,571.00

Total Debt                                         $20,318,668.31

   Appraised Property Value                        $31,128,892.00
   Total Investments as a % of Appraisal                   65.27%


Number of Mortgage Investments Outstanding                     56


Average Investment                                     142,316.70
Average Investment as a % of Net Assets                     1.63%
Largest Investment Outstanding                       1,376,117.03
Largest Investment as a % of Net Assets                    15.80%


Mortgage Investments  as a Percentage of Total Mortgage Investments

First Trust Deeds                                          55.61%
Second Trust Deeds                                         36.30%
Third Trust Deeds                                           4.95%
Fourth Trust Deeds                                          3.14%
                                              --------------------
                                                          100.00%
Total

Mortgage Investments by Type          Amount              Percent
of Property

Owner Occupied Homes                  $944,491.33          11.85%
Non-Owner Occupied Homes               374,408.39           4.70%
Apartments                             817,818.78          10.26%
Commercial                           5,833,016.81          73.19%
                                 -----------------     -----------
Total                               $7,969,735.31         100.00%

*Footnote  on  following  page.

<PAGE>

The following is a distribution of loans outstanding as of December 31, 1998
by Counties.

Santa Clara               $2,289,006.95           28.72%
Alameda                    1,173,232.37           14.72%
San Mateo                    969,458.58           12.16%
Stanislaus                   871,569.71           10.93%
Contra Costa                 768,318.32            9.64%
San Francisco                676,147.60            8.48%
Sacramento                   595,505.84            7.47%
Sonoma                       253,096.02            3.18%
Ventura                       91,000.00            1.14%
Shasta                        81,033.44            1.02%
Marin                         78,854.34            0.99%
Monterey                      70,617.58            0.89%
Santa Cruz                    33,897.62            0.43%
Solano                        17,996.94            0.23%
                     -------------------      -----------

Total                     $7,969,735.31          100.00%


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

Statement of Condition of Mortgage Investments:

    Number of Mortgage Investments in Foreclosure                     -0-

Scheduled  maturity  dates of mortgage  investments as of December 31, 1998
are as follows:

                        Year Ending
                        December 31,

                            1999                                    $4,470,166
                            2000                                     1,021,816
                            2001                                     1,004,686
                            2002                                       422,896
                            2003                                       437,684
                         Thereafter                                    612,487
                                                               ================
                                                                    $7,969,735
                                                               ================

The  scheduled  maturities for 1999 include $2,080,024 in  Mortgage Investments
which are past  maturity at December  31,  1998.  $816,898 of those Mortgage
Investments were categorized as delinquent over 90 days.

Seven  Mortgage  Investments  with  principal  outstanding  of $994,735 had
interest payments overdue in excess of 90 days.
<PAGE>



Item 3 - Legal Proceedings

In the normal course of business,  the  Partnership  may become involved in
various types of legal  proceedings  such as  assignments  of rents,  bankruptcy
proceedings,   appointments   of   receivers,   unlawful   detainers,   judicial
foreclosures,   etc.,  to  enforce  the  provisions  of  the  deeds.  Management
anticipates  that the  ultimate  outcome of these legal  matters will not have a
material  adverse  effect on the net assets of the  Partnership  in light of the
Partnership's  allowance  for doubtful  accounts.  As of the date hereof,  legal
actions against  borrowers and other involved parties have been initiated by the
Partnership  to help  assure  payments  against  unsecured  accounts  receivable
totaling $23,775. The Partnership is a defendant along with numerous defendants,
including a developer, contractor, and other lenders, in a lawsuit involving the
Partnerships attempt to recover its investment in real estate acquired through
foreclosure.

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

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

                                Part II

Item 5 - Market for the Registrants Partners Capital and Related Matters.

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

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

As of  December  31,  1998,  there  were  715  holders  of  record  of  the
Partnerships Units. A decrease of 27 from 1997.


<PAGE>
<TABLE>
<CAPTION>

Item 6 - Selected Financial Data

     Redwood  Mortgage  Investors  VI began  operations  in  October  1987.  Its
financial  condition  and results of  operation  for three years to December 31,
1998 were:

                                                            Balance Sheets
                                                                Assets

                                                                          December 31,
                                                      ------------------------------------------------------
                                                               1998                1997                1996
                                                      --------------      --------------      --------------
<S>                                                         <C>                <C>                 <C>     
Cash                                                        299,775            $331,143            $180,597
                                                      --------------      --------------      --------------
Accounts Receivable:
  Mortgage Investments, secured by Deeds of Trust         7,969,735           8,104,984           9,313,924
  Accrued Interest on Mortgage Investments                  717,719             617,456             405,783
  Advances on Mortgage Investments                          162,083             127,519             108,019
  Accounts receivables, unsecured                            23,775             161,414             251,531
                                                      --------------      --------------      --------------
                                                         $8,873,312          $9,011,373         $10,079,257

Less allowance for doubtful accounts                        202,344              28,614             252,850
                                                      --------------      --------------      --------------
                                                         $8,670,968           8,982,759         $ 9,826,407
                                                      --------------      --------------      --------------

Real estate owned, held for sale, acquired through
    Foreclosure                                             169,922             309,319           1,441,007
Investment in Partnership                                         0             708,141             496,040
                                                      --------------      --------------      --------------
                                                         $9,140,665         $10,331,362         $11,944,051
                                                      ==============      ==============      ==============



                                                   Liabilities and Partners Capital

Liabilities:
  Notes Payable - Bank Line of Credit                       390,000            $899,011          $1,530,511
 Accounts Payable                                            22,668                   0                   0
  Deferred interest on Mortgage Investments                  20,463                 898              18,522
                                                      --------------      --------------      --------------
          Total Liabilities                                 433,131             899,909           1,549,033
                                                      --------------      --------------      --------------

Partners Capital:
     Limited Partners  capital, subject to                8,697,768           9,421,687          10,385,252
redemption
     General Partners  capital                                9,766               9,766               9,766
                                                      --------------      --------------      --------------

          Total Partners  Capital                         8,707,534           9,431,453          10,395,018
                                                      --------------      --------------      --------------

          Total Liabilities and Partners Capital        $9,140,665         $10,331,362         $11,944,051
                                                      ==============      ==============      ==============
</TABLE>
<PAGE>

<TABLE>
<CAPTION>


                                                         Statements of Income

                                                               1998                1997                1996
                                                      --------------      --------------      --------------

<S>                                                        <C>               <C>                 <C>       
Gross Revenue                                              $871,861          $1,036,596          $1,167,859
Expenses                                                    359,356             507,409             579,697
                                                      ==============      ==============      ==============
Net Income                                                  512,505             529,187             588,162
                                                      ==============      ==============      ==============


Net Income: to General Partners (1%)                          5,125              $5,292              $5,882
                     to Limited Partners (99%)              507,380             523,895             582,280
                                                      --------------      --------------      --------------

                                                           $512,505            $529,187            $588,162
                                                      ==============      ==============      ==============


Net Income per $1,000 invested by Limited
 Partners for entire period:
  - where income is reinvested and compounded                   $56                 $53                 $54
                                                      ==============      ==============      ==============

  -where partner receives income in monthly
     distributions                                              $55                 $52                 $52
                                                      ==============      ==============      ==============

<FN>

     In 1995 the annualized  yield was 5.30%. In 1996, the annualized  yield was
5.35%, in 1997 the annualized  yield was 5.29% and in 1998 the annualized  yield
was 5.63%. The annualized  yield since inception  through December 31, 1998, was
7.52%.
</FN>

</TABLE>              
<PAGE>

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

     On September 2, 1989,  the  Partnership  had sold  97,725.94  Units and its
contributed  capital totalled  $9,772,594 of the approved  $12,000,000 issue, in
Units of $100  each.  As of that  date the  offering  was  formally  closed.  On
December 31, 1998, the Partnerships net capital totalled $8,707,534.

