REDWOOD
MORTGAGE INVESTORS VI


(a
California Limited Partnership)


Index
to Form 10-K





December
31, 2007












Part IPage
      No.Item
      1   – Business
            4Item
      2   – Properties
            9Item
      3   – Legal Proceedings
            9Item
      4   – Submission of Matters to a Vote of Security Holders
      (Partners)
            9Part IIItem
      5   – Market for the Registrant’s “Limited Partnership
      Units” and Related Unitholder Matters
            9Item
      6   – Selected Financial Data
            10Item
      7   – Management Discussion and Analysis of Financial
      Condition and Results of Operations
            11Item
      7a – Quantitative and Qualitative Disclosures About Market
      Risk
            19Item
      8   – Financial Statements and Supplementary
      Data
            22Item
      9   – Changes in and Disagreements with Accountants on
      Accounting and Financial Disclosure
            47Item
      9a – Controls and Procedures
            47Item
      9b – Other Information
            47Part IIIItem
      10 – Directors, Executive Officers and Corporate
Governance
            47Item
      11 – Executive Compensation
            48Item
      12 – Security Ownership of Certain Beneficial Owners and Management, and
      Related Stockholder Matters
            49Item
      13 – Certain Relationships and Related Transactions, and Director
      Independence
            49Item
      14 – Principal Accountant Fees and Services
            49Part IVItem
      15 – Exhibits, Financial Statements and Schedules
            50Signatures
            51Certifications
            52





1








UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549








FORM
10-K








(Mark
One)


[X]
            ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For
the Year Ended December 31, 2007





OR





[   ]
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For
the transition period from ______________ to ______________








Commission
File Number:  000-17573








REDWOOD
MORTGAGE INVESTORS VI,


a
California Limited Partnership


(Exact
name of registrant as specified in its charter)








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








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








(650)
      365-5341


(Registrant’s
telephone number, including area code)








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





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





2





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act of 1933, as amended.





Yes
            
            
            No
            XX





Indicate
by check mark if the registrant is not required to file pursuant to Section 13
or Section 15(d) of the Securities Act of 1934, as amended.





Yes
            
            
            No
            XX





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 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.





Yes
            XX
            
            No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.





Large
      Accelerated Filer
            
            Accelerated
      Filer
            
            Non-Accelerated
      Filer
            X





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).





Yes
            
            
            No
            XX





As of
June 30, 2007, the aggregate value of limited partnership Units held by
non-affiliates was $6,181,674. This calculation is based on the capital account
balance of the limited partners and excludes partnership Units held by the
general partners.





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, are incorporated in Parts II, III, and
IV.


3


Part I








Item 1 –
Business





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





The
Partnership was formed in September 1987, with an approved 120,000 Units of $100
each ($12,000,000).  The Units were offered on a “best efforts” basis
through broker/dealer member firms of the Financial Industry Regulatory Agency
(FINRA).  It immediately began issuing Units and began investing in
loans in October 1987.  The offering terminated in September 1989, and
as of that date 97,725.94 limited partner Units were sold realizing proceeds of
$9,772,594.  At December 31, 2007, the Partnership had a balance of
secured loans totaling $4,944,898 with interest rates thereon ranging from 8.50%
to 10.50%.





Currently
first, second and third mortgage loans comprise 55.91%, 40.05% and 4.04%
respectively, of the total amount of secured loan portfolio.  Single
Family (1-4 units) homes comprise 57.67% of the secured mortgage loans, down
from 79.1% in 2006.  Commercial secured loans comprise 31.70% of the
portfolio, an increase of 17.04% from 2006.  The major concentration
of secured loans, comprising 52.14% of the total secured loans, is in the nine
counties that comprise the San Francisco Bay Area.  The remaining
balance is primarily in counties adjacent to the San Francisco Bay Area and in
Northern California (32.63%) and in Southern California
(15.23%).  Currently secured loan amounts average
$206,037.  Some of the secured loans are fractionalized between
affiliated partnerships with objectives similar to those of the Partnership to
further reduce risk.  Average equity per loan transaction, which is
our loan plus any senior loans, divided by the property’s appraised value,
subtracted from 100%, stood at 42.00%, based on senior loans and appraised
values at the inception of our loan.  Generally, the greater the
equity, the greater the protection for the lender.  The Partnership’s
loan portfolio did not have any property in foreclosure as of the end of
December 2007.