     The  Partnership  began funding  Mortgage  Investments in October 1987. The
Partnerships Mortgage Investments  outstanding for the years ended December 31,
1996, 1997 and 1998, were $9,313,924,  $8,104,984,  and $7,969,735 respectively.
The decrease in Mortgage Investments outstanding of $1,344,189 from December 31,
1996 to December 31, 1998, was again due primarily to the Partnership  utilizing
Mortgage  Investment  payoffs to meet Limited Partner capital  liquidations  and
line of credit pay-down to save interest  expense on the note.  During the years
1996, 1997, and 1998, Mortgage Investment principal collections exceeded Limited
Partner liquidations.

     Currently,  general mortgage  interest rates are lower than those prevalent
at the inception of the Partnership. New Mortgage Investments will be originated
at these lower interest rates. The result is to reduce the average return across
the entire Mortgage Investment portfolio held by the Partnership. In the future,
interest  rates  likely  will  change  from their  current  levels.  The General
Partners  cannot at this time predict at what levels  interest  rates will be in
the future.  Although the rates charged by the Partnership are influenced by the
level of interest  rates in the market,  the General  Partners do not anticipate
that rates charged by the Partnership to its borrowers will change significantly
from the beginning of 1999 over the next 12 months.  As of December 31, 1998 the
Partnerships  Real Estate  Owned  account  and the  Investment  in  Partnership
account have been reduced to a combined  $169,922  balance.  These  accounts had
combined  balances of  $1,017,460  and $ 1,937,047  as of December  31, 1997 and
1996,  respectively.  The conversion of these non-earning  assets will allow the
Partnership to produce current income from  previously non earning  assets.  The
overall effect of these developments will allow the Partnerships yield to rise.
The General  Partners  anticipate that the annualized  yield for the forthcoming
year 1999, will be higher than the current years performance level.

     Each year,  the  Partnership  negotiates a line of credit with a commercial
bank which is secured by its  Mortgage  Investment  portfolio.  The  outstanding
balance of the bank line of credit was $1,530,511, $899,011 and $390,000 for the
years ended December 1996, 1997 and 1998, respectively. The interest rate on the
bank line of credit has  remained at Prime plus one  percent  for the  preceding
three years.  For the years ended December 31, 1998,  1997and 1996 , interest on
Note Payable-Bank was $43,170,  $133,577and $158,175  respectively.  The primary
reason for this decrease was that the  Partnership  had a lower  overall  credit
facility utilization from 1995 to 1996 and from 1996 to December 31, 1998. As of
December 31, 1998, the Partnership has borrowed  $390,000 at an interest rate of
Prime plus one percent.  This added source of funds will help in maximizing  the
Partnership yield by allowing the Partnership to minimize the amount of funds in
lower yield investment  accounts when appropriate  Mortgage  Investments are not
currently available and because the Mortgage Investments made by the Partnership
usually bear  interest at a rate in excess of the rate payable to the bank which
extended the line of credit, the amount to be retained by the Partnership, after
payment of the line of credit cost,  will be greater than without the use of the
line of credit.

     The Partnerships 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- one 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, 1998,
there were no properties in  foreclosure.  Cash is continually  being  generated
from interest  earnings,  late charges,  prepayment  penalties,  amortization of
notes and pay-off of notes. Currently,  this amount exceeds Partnership expenses
and  earnings  and  principal  payout   requirements.   As  Mortgage  Investment
opportunities become available,  excess cash and available funds are invested in
new Mortgage Investments.
<PAGE>


     The General Partners  regularly review the Mortgage  Investment  portfolio,
examining the status of delinquencies,  the underlying collateral securing these
Mortgage  Investments,  REO expenses,  sales activities,  and borrowers payment
records and other data relating to the Mortgage  Investment  portfolio.  Data on
the local real estate market, and on the national and local economy are studied.
Based upon this  information  and more,  Mortgage  Investment  loss reserves and
allowance  for doubtful  accounts are  increased  or  decreased.  Because of the
number of variables  involved,  the magnitude of possible swings and the General
Partners  inability to control many of these factors,  actual results may and do
sometimes  differ  significantly  from estimates  made by the General  Partners.
Management  provided  $312,684,  $268,101 and $180,054 as provision for doubtful
accounts for the years ended December 31, 1996,  December 31, 1997, and December
31, 1998,  respectively.  The decrease in the provision reflects the decrease in
the  amount  of  REO,  unsecured   receivables  and  the  decreasing  levels  of
delinquency within the portfolio.  Additionally,  the General Partners felt that
the bottom of the real estate  cycle had been  reached,  reflecting a decreasing
need to set aside reserves for the continuously  declining real estate values as
had been the case in the early 1990s in the California  real estate market.  As
of December 31, 1998, the Partnership reduced the REO balance from $1,501,712 as
of December 31, 1995,  to $169,922  through  December 31, 1998.  This  reduction
assisted the  Partnership  in increasing  yields in 1998,  as assets  previously
lying idle, now produced current income.

     The December 1998 issue of Western Economic Developments,  published by the
Federal  Reserve Bank of San Francisco,  said the following about the California
economy:

     The pace of  economic  growth in  California  was  solid in recent  months,
despite continued contraction in some major industries. Total payroll employment
rose 3.2 percent on an annual basis in October and  November.  This is above the
average growth rate for the first eleven months of 1998, but it is below the 3.8
percent pace from last year.  Faced by declining export demand and rising import
competition,   durable   goods   manufacturers   cut   employment  in  November.
Manufacturers of computers and electronic components have been particularly hard
hit this year, and aerospace employment has contracted. However, the pace of job
creation has remained strong in sectors other than  manufacturing,  and this has
helped to lower the state unemployment rate to 5.7 percent in November.

     Californias  state and local  governments  have created new jobs at about a
2.5 percent annual pace this year, a pickup from prior years that is due in part
to improved fiscal  capacity.  About 21,000 of the 29,000 jobs created this year
were for educators at local schools.
 
     To the Partnership, the above evaluation of the California economy means an
increase in property values, job growth, personal income growth, etc., which all
translates  into  more  loan  activity,  which of  course,  is  healthy  for the
Partnerships lending activity.

     The  Partnerships  interest  in land  located  in East Palo  Alto,  Ca, was
acquired through foreclosure.  The Partnerships  interest is invested with that
of two other Partnerships.  The Partnerships basis of $0, $708,141 and $496,040
for the years ended December 31, 1998,  December 31, 1997 and 1996 respectively,
has been invested with that of two other Partnerships.  The Partnership had been
attempting  to  develop  property  into an  approximately  63 units  residential
subdivision,   (the Development).   The  proposed   Development  had  gained
significant  public  awareness  as a result of certain  environmental,  fish and
wildlife density, and other concerns. Incorporated into the proposed Development
were various  mitigation  measures  included  remediation of hazardous  material
existing on the property and protection of potentially  affected  species due to
the proximity to the San  Francisco  Baylands.  These issues and others  sparked
significant public controversy.  Opposition against and support for the proposed
Development existed. Among those in opposition to the project was Rhone Poulanc,
Inc.,  which is responsible for a nearby  hazardous  waste site.  Rhone Poulanc,
Inc.  has  been   identified   as  the   Responsible   Party  for  the Arsenic
Contamination  which  affected a portion of the property.  On May 8, 1998,  the
Partnership,  in order to  resolve  disputes  which  arose  during the course of
attempts to obtain entitlements for this
<PAGE>

     Development, entered into agreements with Rhone-Poulanc,  Inc., which among
other things,  restricted  the property to non  residential  uses,  provided for
appropriate  indemnification and included other  consideration  including a cash
payment to the  Partnership.  The  Partnership  has  retained  ownership  of the
property,  which is subject to various deed  restrictions,  options and or first
rights of refusal.  The General  Partners  are pleased  with this outcome to the
residential  development  attempt.  The General  Partners may now explore  other
available options with respect to alternative uses for the property. In order to
pursue these options,  rezoning of the propertys  existing  residential  zoning
classification  will be  required.  The  Partnership  is  continuing  to explore
remediation  options  available to mitigate the pesticide  contamination,  which
affects the property.  This pesticide  contamination appears to be the result of
agricultural  operations  by  prior  owners,  and is  unrelated  to the  Arsenic
Contamination  for which Rhone Poulanc,  Inc. remains  responsible.  The General
Partners  do not  believe  at  this  time  that  remediation  of  the  pesticide
contaminants  will have a material adverse effect on the financial  condition of
the Partnership.

     At the time of subscription to the  Partnership,  Limited  Partners made an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound  earnings  in their  capital  account.  For the years
ended December 31, 1996, 1997, and 1998, the Partnership  made  distributions of
earnings to Limited Partners after allocation of syndication costs of, $288,796,
$252,378 and $230,712 respectively. Distribution of Earnings to Limited Partners
after  allocation of  syndication  costs for the years ended  December 31, 1996,
December 31, 1997, and December 31, 1998 to Limited  Partners capital accounts
and not  withdrawn  was  $293,484,  $271,517  and $276,668  respectively.  As of
December 31, 1996,  December 31, 1997, and December 31, 1998,  Limited  Partners
electing to withdraw earnings  represented 49 %, 46% and 43% 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,  1996,  December 31,
1997, and December 31, 1998, $96,362,  $159,732 and $122,069 respectively,  were
liquidated  subject  to the 10% and/or 8% penalty  for early  withdrawal.  These
withdrawals are within the normally  anticipated range that the General Partners
would expect in their  experience  in this and other  Partnerships.  The General
Partners  expect  that a small  percentage  of  Limited  Partners  will elect to
liquidate  their  capital  accounts  over one year  with a 10%  and/or  8% early
withdrawal  penalty.  In  originally  conceiving  the  Partnership,  the General
Partners wanted to provide  Limited  Partners  needing their capital  returned a
degree of liquidity.  Generally,  Limited Partners electing to withdraw over one
year need to liquidate  investments to raise cash. The trend the  Partnership is
experiencing in withdrawals by Limited Partners  electing a one year liquidation
program  represents a small percentage of Limited Partner capital as of December
31, 1996, December 31, 1997, and December 31, 1998, respectively and is expected
by the General Partners to commonly occur at these levels.

     Additionally, for the years ended December 31, 1996, December 31, 1997, and
December 31,  1998,  $1,086,737,  $1,137,677  and  $938,040  respectively,  were
liquidated  by Limited  Partners who have elected a  liquidation  program over a
period of five  years or  longer.  Once the  initial  five year hold  period has
passed,  the General  Partners expect to see an increase in liquidations  due to
the ability of Limited  Partners to withdraw  without  penalty.  This ability to
withdraw  after  five  years by Limited  Partners  has the  effect of  providing
Limited Partner  liquidity  which the General  Partners then expect a portion of
the Limited Partners to avail themselves of. This has the anticipated  effect of
the partnership growing, primarily through reinvestment of earnings in years one
through five. The General  Partners expect to see increasing  numbers of Limited
Partner  withdrawals  in years five  through  eleven,  at which time the bulk of
those Limited  Partners who have sought  withdrawal  will have been  liquidated.
After year eleven,  liquidation  generally subsides and the Partnership  capital
again tends to increase.
<PAGE>
<TABLE>
<CAPTION>

     Actual  liquidation  of both  capital  and  earnings  from year five (1992)
through year eleven (1998) is shown hereunder: 

                              Years ended December 31,

                 1992           1993           1994           1995            1996           1997              1998
           -----------     ----------    -----------    -----------     -----------    -----------    --------------
<S>          <C>             <C>            <C>            <C>             <C>            <C>               <C>    
Earnings     $323,037        377,712        303,014        303,098         294,678        257,670           235,837
Capital     *$232,370        528,737        729,449        892,953       1,183,099      1,297,410         1,060,109
           ===========     ==========    ===========    ===========     ===========    ===========    ==============
Total        $555,407       $906,449     $1,032,463     $1,196,051      $1,477,777     $1,555,080        $1,295,946
           ===========     ==========    ===========    ===========     ===========    ===========    ==============

*These amounts represent gross of early withdrawal penalties.

     The Year 2000 will be a challenge for the entire world, with respect to the
conversion of existing computerized operations. The Partnership is completing an
assessment of Year 2000 hardware and software issues. This assessment is not yet
fully complete.  The Partnership  relies on Redwood Mortgage Corp., an affiliate
of the Partnership,  and third parties to provide loan and investor services and
other  computerized  functions,  effected by Year 2000 computerized  operations.
Major  services  provided  to  the  Partnership  by  these  companies  are  loan
servicing,  accounting  and  investor  services.  The  vendors  that  supply the
software for loan servicing  have already  confirmed  compliance  with Year 2000
issues.  Installation  of accounting  software that is Year 2000  compliant will
begin after the  1998-year  ends.  The  investor  servicing  software  Year 2000
compliance  is still under  assessment.  Existing  investor  servicing  software
maintenance  agreements  provide for  conversion  to Year 2000  compliance to be
provided by the vendor.  Additionally,  the  Partnership  has contacted  several
vendors that provide investor  services as a possible  alternative to continuing
to provide  investors  services in house.  It would  appear  that these  service
providers  would be more expensive than the current in house systems but they do
provide a back-up  alternative in the event of our own failure to fully convert.
Hardware utilized by Redwood Mortgage Corp., is currently being tested to insure
that modifications  necessary to be made prior to Year 2000 can be accomplished.
At this juncture,  existing hardware appears to be substantially  compliant with
Year 2000 issues.

     The costs of updating  the various  software  systems  will be borne by the
various  companies  that supply the  Partnership  with services.  Therefore,  no
significant  capital outlays are  anticipated  and the Partnership  expects only
incidental costs of conversion for Year 2000 issues.

     The Partnership is in the business of making Mortgage  Investments  secured
by real estate. The most important factor in making the Mortgage  Investments is
the value of the real estate  security.  Year 2000 issues have some potential to
effect  industries  and  businesses  located  in the  marketplaces  in which the
Partnership places its Mortgage  Investments.  This would only have an affect on
the Partnership if Year 2000 issues cause a significant downturn in the northern
California economy. In fact, Silicon Valley is located in our marketplace. There
may be significant  increased  demand for Silicon Valley type services and goods
as companies make ready for the Year 2000 conversion.

     Although not fully developed, if all or any accounting,  loan servicing and
investor  services   conversions   should  fail,  the  size  and  scope  of  the
Partnerships  activities  are such that  they  could be  handled  at an equal or
higher cost on a manual basis or outsourced to other  servicers  existing in the
industry, while correcting the systems problems and are likely to be temporarily
in nature.  While this would entail some initial set up costs, these costs would
likely not be so significant as to have a material effect upon the  Partnership,
shifting portions of daily operations to manual or outsourced systems may result
in time delays.  Time delays in providing  accurate  and  pertinent  information
could negatively affect customer relations and lead to the potential loss of new
loans and Limited Partner investments.

     The  foregoing  analysis  of  Year  2000  issues  includes  forward-looking
statements  and  predictions  about  possible  or  future  events,   results  of
operations and financial condition. As such, this analysis may prove to
</TABLE>

<PAGE>

     be inaccurate because of the assumptions made by the General Partner or the
actual development of future events. No assurance can be given that any of these
forward-looking  statements and predictions  will ultimately prove to be correct
or even substantially correct.  Various other risks and uncertainties could also
affect the Year 2000 analysis  causing the effect on the  Partnership to be more
severe than discussed above. The General Partners Year 2000 compliance  testing
cannot  guarantee that all computer  systems will function  without error beyond
the Year 2000. Risks also exist with respect to Year 2000 compliance by external
parties who may have no relationship to the Partnership or the General  Partner,
but who have a significant  relationship with one or more third parties, and may
have a system  failure  that  adversely  affects  the  Partnerships  ability to
conduct  business.  While the General  Partner is  attempting  to identify  such
external  parties,  no  assurance  can be  given  that it will be able to do so.
Furthermore, third parties with direct relationships with the Partnership, whose
systems have been identified as likely to be Year 2000  compliant,  may suffer a
breakdown  due  to  unforeseen  circumstances.  It is  also  possible  that  the
information  collected by the General Partner for these third parties  regarding
their compliance with Year 2000 issues may be incorrect.  Finally,  it should be
noted that the  foregoing  discussion  of Year 2000 issues  assumes  that to the
extent the  General  Partners  systems  fail,  whether  because  of  unforeseen
complications  or  because  of  third  parties  failure,  switching  to  manual
operations will allow the Partnership to continue to conduct its business. While
the  General  Partner  believes  this  assumption  to  be  reasonable,  if it is
incorrect,  the  Partnerships  results of operations  would likely be adversely
affected.