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





For the
year ended December 31, 2007 and 2006 the Partnership did not take back any
collateral from defaulted borrowers.





For the
years 2005, 2006 and 2007, the Partnership’s revenues were $522,282, $484,648
and $511,604, respectively.  The changes in revenues were the result
of the combination of varying average loan balances, and the related average
interest rates.  For 2005, 2006 and 2007 these combinations were
$4,876,596 and 9.13%, $4,830,820 and 9.20% and $4,912,259 and 9.62%,
respectively.  Cash flow generated from mortgage interest and loan
pay-downs and pay-offs was used to meet limited partner capital and earnings
liquidations and the excess was used to make mortgage loans or for other proper
Partnership purposes.  Withdrawals by limited partners were $457,825,
$468,966 and $527,873 for the three years ended December 31, 2005, 2006 and
2007, respectively.





During
the year 2007, the Partnership’s annualized yield on compounding accounts was
6.25% and on monthly distributing accounts it was 6.08%.





4


Competition
and General Economic Conditions.





The
Partnership’s major competitors in providing mortgage loans are banks, savings
and loan associations, thrifts, conduit lenders, mortgage brokers, and other
entities both larger and smaller than the Partnership.  Many of these
lenders are not portfolio lenders and rely upon their ability to sell notes they
have funded in order to provide further capital resources to continue their
lending operations.  In addition, many competitors, due to their size,
are unable to regularly entertain loan requests at or above $1,000,000, thus
reducing the competition and allowing the Partnership to provide higher quality
loans and/or higher returns.





From 2004
through 2006, competition for real estate loans was strong, particularly among
residential lenders.  Partly due to competitive factors, underwriting
standards decreased and innovative loan products developed.  As a
result, many borrowers who previously had a difficult time obtaining real estate
financing were able to obtain real estate loans.  In 2007, real estate
purchase volumes continued to decline from their highs in
2005.  Accompanying lower purchase volumes, loan demand decreased,
values began to decline and loan delinquencies began to
increase.  Together, these factors, as well as others, contributed to
a reduced demand for mortgage backed securities.  Lenders reliant upon
the sale of their notes to provide additional capital for lending faced a credit
squeeze, pressure on capital, and earnings.  During 2007, over 250
lenders ceased to do business in the United States, resulting in diminished
competition in the lending industry.  The general partners believe the
lower level of competition may provide an opportunity for the Partnership to
seek well-qualified borrowers with desirable security for its lending
operations.  It is possible that coupon rates may rise as competition
lessens, and as interest rate spreads increase a clearer risk return equation
may develop.





During
2007, the national economy itself has decelerated.  Real Gross
Domestic Product, the output of goods and services produced by labor and
property located in the United States increased at an annual rate of 0.6% in the
fourth quarter of 2007 as compared to 2.1% in the fourth quarter of
2006.  For the first through fourth quarters of 2007, Real Gross
Domestic Product was 0.6%, 3.8%, 4.9% and 0.6% as compared to 4.8%, 2.4%, 1.1%
and 2.1% for the first through fourth quarters of 2006.  The Federal
Reserve is not forecasting a recession but does anticipate slow growth for this
year and higher unemployment.





The
unemployment rate for the United States increased in the fourth quarter of 2007
to 5.0% as compared to 4.7% for the third quarter, 4.7% for the second quarter
and 4.5% for the first quarter.  In January and February of 2008, the
national unemployment rate fell to 4.9% and 4.8%, respectively.  On a
comparison basis, the annual unemployment rates for the United States were 4.6%
for 2007, 4.6% for 2006, 5.1% for 2005 and 5.5% for 2004.  In
California, unemployment rates increased 1% year over year from 4.9% in December
2006 to 5.9% as of December 2007.  Unemployment is a significant
indicator of a borrower’s ability to make payments.