<PAGE>



             Item 8 - Financial Statements and Supplementary Data

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

A- Financial Statements

Independent Auditors Report,
Balance Sheets - December 31, 1998, and December 31, 1997,
Statements of Income for the three years ended December 31, 1998,
Statements of Changes in Partners Capital for the three years 
     ended December 31, 1998,
Statements of Cash Flows for the three years ended December 31, 1998,
Notes to Financial Statements - December 31, 1998.

B. - Financial Statement Schedules

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

Schedule II     Amounts receivable from related parties and underwriters,
                promoters, and employees other than related parties
Schedule VIII    Valuation of Qualifying Accounts
Schedule IX      Short Term Borrowings
Schedule XII     Mortgage Investments on real estate

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

<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                         (with Auditors Report Thereon)



<PAGE>


                                PARODI & CROPPER
                          CERTIFIED PUBLIC ACCOUNTANTS
                       3658 Mount Diablo Blvd., Suite #205
                           Lafayette California 94549
                                 (925) 284-3590




                          INDEPENDENT AUDITORS REPORT


THE PARTNERS
REDWOOD MORTGAGE INVESTORS VI

     We have audited the financial  statements and related  schedules of REDWOOD
MORTGAGE  INVESTORS VI (A California  Limited  Partnership)  listed in Item 8 on
form 10-K  including  balance  sheets as of  December  31, 1998 and 1997 and the
statements of income,  changes in partners  capital and cash flows for the three
years ended December 31, 1998. These financial statements are the responsibility
of the Partnerships  management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the financial position of REDWOOD MORTGAGE INVESTORS
VI as of December 31, 1998 and 1997,  and the results of its operations and cash
flows for the three years ended  December 31, 1998 in conformity  with generally
accepted  accounting  principles.  Further, it is our opinion that the schedules
referred to above present fairly the information set forth therein in compliance
with the  applicable  accounting  regulations  of the  Securities  and  Exchange
Commission.


                                                           /S/ Bruce Cropper
                                                           PARODI & CROPPER






Lafayette, California
March 3, 1999

<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                                 BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997

                                   ASSETS
<TABLE>
<CAPTION>

                                                                          1998                 1997
                                                                     ---------------      ---------------

<S>                                                                        <C>                  <C>     
Cash                                                                       $299,775             $331,143
                                                                     ---------------      ---------------

Accounts receivable:
  Mortgage Investments, secured by deeds of trust                         7,969,735            8,104,984
  Accrued Interest on Mortgage Investments                                  717,719              617,456
  Advances on Mortgage Investments                                          162,083              127,519
  Accounts receivables, unsecured                                            23,775              161,414
                                                                     ---------------      ---------------
                                                                          8,873,312            9,011,373
  Less allowance for doubtful accounts                                      202,344               28,614
                                                                     ---------------      ---------------
                                                                          8,670,968            8,982,759
                                                                     ---------------      ---------------

Real estate owned, held for sale, acquired through foreclosure              169,922              309,319
Investment in Partnership                                                         0              708,141
                                                                     ---------------      ---------------

          Total Assets                                                   $9,140,665          $10,331,362
                                                                     ===============      ===============


                                                   LIABILITIES AND PARTNERS CAPITAL


Liabilities:
  Accounts Payable                                                          $22,668                   $0
  Deferred Interest                                                          20,463                  898
  Note payable - bank line of credit                                        390,000              899,011
                                                                     ---------------      ---------------
          Total Liabilities                                                 433,131              899,909
                                                                     ---------------      ---------------



Partners Capital:
  Limited Partners capital, subject to redemption, (note 4D):
      net of Formation Loan receivable of $0 and $59,521,
          for 1998 and 1997, respectively                                 8,697,768            9,421,687

  General Partners  Capital:                                                  9,766                9,766
                                                                     ---------------      ---------------
    Total Partners  capital                                               8,707,534            9,431,453
                                                                     ---------------      ---------------
          Total Liabilities and Partners capital                        $9,140,665          $10,331,362
                                                                     ===============      ===============


See accompanying notes to financial statements.

</TABLE>
<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                              STATEMENTS OF INCOME
                   FOR THE THREE YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>


                                                                          YEARS ENDED DECEMBER 31,
                                                             ---------------------------------------------------
                                                                 1998               1997               1996
                                                             -------------      --------------     -------------

Revenues:
<S>                                                              <C>               <C>               <C>       
  Interest on Mortgage Investments                               $847,960          $1,011,621        $1,135,218
  Interest on bank deposits                                         8,487               6,563             4,750
  Late charges, prepayment penalties, and fees                     15,414              18,412            27,891
                                                             -------------      --------------     -------------
                                                                  871,861           1,036,596         1,167,859
                                                             -------------      --------------     -------------

Expenses:
  Mortgage servicing fees                                          70,630              39,918            44,565
  Asset management fee                                              6,640                   0                 0
  Clerical costs through Redwood Mortgage                          24,440              27,786            31,838
  Interest and line of credit costs                                43,170             133,577           158,175
  Provision for doubtful accounts and losses
      on real estate acquired through foreclosure                 180,054             268,101           312,684
  Professional services                                            18,831              23,517            17,825
  Other                                                            15,591              14,510            14,610
                                                             -------------      --------------     -------------
                                                                  359,356             507,409           579,697
                                                             -------------      --------------     -------------

Net Income                                                       $512,505            $529,187          $588,162
                                                             =============      ==============     =============

Net income:  To General Partners(1%)                               $5,125              $5,292            $5,882
                      To Limited Partners (99%)                  $507,380            $523,895          $582,280
                                                             =============      ==============     =============
                                                                 $512,505            $529,187          $588,162
                                                             =============      ==============     =============

Net income per $1,000 invested by Limited
 Partners for entire period:
  -where income is reinvested and compounded                          $56                 $53               $54
                                                             =============      ==============     =============

  -where partner receives income in monthly distributions             $55                 $52               $52
                                                             =============      ==============     =============










<FN>

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


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS CAPITAL
                   FOR THE THREE YEARS ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>

                                                                    PARTNERS CAPITAL
                                   ------------------------------------------------------------------------------------
                                               LIMITED PARTNERS CAPITAL
                                   --------------------------------------------------
                                      Capital
                                      Account         Formation                            General
                                      Limited            Loan                             Partners
                                     Partners         Receivable          Total            Capital           Total
                                   --------------    -------------    ---------------    ------------     -------------

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

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

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

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

Balances at December 31, 1997         $9,481,208        ($59,521)         $9,421,687          $9,766        $9,431,453

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

Balances at December 31, 1998         $8,697,768                0         $8,697,768          $9,766         $8,707,534
                                   ==============    =============     ==============    ============     ==============
<FN>

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


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>

                                                                      YEARS ENDED DECEMBER 31,
                                                         ----------------------------------------------------
                                                             1998                1997               1996
                                                         --------------      -------------      -------------
Cash flows from operating activities:
<S>                                                           <C>                <C>                <C>     
  Net income                                                  $512,505           $529,187           $588,162
  Adjustments to reconcile net income to net
   cash provided by operating activities:
   Provision for doubtful accounts                             268,764            264,484             65,804
   Provision for Losses (recovery) on real estate held
   for sale                                                   (88,710)              3,617            246,880
    Early withdrawal penalty credited to income                (3,604)            (4,914)            (3,196)
    (Increase) decrease in assets:
       Accrued interest & advances                           (134,827)          (231,173)             63,950
       Prepaid expenses and other assets                             0                  0                935
     Increase (decrease) in liabilities:
       Accounts payable and accrued expenses                    22,668                  0                  0
       Deferred Interest on Mortgage Investments                19,565           (17,624)             18,522
                                                         --------------      -------------      -------------

      Net cash provided by operating activities                596,361            543,577            981,057
                                                         --------------      -------------      -------------