Month to
month, inflation has been volatile throughout 2006 and 2007.  The cost
of oil, a component in inflation, has fluctuated but followed a significant
upward trend rising to $110 per barrel in March of 2008.  The Consumer
Price Index for All Urban Consumers decreased in December of 2007 by 0.1% before
seasonal adjustment, but was up by 4.1% for the year.  Consumer Price
Index increases were 2.5% for 2006, 3.4% for 2005 and 1.9% for
2004.  At the same time, interest rates have been declining as the
Federal Reserve has exhibited strong resolve in attempting to stimulate the
economy through a variety of means, including lowering the Federal Funds
Rate.  After having left the Federal Funds Rate unchanged at 5.25% for
more than two years, in September 2007 the Federal Reserve acted to decrease the
Federal Funds Rate by 0.50%, then again by 0.25% in October 2007, 0.25% in
December 2007, 1.25% in January 2008, and 0.75% in March 2008 to a level of
2.25%.  Long term interest rates, represented by the 10 year treasury
bonds, have responded somewhat to the lowered Federal Funds
Rates.  However, as long term rates are not directly related to the
Federal Funds Rate, it is likely to take some time before the lowering of the
Federal Funds Rate will have its full effect.  As of September 30,
2007, the 10 year Treasury yield was 4.61%, at December 31, 2007 it was 4.04%,
and at March 22, 2008 it was 3.34%.  The lowering of the Federal Funds
Rate has also had an effect of lowering interest rates on longer term
maturities.   These lower interest rates help the affordability
of owning real estate.





5


Mortgage
rates have responded slowly to the Federal Reserves actions to lower interest
rates.  Freddie Mac reports average interest rates for 30 year fixed
rate conforming loans were 6.16% for March of 2007, 6.66% for June of 2007,
6.38% for September of 2007, 6.10% for December of 2007 and 5.87% on March 20,
2008.  Historically, the annual average rate for 30 year fixed rate
conforming mortgages has been 6.34% in 2007, 6.41% in 2006, 5.87% in 2005, and
5.83% in 2004.  The recent downward trend in interest rates on real
estate loans should begin to stimulate real estate sales volumes, which have
been declining since their high point in 2005.





On a
national level, both residential sales volumes and median home prices dropped in
2007.  Sales of existing homes as reported by the National Association
of Realtors declined from 7,076,000 in 2005 to 6,478,000 in 2006 and to
5,652,000 in 2007.  The median national sales price of existing homes
was $219,000 in 2005.  It increased to $221,900 in 2006 and then
declined to $219,000 in 2007.





The
Partnership is expecting a reduced number of lenders in the marketplace along
with strengthened underwriting standards throughout the
industry.  Each of these factors is expected to lead to increased
lending opportunities.  Nevertheless, in many of our lending areas,
residential real estate values have been declining, which will require the
Partnership to be diligent in determining appropriate loan to value
parameters.  In addition, the slowing economy will create less demand
and perhaps further increases in unemployment, which might make it more
difficult for borrowers to meet their monetary obligations.  Lowered
interest rates and the Federal Reserve’s efforts to further stimulate the
economy could mitigate these factors and have positive effects on the
Partnership and borrowers’ abilities to meet their financial
obligations.





6


Secured Loan
Portfolio





As of
December 31, 2007, a summary of the Partnership’s secured loan portfolio is set
forth below.





Loans
      as a Percentage of Appraised Value





First
      Trust Deed Loans
            
            $
            2,764,524Second
      Trust Deed Loans
            
            
            1,980,374Third
      Trust Deed Loans
            
            
            200,000Total
      loans
            
            $
            4,944,898Priority
      Positions due other Lenders at Time of Loan
            
            
            5,715,592Total
      Debt
            
            $
            10,660,490Appraised
      Property Value at time of loan
            
            $
            18,380,414Total
      Secured Loans as a % of Appraisal based onappraisals
      and prior liens at date of loan
            
            
            58.00
            %





Number
      of Secured Loans Outstanding
            
            
            