Cash flows from investing activities:
  Principal collected on Mortgage Investments                1,934,071          1,634,128          3,295,834
  Mortgage Investments made                                (1,798,822)          (557,796)        (2,474,843)
  Additions to real estate held for sale                       (2,785)           (47,415)          (242,869)
  Dispositions of real estate held for sale                     85,449            909,491            299,414
  Investment in Partnership                                  (215,281)          (212,101)           (39,219)
  Proceeds from Partnership                                  1,068,865                  0                  0
  Proceeds from unsecured accounts receivable                   42,605                  0                  0
                                                         --------------      -------------      -------------
    Net cash provided by (used in) investing activities      1,114,102          1,726,307            838,317
                                                         --------------      -------------      -------------

Cash flows from financing activities:
 Net increase (decrease) in note payable-bank                (509,011)          (631,500)          (510,500)
 Partners withdrawals                                      (1,286,111)        (1,541,671)        (1,469,056)
  Formation Loan collections                                    53,291             53,833             56,803
                                                         --------------      -------------      -------------

    Net cash provided by (used in) financing activities    (1,741,831)        (2,119,338)        (1,922,753)
                                                         --------------      -------------      -------------

Net increase (decrease) in cash                               (31,368)            150,546          (103,379)

Cash - beginning of period                                     331,143            180,597            283,976
                                                         --------------      -------------      -------------

Cash - end of period                                          $299,775           $331,143           $180,597
                                                         ==============      =============      =============

<FN>

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

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

     NOTE 1 -  ORGANIZATION  AND GENERAL  Redwood  Mortgage  Investors  VI, (the
Partnership)  is a  California  Limited  Partnership,  of  which  the  General
Partners are D. Russell  Burwell,  Michael R. Burwell and Gymno  Corporation,  a
California  corporation  owned and operated by the individual  General Partners.
The partnership was organized to engage in business as a mortgage lender for the
primary  purpose  of making  Mortgage  Investments  secured by Deeds of Trust on
California real estate.  Mortgage Investments are being arranged and serviced by
Redwood  Mortgage  Corp.,  (Redwood  Mortgage),  an  affiliate  of  the  General
Partners. The offering was closed with contributed capital totaling $9,781,366.

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

     A. Sales  Commissions - Formation  Loan Sales  commissions  ranging from 0%
(units sold by General  Partners) to 10% of gross  proceeds were paid by Redwood
Mortgage.,  an affiliate of the General  Partners that arranges and services the
Mortgage Investments.  To finance the sales commissions,  the Partnership loaned
to Redwood  Mortgage  $623,255 (the  Formation  Loan)  relating to contributed
capital of $9,781,366.  The Formation Loan is unsecured,  and was repaid without
interest, in ten annual installments of principal, commencing December 31, 1989.
The last payment was made during 1998. The following  reflects  transactions  in
the Formation Loan account through December 31, 1998:

Amount loaned during 1987,1988 and 1989                                $623,255
Less:
   Cash repayments                                       $566,586
   Allocation of early withdrawal penalties                56,669       623,255
                                                     ============     ---------

Balance December 31, 1998                                                    $0
                                                                      =========

     The Formation Loan, which is receivable from Redwood Mortgage, an affiliate
of the General  Partners,  was deducted  from Limited  Partners  capital in the
balance sheet.  As amounts were collected from Redwood  Mortgage,  the deduction
from  capital  was  reduced.  As of  December  31,  1998  there  was no longer a
deduction.

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


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Accrual Basis

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


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

B. Management Estimates

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

C. Mortgage Investments, Secured by Deeds of Trust

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

     Financial   Accounting  Standards  Board  Statements  (SFAS)  114  and  118
(effective  January 1, 1995) provide that if the probable  ultimate  recovery of
the carrying amount of a Mortgage  Investment,  with due  consideration  for the
fair value of  collateral,  is less than the  recorded  investment  and  related
amounts due and the  impairment is considered  to be other than  temporary,  the
carrying  amount of the investment  (cost) shall be reduced to the present value
of future cash flows.  The adoption of these  statements did not have a material
effect on the  financial  statements  of the  Partnership  because  that was the
valuation method previously used on impaired loans.

     At December 31,  1998,  1997 and 1996,  reductions  in the cost of Mortgage
Investments  categorized as impaired by the Partnership totalled $84,736, $0 and
$13,006,  respectively.  The  reduction  in  stated  value was  accomplished  by
increasing the allowances for doubtful accounts.

     As  presented  in Note 10 to the  financial  statements  as of December 31,
1998, the average mortgage investment to appraised value of security at the time
the loans were  consummated  was  65.27%.  When a loan is valued for  impairment
purposes, an updating is made in the valuation of collateral security.  However,
a low loan to value ratio tends to minimize reductions for impairment.

D. Cash and Cash Equivalents

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

E. Real Estate Owned, Held for Sale

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

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>

     The following  schedule  reflects the costs of real estate acquired through
foreclosure and the recorded reductions to estimated fair values, less estimated
costs to sell as of December 31, 1998 and 1997:

                                                                        December 31,
                                                       -----------------------------------------------
                                                            1998                            1997
                                                       ---------------                 ---------------

<S>                                                          <C>                             <C>     
Costs of properties                                          $366,655                        $449,319
Reduction in value                                            196,733                         140,000
                                                       ---------------                 ---------------

Fair value reflected in financial statements                 $169,922                        $309,319
                                                       ===============                 ===============

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

F. Investment in Partnership (see note 5)

G. Income Taxes

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

H. Organization and Syndication Costs

     The Partnership  bears its own  organization  and syndication  costs (other
than certain sales  commissions  and fees described  above)  including legal and
accounting expenses,  printing costs, selling expenses, a 1% wholesale brokerage
fee and filing fees.  Organizational  costs of $14,750 were capitalized and were
amortized  over a five year period.  Syndication  costs of $346,135 were charged
against partners capital and were allocated to individual  partners  consistent
with the Partnership Agreement.

I. Allowance for Doubtful Accounts

     Mortgage  Investments and the related accrued  interest,  fees and advances
are  analyzed  on a  continuous  basis  for  recoverability.  Delinquencies  are
identified and followed as part of the Mortgage  Investment  system. A provision
is made for doubtful  accounts to adjust the allowance for doubtful  accounts to
an amount  considered by management  to be adequate  with due  consideration  to
collateral value to provide for  unrecoverable  accounts  receivable,  including
impaired  Mortgage  Investments,   unspecified  mortgage  investments,   accrued
interest and advances on Mortgage  Investments,  and other  accounts  receivable
(unsecured).  The  composition  of the  allowance  for  doubtful  accounts as of
December 31, 1998 and 1997 was as follows:

</TABLE>
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>

                                                                        December 31,
                                                       -----------------------------------------------
                                                            1998                            1997
                                                       ---------------                 ---------------

<S>                                                           <C>                                  <C>
Impaired Mortgage Investments                                 $84,736                              $0
Unspecified Mortgage Investments                               93,732                          13,432
Accounts receivable, unsecured                                 23,776                          15,182
                                                                                       ---------------
                                                       ===============
                                                             $202,244                         $28,614
                                                       ===============                 ===============

J. Net Income Per $1,000 Invested

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

NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES

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

A. Mortgage Brokerage Commissions

     Mortgage brokerage  commissions for services in connection with the review,
selection,  evaluation,  negotiation  and extension of the Mortgage  Investments
were limited up to 12% of the  principal  amount of the loans through the period
ending  6  months  after  the  termination  date  of the  offering.  Thereafter,
commissions  are limited to an amount not to exceed 4% of the total  Partnership
assets  per year.  Such  commissions  are paid by the  borrowers,  thus,  not an
expense of the Partnership.  Such  commissions  totalled $36,700 and $10,000 for
the years ended December 31, 1998 and 1997, respectively.

B. Mortgage Servicing Fees

     Monthly  mortgage  servicing fees are paid to Redwood Mortgage up to 1/8 of
1% (1.5% annual) of the unpaid principal, or such lesser amount as is reasonable
and customary in the  geographic  area where the property  securing the Mortgage
Investment is located.  Mortgage servicing fees of $70,630, $39,918, and $44,565
were incurred for years 1998, 1997 and 1996, respectively.
</TABLE>
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

C. Asset Management Fee

     The General  Partners are  authorized to receive  monthly fees for managing
the Partnerships  Mortgage Investment portfolio and operations of up to 1/32 of
1% (3/8 of 1% annual). There were no management fees incurred for years 1997 and
1996, respectively. Management fees totalled $6,640 for 1998.