            24





Average
      Secured Loan
            
            
            206,037Average
      Secured Loan as a % of Partners’ Capital
            
            
            3.37
            %Largest
      Secured Loan Outstanding
            
            
            400,000Largest
      Secured Loan as a % of Partners’ Capital
            
            
            6.54
            %Largest
      secured Loan as a % of Total Assets
            
            
            6.53
            %





Secured
      Loans as a Percentage of Total Loans
            
            PercentFirst
      Trust Deeds
            
            
            55.91
            %Second
      Trust Deeds
            
            
            40.05
            %Third
      Trust Deeds
            
            
            4.04
            %Total
            
            
            100.00
            %





Secured
      Loans by Type of Property
            
            Amount
            
            PercentSingle
      Family (1-4 units)
            
            $
            2,851,528
            
            57.67
            %Commercial
            
            
            1,567,745
            
            31.70
            %Apartments
            
            
            525,625
            
            10.63
            %Total
            
            $
            4,944,898
            
            100.00
            %





7


The
following is a distribution of secured loans outstanding as of December 31, 2007
by California Counties:





TotalSecuredCalifornia
      County
            
            Loans
            
            PercentSan Francisco Bay Area
    CountiesSan
      Francisco
            
            $
            1,100,625
            
            22.26
            %Alameda
            
            
            905,488
            
            18.31
            %Solano
            
            
            355,245
            
            7.18
            %Contra
      Costa
            
            
            216,981
            
            4.39
            %Napa
            
            
            —
            
            —San
      Mateo
            
            
            —
            
            —Marin
            
            
            —
            
            —Santa
      Clara
            
            
            —
            
            —Sonoma
            
            
            —
            
            —2,578,339
            
            52.14
            %San Francisco Bay Area Adjacent
      CountiesSan
      Joaquin
            
            
            437,500
            
            8.85
            %Monterey
            
            
            349,383
            
            7.07
            %Mariposa
            
            
            121,671
            
            2.46
            %Stanislaus
            
            
            107,543
            
            2.17
            %1,016,097
            
            20.55
            %Other California CountiesLos
      Angeles
            
            
            296,988
            
            6.01
            %Butte
            
            
            289,569
            
            5.86
            %Orange
            
            
            249,207
            
            5.04
            %San
      Bernardino
            
            
            206,863
            
            4.18
            %El
      Dorado
            
            
            200,000
            
            4.04
            %Shasta
            
            
            107,835
            
            2.18
            %1,350,462
            
            27.31
            %Total
            
            $
            4,944,898
            
            100.00
            %




Number
      of Loans in Foreclosure
            
            0
            
            
            
            $
            —





Scheduled
maturity dates of secured loans as of December 31, 2007 are as
follows:




Prior
      to December 31, 2008
            
            $
            939,569Between
      January 1, 2009 and December 31, 2009
            
            
            992,745Between
      January 1, 2010 and December 31, 2010
            
            
            596,140Between
      January 1, 2011 and December 31, 2011
            
            
            1,556,694Between
      January 1, 2012 and December 31, 2012
            
            
            859,750Thereafter
            
            
            —$
            4,944,898





8


The
Partnership’s largest loan in the principal amount of $400,000 represents 8.09%
of outstanding secured loans and 6.53% of Partnership assets.  Larger
loans sometimes increase above 10% of the secured loan portfolio or Partnership
assets as these amounts decrease due to limited partner withdrawals and loan
payoffs and due to restructuring of existing loans.





The
scheduled maturities for 2008 includes no loans past maturity at December 31,
2007.  The Partnership occasionally allows borrowers to continue to
make the regular interest payments on debt past maturity for periods of
time.  In many instances the interest rate on these past maturity
loans is higher than currently existing interest rates.  It is the
Partnership’s experience loans can be refinanced or repaid before and after the
maturity date.  Therefore, the table of scheduled maturities is not a
forecast of future cash receipts.








Item 2 –
Properties





The
Partnership did not take back any collateral security from borrowers in 2007 and
2006.





The
Partnership owns, through previous foreclosures, one property: an undeveloped
parcel of land located in East Palo Alto, California.  The land is
owned with two other affiliated partnerships.  The Partnership’s net
investment in the land at December 31, 2007 is $130,215.  The property
is currently listed for sale.








Item 3 – Legal
Proceedings





In the
normal course of business, the Partnership may become involved in various types
of legal proceedings such as assignment of rents, bankruptcy proceedings,
appointment of receivers, unlawful detainers, judicial foreclosure, etc., to
enforce the provisions of the deeds of trust, collect the debt owed under the
promissory notes, or to protect, or recoup its investment from the real property
secured by the deeds of trust.  None of these actions would typically
be of any material importance.  As of the date hereof, the Partnership
is not involved in any legal proceedings other than those that would be
considered part of the normal course of business.








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





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





Part II





Item 5 – Market for the
Registrant’s “Limited Partnership Units” and Related Unitholder
Matters





120,000
Units at $100 each (minimum 20 Units) were offered through broker-dealer member
firms of the Financial Industry Regulatory Authority (FINRA) on a “best efforts”
basis (as indicated in Part I item 1).  All Units were sold to
California residents.  Investors have the option of withdrawing
earnings on a monthly, quarterly or annual basis or having their earnings
retained in the Partnership.  Limited partners may withdraw from the
Partnership in accordance with the terms of the partnership agreement subject to
possible early withdrawal penalties.  There is no established public
trading market for the Units.  As of December 31, 2007, 342 limited
partners had a total capital balance of $6,106,854.





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 herein by reference.





During
the years 2005, 2006 and 2007, the Partnership’s annualized yield on compounding
accounts was 6.15%, 6.13% and 6.25%, respectively.  During the years
2005, 2006 and 2007, the Partnership’s annualized yield on monthly distributing
accounts was 5.99%, 5.96% and 6.08%, respectively.





9


Item 6 – Selected Financial
Data





Redwood
Mortgage Investors VI began operations in October, 1987.  Its
financial condition and results of operation as of and for the five years ended
December 31, 2007 were:





Balance
Sheets





December
      31,





2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Cash
            
            $
            515,852
            
            
            $
            161,114
            
            
            $
            4,361,983
            
            
            $
            1,090,027
            
            
            $
            32,160LoansLoans,
      secured by deeds of trust
            
            
            4,944,898
            
            
            
            5,493,828
            
            
            
            2,021,973
            
            
            
            5,225,128
            
            
            
            5,255,620Loans,
      unsecured, net
            
            
            769,858
            
            
            
            712,643
            
            
            
            144,098
            
            
            
            261,276
            
            
            
            242,462Interest
      and other receivablesAccrued
      interest and late fees
            
            
            77,320
            
            
            
            68,329
            
            
            
            22,138
            
            
            
            61,364
            
            
            
            54,562Advances
      on loans
            
            
            578
            
            
            
            1,004
            
            
            
            51
            
            
            
            2,890
            
            
            
            4,091Receivable
      from affiliate
            
            
            12,003
            
            
            
            3,414
            
            
            
            —
            
            
            
            —
            
            
            
            —Less
      allowances for loan losses
            
            
            (323,916
            )
            
            
            (294,507
            )
            
            
            (315,379
            )
            
            
            (315,751
            )
            
            
            (279,865
            )Real
      estate held, net
            
            
            130,215
            
            
            
            130,215
            
            
            
            130,215
            
            
            
            128,902
            
            
            
            1,312,773Total
      assets
            
            $
            6,126,808
            
            
            $
            6,276,040
            
            
            $
            6,365,079
            
            
            $
            6,453,836
            
            
            $
            6,621,803





Liabilities and Partners’
Capital





December
      31,





2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003LiabilitiesAccounts
      payable
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            11,487
            
            
            $
            13,064Payable
      to affiliates
            
            
            10,193
            
            
            
            10,194
            
            
            
            8,572
            
            
            
            12,541
            
            
            
            12,496Total
      liabilities
            
            
            10,193
            
            
            
            10,194
            
            
            
            8,572
            
            
            
            24,028
            
            
            
            25,560Partners’
      capitalLimited
      partners’ capital, subjectto
      redemption
            
            
            6,106,854
            
            
            
            6,256,085
            
            
            
            6,346,746
            
            
            
            6,420,047
            
            
            
            6,586,482General
      partners’ capital
            
            
            9,761
            
            
            
            9,761
            
            
            
            9,761
            
            
            
            9,761
            
            
            
            9,761Total
      partners’ capital
            
            
            6,116,615
            
            
            
            6,265,846
            
            
            
            6,356,507
            
            
            
            6,429,808
            
            
            