D. Other Fees

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

E. Income and Losses

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

F. Operating Expenses

     The General Partners or their affiliate  (Redwood  Mortgage) are reimbursed
by the  Partnership  for all  operating  expenses  actually  incurred by them on
behalf of the Partnership,  including without limitation,  out-of-pocket general
and administration expenses of the Partnership, accounting and audit fees, legal
fees and expenses,  postage and preparation of reports to Limited  Partners.  In
1998,  1997,  and 1996,  clerical costs  totaling  $24,440,  $27,786 and $31,838
respectively,  were reimbursed to Redwood  Mortgage and are included in expenses
in the Statements of Income.

NOTE 4 OTHER PARTNERSHIP PROVISIONS

A. Term of the Partnership

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

B. Election to Receive Monthly, Quarterly or Annual Distributions

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

C. Profits and Losses

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

D. Withdrawal From Partnership

     A Limited  Partner  had no right to  withdraw  from the  Partnership  or to
obtain  the return of his  capital  account  for at least five years  after such
units are  purchased  which in all  instances had occurred by December 31, 1998.
After that  time,  at the  election  of the  Partner,  capital  accounts  can be
returned  over a five year  period in 20 equal  quarterly  installments  or such
longer period as is requested.
<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

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

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

NOTE 5 - INVESTMENT IN PARTNERSHIP

     The  Partnerships  interest  in land  located in East Palo Alto,  CA.,  was
acquired through foreclosure.  The Partnership interest is invested with that of
two other  Partnerships.  The  Partnerships  had been  attempting to develop the
property into single family residences.  Significant  community  resistance,  as
well as environmental, and fish and wildlife concerns affected efforts to obtain
the required  approvals.  The  Partnership,  in resolving  disputes  which arose
during the course of the Partnerships  attempt to obtain entitlements to develop
the property,  entered into agreements on May 8, 1998 with  Rhone-Poulanc,  Inc.
These agreements,  among other things,  restrict the property to non-residential
uses, provide for appropriate indemnifications,  and include other consideration
including the payment of cash. The Partnership  still retains  liability for the
remediation of pesticide contamination affecting the property.  Investigation of
remediation  options are ongoing.  At this time management does not believe that
remediation of the pesticide contaminants will have a material adverse effect on
the  financial  condition  of the  Partnership.  As of December  31,  1998,  the
Partnership has received $145,443 in excess of its cost.

NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT

     The  Partnership  had a  bank  line  of  credit  secured  by  its  Mortgage
Investment  portfolio  up to  $2,000,000  at 1% over prime.  The  balances  were
$390,000  and  $899,011 at December  31,  1998 and 1997,  respectively,  and the
interest  rate at December  31, 1998 was 8.75%  (7.75%  prime + 1%). The line of
credit  expired  December  31,  1998 and was  replaced  by a line of  credit  of
$1,000,000 at 8.75% which will expire December 31, 1999.


<PAGE>


                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

NOTE 7 - LEGAL PROCEEDINGS

     Legal  actions  against  borrowers  and other  involved  parties  have been
initiated by the Partnership to help assure payments against unsecured  accounts
receivable totaling $23,775.  The Partnership is a defendant along with numerous
defendants,  including a developer,  contractor, and other lenders, in a lawsuit
involving the  Partnerships  attempt to recover its  investment in real estate
acquired through foreclosure.

     Management  anticipates that the ultimate outcome of the legal matters will
not have a material  adverse effect on the net assets of the  Partnership,  with
due  consideration  having been given in arriving at the  allowance for doubtful
accounts.


NOTE 8 - INCOME TAXES

     The following reflects a reconciliation  from net assets (Partners Capital)
reflected in the financial statements to the tax basis of those net assets:

                                              December 31,
                              -----------------------------------------------
                                           1998                           1997
                                 ----------------               ---------------

Net assets - Partners Capital
per financial statements              $8,707,534                    $9,431,453


Formation Loan receivable                      0                        59,521
Allowance for doubtful accounts          202,344                        28,614
                                 ================               ===============
Net assets tax basis                  $8,909,878                    $9,519,588
                                 ================               ===============

     In 1998 and  1997,  approximately  71% and 72%,  respectively,  of  taxable
income was allocated to tax exempt  organizations  i.e.,  retirement plans. Such
plans do not have to file income tax returns  unless their  unrelated  business
income exceeds $1,000.  Applicable  amounts become taxable when distribution is
made to participants.

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

     (b) The  Carrying  Value of  Mortgage  Investments  - (see  note 2 (c)) was
$7,969,735  at  December  31,  1998.  The fair  value of  these  investments  of
$7,945,380  was  estimated  based upon  projected  cash flows  discounted at the
estimated  current  interest  rates at which  similar  loans would be made.  The
applicable  amount of the  allowance  for doubtful  accounts  along with accrued
interest and advances  related  thereto  should also be considered in evaluating
the fair value versus the carrying value.

<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS
<TABLE>
<CAPTION>

The Mortgage Investments are secured by recorded deeds of trust. At December 31, 1998, there were 56 
Mortgage  Investments  outstanding with the following characteristics:

<S>                                                                              <C>
Number of Mortgage Investments outstanding                                       56
Total Mortgage Investments outstanding                                   $7,969,735

Average Mortgage Investment outstanding                                    $142,317
Average Mortgage Investment as percent of total                               1.79%
Average Mortgage Investment as percent of Partners  Capital                   1.63%

Largest Mortgage Investment outstanding                                  $1,376,117
Largest Mortgage Investment as percent of total                              17.27%
Largest Mortgage Investment as percent of Partners  Capital                  15.80%

Number of counties where security is located (all California)                    14
Largest percentage of Mortgage Investments in one county                     28.72%
Average Mortgage Investment to appraised value of security at time
     Mortgage Investment was consummated                                     65.27%
Number of Mortgage Investments in foreclosure                                     0



The following categories of mortgage investments are pertinent at December 31, 1998 and 1997:

                                                                          December 31,
                                                            ------------------------------------------
                                                                  1998                      1997
                                                            -----------------          ---------------
First Trust Deeds                                                  4,432,246               $4,588,169
Second Trust Deeds                                                 2,892,870                2,869,543
Third Trust Deeds                                                    394,620                  397,273
Fourth Trust Deeds                                                   249,999                  249,999
                                                            -----------------          ---------------
  Total mortgage investments                                       7,969,735                8,104,984
Prior liens due other lenders                                     12,348,933               11,075,429
                                                            -----------------          ---------------
  Total debt                                                     $20,318,668              $19,180,413
                                                            =================          ===============

Appraised property value at time of loan                         $31,128,892              $28,422,684
                                                            =================          ===============

Total investments as a percent of appraisals                          65.27%                   67.48%
                                                            =================          ===============

Investments by Type of Property

Owner occupied homes                                                 944,491               $1,057,067
Non-Owner occupied homes                                             374,408                  380,142
Apartments                                                           817,819                  791,755
Commercial                                                         5,833,017                5,876,020
                                                            =================          ===============
                                                                  $7,969,735               $8,104,984
                                                            =================          ===============
</TABLE>

<PAGE>

                          REDWOOD MORTGAGE INVESTORS VI
                       (A California Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

     Scheduled  maturity  dates of mortgage  investments as of December 31, 1998
are as follows:

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

                            1999                                    $4,470,166
                            2000                                     1,021,816
                            2001                                     1,004,686
                            2002                                       422,896
                            2003                                       437,684
                         Thereafter                                    612,487
                                                               ================
                                                                    $7,969,735
                                                               ================

     The  scheduled   maturities   for  1999  include   $2,080,024  in  Mortgage
Investments  which are past  maturity at December  31,  1998.  $816,898 of those
Mortgage Investments were categorized as delinquent over 90 days.