            6,596,243Total
      liabilitiesand
      partners’ capital
            
            $
            6,126,808
            
            
            $
            6,276,040
            
            
            $
            6,365,079
            
            
            $
            6,453,836
            
            
            $
            6,621,803





10


Statements of
Income





2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Gross
      revenue
            
            $
            511,604
            
            
            $
            484,648
            
            
            $
            522,282
            
            
            $
            538,737
            
            
            $
            491,640Expenses
            
            
            129,140
            
            
            
            102,522
            
            
            
            133,874
            
            
            
            191,585
            
            
            
            158,524Net
      income
            
            $
            382,464
            
            
            $
            382,126
            
            
            $
            388,408
            
            
            $
            347,152
            
            
            $
            333,116Net
      income:to
      general partners (1%)
            
            $
            3,822
            
            
            $
            3,821
            
            
            $
            3,884
            
            
            $
            3,472
            
            
            $
            3,331to
      limited partners (99%)
            
            
            378,642
            
            
            
            378,305
            
            
            
            384,524
            
            
            
            343,680
            
            
            
            329,785$
            382,464
            
            
            $
            382,126
            
            
            $
            388,408
            
            
            $
            347,152
            
            
            $
            333,116Net
      income per $1,000 investedby
      limited partners forentire
      period:-
      where income is compounded
            
            $
            62
            
            
            $
            61
            
            
            $
            62
            
            
            $
            54
            
            
            $
            50-
      where partner receives incomein
      monthly distributions
            
            $
            61
            
            
            $
            60
            
            
            $
            60
            
            
            $
            53
            
            
            $
            49





Annualized
yields when income is compounded or distributed monthly for the years 2003
through 2007 are outlined in the table below:




Compounded
            
            
            Distributed2003
            
            
            5.00
            %
            
            
            4.89
            %2004
            
            
            5.40
            %
            
            
            5.27
            %2005
            
            
            6.15
            %
            
            
            5.99
            %2006
            
            
            6.13
            %
            
            
            5.96
            %2007
            
            
            6.25
            %
            
            
            6.08
            %





The
average annualized yield, when income is compounded from inception through
December 31, 2007 was 6.84%.  The average annualized yield, when
income is distributed monthly, from inception through December 31, 2007 was
6.64%.








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





MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF THE PARTNERSHIP





Critical
Accounting Policies.





In
preparing the financial statements, management is required to make estimates
based on the information available that affect the reported amounts of assets
and liabilities as of the balance sheet dates and revenues and expenses during
the reporting periods.  Such estimates relate principally to the
determination of (1) the allowance for loan losses (i.e. the amount of allowance
established against loans receivable as an estimate of potential loan losses)
including the accrued interest and advances that are estimated to be
unrecoverable based on estimates of amounts to be collected plus estimates of
the value of the property as collateral and (2) the valuation of real estate
acquired through foreclosure.  At December 31, 2007, we owned one real
property that we had acquired through foreclosure in a prior year.





11


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





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





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





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





The
Partnership periodically compares the carrying value of real estate to expected
future undiscounted cash flows for the purpose of assessing the recoverability
of the recorded amounts. If the carrying value exceeds future undiscounted cash
flows, the assets are reduced to fair value.





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





Forward-Looking
Statements.





Certain
statements in this Report on Form 10-K which are not historical facts may be
considered forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended, including statements regarding the Company’s
expectations, hopes, intentions, beliefs and strategies regarding the
future.  Forward-looking statements include statements regarding
future interest rates and economic conditions and their effect on the
Partnership and its assets, trends in the California real estate market,
estimates as to the allowance for loan losses, estimates of future limited
partner withdrawals, 2008 annualized yield estimates, additional foreclosures in
2008, expectations regarding the Partnership’s level of delinquency, plans to
develop certain properties, beliefs relating to the impact on the Partnership
from current conditions and trends in the “sub prime” lending markets, beliefs
regarding the Partnership recovering the full value of its investment in certain
properties, the expectation that borrower foreclosures will not have a material
effect on liquidity, the use of excess cash flow and the intention not to sell
the Partnership’s loan portfolio.  Actual results may be materially
different from what is projected by such forward-looking
statements.  Factors that might cause such a difference include
unexpected changes in economic conditions and interest rates, the impact of
competition and competitive pricing and downturns in the real estate markets in
which the Company has made loans.  All forward-looking statements and
reasons why results may differ included in this Form 10-K are made as of the
date hereof, and we assume no obligation to update any such forward-looking
statement or reason why actual results may differ.