     Seven  Mortgage  Investments  with  principal  outstanding  of $994,735 had
interest payments overdue in excess of 90 days.

     The cash  balance at December  31, 1998 of $299,775  were in two banks with
interest  bearing  balances  totalling  $296,563.  The  balances  exceeded  FDIC
insurance  limits (up to $100,000 per bank) by $99,775.  As and when deposits in
the Partnerships bank accounts increase significantly beyond the insured limit,
the funds are generally either placed in new Mortgage Investments or used to pay
down on the line of credit balance.


<PAGE>



<TABLE>
<CAPTION>

SCHEDULE II

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

Column A                  Column B       Column C       Column D             Column E
Name of Debtor            Balance Beg.   Additions           Deductions        Balance at end of period
                          of period
                          12/31/97
                                                         (1)         (2)          (1)             (2)
                                                      Amounts     Amounts     Current         Not Current
                                                      collected   written     12/31/98         12/31/98
                                                                  off *

<S>                       <C>              <C>        <C>         <C>            <C>             <C>  
Redwood Mortgage          $59,521          $0.00      $53,291     $6,230         $0.00           $0.00


     The above  schedule  represents  the  Formation  Loan  borrowed  by Redwood
Mortgage from the  Partnership to pay for the selling  commissions on units.  It
was an unsecured loan and bore no interest.  It was repaid to the Partnership in
ten equal annual  installments  of principal only which began December 31, 1989.
As of December 31, 1998, it was fully repaid.
<FN>

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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

SCHEDULE VIII

                                                   VALUATION AND QUALIFYING ACCOUNTS
                                                     REDWOOD MORTGAGE INVESTORS VI

Col. A             Col. B                    Col. C                      Col. D         Col. E
Description        Balance                  Additions                  Deductions       Balance at
                                 --------------------------------
                   Beginning                                           Describe        End of Period
                   of Period           (1)             (2)
                                 Charged to       Charged     to
                                 Costs            Other
                                 & Expenses       Accounts -
                                                  Describe
Year Ended
12/31/98

Deducted from
Asset Accounts:

Allowance for
<S>                  <C>            <C>                 <C>               <C>            <C>     
Doubtful Accounts    $28,614        $268,764            $0                $95,034        $202,344

Cumulative
write-down of
Real Estate held
for sale (REO)      $140,000       ($88,710)            $0                                $196,733
                                                                 ($145,443)
                    ----------     -----------      ------------ --------------     -----------------

Total               $168,614        $180,054            $0           (a)                  $399,077
                                                                 ($50,409)
                    ==========     ===========      ============ ==============     =================
<FN>

(a) represents net loss (or gain) on Mortgage Investments and Real Estate held for sale.

</FN>
</TABLE>
<PAGE>



<TABLE>
<CAPTION>

SCHEDULE IX

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

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

Year-Ended
<S>                <C>               <C>               <C>               <C>               <C>  
12/31/98           $390,000          9.45%             $1,068,000        $456,874          9.45%

</TABLE>
<PAGE>



<TABLE>
<CAPTION>

SCHEDULE XII

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

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

<S>                           <C>        <C>            <C>          <C>                      <C>                 
Comm       14.75%  09/01/95   2,241.96   250,000.00     185,000.00   180,618.12               2nd Mtg    San Mateo
Res        13.75%  10/01/96     275.00    55,374.00      24,000.00    24,000.00               2nd Mtg    San Mateo
Comm       13.75%  10/01/96     644.53         0.00      56,250.00    56,250.00               1st Mtg    San Mateo
Res        12.50%  02/01/07     554.63         0.00      45,000.00    33,897.62               lst Mtg   Santa Cruz
Res         6.00%  04/01/96     106.81    10,470.00      20,000.00    19,738.80     4,913.26  2nd Mtg   Sacramento
Res         4.00%  04/01/97     113.30         0.00      22,500.00    23,130.86     5,325.10  1st Mtg   Sacramento
Res         4.00%  04/01/97     120.00         0.00      24,000.00    22,646.50               lst Mtg   Sacramento
Comm       10.00%  08/06/02     709.38    30,802.00      82,873.25    76,863.12               2nd Mtg     Alameda
Comm       12.50%  01/01/08   1,343.45    64,620.00     109,000.00    90,605.96               2nd Mtg   Santa Clara
Comm       14.50%  01/01/00   6,157.52   442,592.00     499,998.80   499,998.81               2nd Mtg  Contra Costa
Apts        7.00%  08/01/03   1,022.35         0.00     153,660.00   153,151.57               lst Mtg   Sacramento
Apts        6.50%  05/01/06     540.83    89,904.00     100,000.00    96,716.11     8,112.45  2nd Mtg   Sacramento
Res        13.50%  09/01/08     280.90    18,085.00      21,635.32    18,320.11               2nd Mtg  Contra Costa
Comm       12.00%  11/01/98   2,057.23    11,864.00     200,000.00    35,656.54               2nd Mtg  San Francisco
Comm       10.00%  12/01/98   1,755.14         0.00     200,000.00   197,333.47    10,530.84  1st Mtg   Stanislaus
Comm       14.00%  01/01/00   3,450.33 1,126,508.00     249,999.40   249,999.40               4th Mtg  Contra Costa
Comm       10.00%  12/01/98   5,046.04         0.00     575,000.00   566,694.43    25,230.20  lst Mtg     Alameda
Comm        7.00%  12/01/03   1,151.48   562,500.00      99,172.75    81,121.58     5,757.40  2nd Mtg     Alameda
Comm       12.00%  02/01/99  14,025.12         0.00   1,376,117.03 1,376,117.03               lst Mtg   Santa Clara
Land       12.00%  07/01/96   1,352.50   494,979.00     135,250.00   135,250.00               3rd Mtg     Sonoma
Comm        8.50%  11/07/99     515.73         0.00      72,809.59    72,809.59               1st Mtg     Sonoma
Land       13.75%  12/20/98   5,524.55    54,724.00     567,856.74   174,236.24    11,049.10  2nd Mtg   Stanislaus
Res         8.00%  12/01/00     500.00   148,004.00      52,500.00    44,094.59               2nd Mtg   Santa Clara
Apts        7.00%  02/10/05     234.06    80,250.00      40,125.00    40,125.00               2nd Mtg  San Francisco
Res        12.00%  06/25/94     100.00         0.00      10,000.00    10,000.00     4,500.00  lst Mtg   Sacramento
Apts       11.50%  04/01/05     123.79         0.00     150,000.00    12,499.99               lst Mtg  San Francisco
Comm        9.00%  05/10/02     670.52         0.00      83,333.33    81,033.44               1st Mtg     Shasta
Res         8.00%  09/27/00     482.54    96,429.00      72,380.95    70,617.58               2nd Mtg    Monterey
Comm       12.00%  02/01/11     756.11         0.00      63,000.00    58,595.01               lst Mtg     Alameda
Comm       12.00%  12/31/01   3,598.27 1,955,550.00     340,000.00   359,827.21               2nd Mtg   Santa Clara
Res         7.00%  05/15/01     850.00         0.00     145,000.00   144,858.86               lst Mtg    San Mateo
Land       14.00%  02/01/97   3,822.50         0.00     382,250.00   235,381.46               1st Mtg   Santa Clara
Res         8.00%  09/18/03     166.58         0.00      22,701.51    22,237.39               lst Mtg     Sonoma
Res         8.00%  09/30/03     170.67         0.00      23,259.09    22,799.04               lst Mtg     Sonoma
Comm       12.00%  02/01/99     508.40 1,279,200.00      49,200.00    49,200.00               2nd Mtg   Santa Clara
Res        13.00%  12/01/99     704.17         0.00      65,000.00    65,000.00     1,408.34  lst Mtg     Ventura
Res        13.00%  12/01/99     140.83         0.00      65,000.00    13,000.00       281.66  lst Mtg     Ventura
Res        13.00%  12/01/99     140.83         0.00      65,000.00    13,000.00       281.66  1st Mtg     Ventura
Apts        7.00%  08/01/02   1,545.83         0.00     265,000.00   265,000.00               lst Mtg   Sacramento
Land       11.00%  07/01/99   3,879.29 1,452,282.00     700,000.00   409,543.57               2nd Mtg  San Francisco
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