Related
Parties.





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


12





·
            Mortgage
      Brokerage CommissionsFor fees in connection with the
      review, selection, evaluation, negotiation and extension of loans, an
      affiliate of the general partners may collect an amount not to exceed 4%
      of the total Partnership assets per year.  The loan brokerage
      commissions are paid by the borrowers, and thus, are not an expense of the
      Partnership.  For the years ended December 31, 2007, 2006 and
      2005 loan brokerage commissions paid by the borrowers were $42,839,
      $124,116, and $52,248,
respectively.





·
            Mortgage
      Servicing Fees  Monthly mortgage servicing fees of up to
      1/8 of 1% (1.5% on an annual basis) of the unpaid principal of the
      Partnership’s loans are paid to Redwood Mortgage Corp., or such lesser
      amount as is reasonable and customary in the geographic area where the
      property securing the mortgage is located.  Mortgage servicing
      fees of $0, $34,885 and $56,508 were incurred for the years ended December
      31, 2007, 2006 and 2005, respectively.  In 2007 and 2006,
      Redwood Mortgage Corp. waived mortgage servicing fees totaling $48,506 and
      $9,824, respectively.





These
servicing fees, including the 2007 and 2006 waived amounts, were charged at 1%,
on an annual basis, of the outstanding principal balances.  If the
maximum mortgage servicing fee of 1.5%, on an annual basis, had been charged to
the Partnership, then net income would have been reduced by approximately
$24,253, $22,355 and $28,254 in 2007, 2006 and 2005,
respectively.  Reducing net income reduces the annualized
yields.  An increase or decrease in this fee within the limits set by
the Partnership’s agreement directly impacts the yield to the limited
partners.





·
            Asset
      Management FeesThe general partners receive monthly
      fees for managing the Partnership’s portfolio and operations up to 1/32 of
      1% of the ‘net asset
      value’ (3/8 of 1% on an annual basis).  For the years
      ended December 31, 2007, 2006 and 2005 management fees totaled $7,785,
      $5,942 and $12,031 respectively.  The general partners waived
      $15,571, $15,867 and $12,061 of additional asset management fees during
      2007, 2006 and 2005, respectively.





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





·
            Income and
      LossesAll income and losses are credited or charged to
      partners in relation to their respective Partnership
      interests.  The allocation to the general partners (combined)
      shall not exceed 1%.





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





·
            Contributed
      CapitalThe general partners jointly and severally were
      to contribute 1/10 of 1% in cash contributions as proceeds from the
      offerings are received from the limited partners.  As of
      December 31, 2007 and 2006, a general partner, Gymno Corporation, had
      contributed $9,761 as capital in accordance with Section 4.02(a) of the
      partnership agreement.





13


Results of Operations– For
the years ended December 31, 2007, 2006 and 2005





Changes
in the Partnership’s operating results for the years ended December 31, 2007 and
2006 are discussed below.





Changes
      for the years ended December 31,2007
            
            
            2006Dollars
            
            
            Percent
            
            
            Dollars
            
            
            PercentRevenueInterest
      on loans
            
            $
            28,079
            
            
            
            6.32
            %
            
            $
            (45,639
            )
            
            
            (9.32
            )%Interest-interest
      bearing accounts
            
            
            (8,982
            )
            
            
            (26.44
            )%
            
            
            17,227
            
            
            
            102.85
            %Late
      fee and other income
            
            
            7,859
            
            
            
            122.76
            %
            
            
            (9,222
            )
            
            
            (59.02
            )%26,956
            
            
            
            5.56
            %
            
            
            (37,634
            )
            
            
            (7.21
            )%ExpensesMortgage
      servicing fees
            
            
            (34,885
            )
            
            
            (100.00
            )%
            
            
            (21,623
            )
            
            
            (38.27
            )%Asset
      management fees
            
            
            1,843
            
            
            
            31.02
            %
            
            
            (6,089
            )
            
            
            (50.61
            )%Clerical
      costs through Redwood Mortgage Corp.
            