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

<S>                             <C>            <C>      <C>          <C>                      <C>              
Apts       12.00%  08/01/99     773.59         0.00     80,000.00    78,854.34                1st Mtg     Marin
Res        11.00%  10/01/01   4,583.33         0.00    500,000.00   500,000.00                lst Mtg   Stanislaus
Res        13.50%  03/01/03     467.39         0.00     36,000.00    17,996.94                lst Mtg     Solano
Res        10.00%  08/01/03     576.96   262,720.00     49,000.00    25,345.46                2nd Mtg   San Mateo
Apts       13.00%  11/01/03     759.15   341,094.00     60,000.00    32,569.07                2nd Mtg San Francisco
Res        13.75%  11/01/03   2,202.61         0.00    167,500.00    82,462.54                1st Mtg    Alameda
Apts       14.00%  03/01/92   1,184.87   960,000.00    100,000.00    95,498.69                2nd Mtg  Santa Clara
Comm       14.50%  05/01/04   4,233.05   532,392.00    310,000.00   187,893.17                2nd Mtg   San Mateo
Comm       11.50%  05/01/99   3,113.39         0.00    314,000.00   307,495.69                1st Mtg    Alameda
Comm       17.25%  11/20/95   2,533.19   185,351.00    200,000.00   193,387.36                3rd Mtg   San Mateo
Apts       14.00%  06/01/92     473.95 1,060,000.00     40,000.00    38,282.01                3rd Mtg  Santa Clara
Res        14.25%  07/01/04     984.46    78,672.00     73,000.00    46,134.38                2nd Mtg San Francisco
Res        14.50%  04/01/05     546.20   150,804.00     40,000.00    27,700.23                3rd Mtg San Francisco
Res        14.50%  07/01/92   2,416.67   340,827.00    200,000.00    71,918.82                2nd Mtg San Francisco
Comm       10.00%  08/01/00   1,428.14    59,402.00    160,000.00   157,105.61                2nd Mtg   San Mateo
Apts        9.00%  02/01/99      38.42   153,534.00      5,122.00     5,122.00                2nd Mtg   Sacramento
                                                                   
Total                       $93,698.54 $12,348,933.0$9,748,494.76 $7,969,735.31   $77,390.01

<FN>

Notes:
     Mortgage   Investments   classified  as  impaired  had  principal  balances
totalling $614,978. Impaired Mortgage Investments are defined  as  Mortgage  Investments  where the costs of  related  balances
exceeds  the  anticipated  fair value less costs to collect. Interest is no longer accrued thereon.

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

</FN>
</TABLE>
<PAGE>


<TABLE>
<CAPTION>

Schedule XII

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

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

                                                 1998                  1997                 1996
                                            ---------------       ---------------      ---------------

<S>                                              <C>                  <C>                 <C>        
Balance at beginning of year                     8,104,984            $9,313,924          $10,402,491
                                            ---------------       ---------------      ---------------
Additions during period:
  New Mortgage Investments                       1,798,822               557,796            2,474,843
  Other                                                  0                     0                    0
                                            ---------------       ---------------      ---------------
                  Total Additions               $1,798,822              $557,796           $2,474,843
                                            ---------------       ---------------      ---------------


Deductions during period:
  Collections of principal                       1,934,071             1,634,128            3,295,834
  Foreclosures                                           0                     0              267,576
  Cost of Mortgage Investments sold                      0                     0                    0
  Amortization of Premium                                0                     0                    0
  Other                                                  0               132,608                    0
                                            ---------------       ---------------      ---------------
                  Total Deductions               1,934,071             1,766,736            3,563,410
                                            ---------------       ---------------      ---------------

Balance at close of year                        $7,969,735            $8,104,984           $9,313,924
                                            ===============       ===============      ===============
</TABLE>
<PAGE>



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

     The Partnership  has neither  changed its accountants nor does it have any
disagreement  on any matter of accounting  principles or practices and financial
statement disclosures.



                           Part III

Item 10 - Directors and Executive Officers of the Registrant.

     The Partnership has no officers or directors. Rather, the activities of the
Partnership  are managed by the three General  Partners of which two individuals
are D. Russell  Burwell and Michael R.  Burwell.  The third  General  Partner is
Gymno Corporation,  a California  corporation,  formed in 1986. The Burwells are
the  two  shareholders  of  this  corporation  on  an  equal  (50-50)  basis.  A
description  of the General  Partners is set forth on page 22 of the  Prospectus
under the section Management.

<PAGE>

Item 11 - Executive Compensation

    COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP

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

     The  following  compensation  has been  paid to the  General  Partners  and
affiliates  for services  rendered  during the year ended December 31, 1998. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus.

Entity Receiving        Description of Compensation 
Compensation            and Services Rendered                          Amount
---------------------- -------------------------------              ----------
I.
Redwood Mortgage       Mortgage Servicing Fee for servicing Mortgage
                       Investments                                     $70,630

General Partners
&/or Affiliates        Asset Management Fee for managing assets         $6,640

General Partners       1% interest in profits                           $5,125


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



Redwood Mortgage   Mortgage Brokerage Commissions for services in connection
                   with the review, selection, evaluation, negotiation, and
                   extension of the Mortgage Investments paid by the borrowers
                   and not by the Partnership                          $36,700

Redwood Mortgage   Processing and Escrow Fees for services in
                   connection with notary, document preparation,
                   credit investigation, and escrow fees payable by
                   the borrowers and not by the Partnership               $749


III. IN ADDITION,  THE GENERAL PARTNER AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME....................................................$24,440

<PAGE>

Item 12 - Security Ownership of Certain Beneficial Owners and Management

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

Item 13 - Certain Relationships and Related Transactions

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

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


                                  Part IV

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

(A)     Documents filed as part of this report:

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

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

<PAGE>

         3. Exhibits.


Exhibit No.                Description of Exhibits

     3.1           Limited Partnership Agreement
     3.2           Form of Certificate of Limited Partnership Interest
     3.3           Certificate of Limited Partnership
    10.1           Escrow Agreement (1)
    10.2           Servicing Agreement (1)
    10.3           (a) Form of Note secured by Deed of Trust which provides for
                   principal and interest payments (1)
                   (b) Form of Note secured by Deed of Trust which provides
                   principal and interest payments and right of assumption (1)
                   (c) Form of Note secured by Deed of Trust which provides for
                   interest only payments (1)
                   (d) Form of Note (1)
    10.4           (a) Deed of Trust and Assignment of Rents to accompany
                       Exhibits 10.3 (a) and (c) (1)
                   (b) Deed of Trust and Assignment of Rents to accompany
                       Exhibits 10.3 (b) (1)
                   (c) Deed of Trust to accompany Exhibit 10.3 (d) (1)
    10.5           Promissory Note for Formation Loan (1)
    10.6           Agreement to Seek a Lender (1)
    24.1           Consent of Parodi & Cropper (1)
    24.2           Consent of  Wilson, Ryan & Campilongo(1)


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

(B)      Reports on form 8-K

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

(C)      See (A) 3 above

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

<PAGE>


                          Signatures

Pursuant  to the  requirements  of Section  13 or 15 (d) of the  Securities
Exchange Act of 1934 the  registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on the 25th day of 
March, 1999.

REDWOOD MORTGAGE INVESTORS VI


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


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


By:      Gymno Corporation, General Partner


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


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


Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacity indicated on the 25th day of March, 1999.


Signature                         Title                                Date


/S/ D. Russell Burwell
-----------------------
D. Russell Burwell             General Partner                   March 25, 1999


/S/ Michael R. Burwell
-----------------------
Michael R. Burwell             General Partner                   March 25, 1999



/S/ D. Russell Burwell
-----------------------
D. Russell Burwell       President of Gymno Corporation,         March 25, 1999
                         (Principal Executive Officer);
                         Director of Gymno Corporation


/S/ Michael R. Burwell
-----------------------
Michael R. Burwell       Secretary/Treasurer of Gymno            March 25, 1999
                         Corporation (Principal Financial
                         and Accounting Officer);
                         Director of Gymno Corporation