            
            (1,216
            )
            
            
            (14.47
            )%
            
            
            (806
            )
            
            
            (8.75
            )%Provisions
      for losses on loans and real estate held
            
            
            50,615
            
            
            
            242.50
            %
            
            
            (19,187
            )
            
            
            (1,138.69
            )%Professional
      services
            
            
            3,090
            
            
            
            5.58
            %
            
            
            13,673
            
            
            
            32.78
            %Other
            
            
            7,171
            
            
            
            38.18
            %
            
            
            2,680
            
            
            
            16.64
            %26,618
            
            
            
            25.96
            %
            
            
            (31,352
            )
            
            
            (23.420
            %Net
      income
            
            $
            338
            
            
            
            0.09
            %
            
            $
            (6,282
            )
            
            
            (1.62
            )%





Please
refer to the above table throughout the discussions of Results of
Operations.





The
increase in interest on loans for 2007 was due to an increase in the average
loan portfolio balance to $4,912,259 during 2007 from an average of $4,830,820
in 2006.  The increase in income was also enhanced by an increase in
the average interest rate earned from 9.20% in 2006 to 9.62% for
2007.  The decrease in interest on loans for 2006 was due to the
decline in the average loan portfolio balance to $4,830,820 in 2006 from an
average loan portfolio balance of $4,876,596 in 2005 and to the Partnership
collecting $43,021 in additional interest in 2005 from a loan previously
categorized as impaired.  This loan was paid off in 2005.





Interest
from interest bearing accounts decreased in 2007 due a reduction in the average
account balances from $1,490,983 in 2006 to $885,637 for 2007.  The
increase in 2006 represents interest earned on a larger average balance, which
increased to $1,490,983 for 2006 from an average balance of $1,220,447 in
2005.  Average interest rates for the years ended December 31, 2007,
2006 and 2005 were 2.82%, 2.28%, and 1.37%, respectively.





The
increase in late fees and other income for 2007 was due to increases of $1,173
for late fees, $3,364 for early withdrawal penalties and $3,322 for
miscellaneous items.  The decrease for 2006 was due to decreases of
miscellaneous fees of $5,709, early withdrawal penalties of $1,197 and reduction
in late charges of $2,316.





The
decrease in mortgage servicing fees for 2007 was due to a waiver of these fees
by Redwood Mortgage Corp.  The decrease in mortgage servicing fees for
2006 was due to 2005 results being boosted by the payment of servicing fees of
$9,439 on an impaired loan, and Redwood Mortgage waiving part of their mortgage
servicing fees totaling $9,824 in 2006.  The average loan portfolio
balance also decreased in 2006 to $4,830,820 from an average loan portfolio
balance of $4,876,596 in 2005.





14


The
slight increase in asset management fees for 2007 is due to a waiver in 2006 of
$1,891 by the general partners.  The decrease in asset management fees
for 2006 was primarily due to the Partnership paying the full 3/8% asset
management fee during the final three months of 2005 instead of a reduced fee of
1/8% as agreed upon by the general partners.  In 2006 the Partnership
paid asset management fees at a reduced rate of 1/8% for three quarters only and
waived $1,891 for one quarter, resulting in total waived asset management fees
of $15,867 in 2006.  The reduction was also due to a reduction in
limited partners’ capital from $6,346,746 in 2005 to $6,256,085 in
2006.





The
decrease in clerical costs for both 2007 and 2006 was primarily attributable to
reduced clerical costs in servicing this Partnership.





Provisions
for loan losses increased in 2007.  Management increased the allowance
for loan losses in light of the increase in loans under workout agreements from
one ($152,698) in 2006 to three ($423,045) at year end 2007, the increase in the
number of delinquent loans to three ($541,952) in 2007 from two ($552,698) in
2006, and due to the weaker overall real estate economic
conditions.  Also, in 2006, there was a recovery of $ 20,872 in the
provision.  The decrease in the provision for losses on loans and real
estate held for 2006 was due to the Partnership not allocating any additional
provision and recording a recovery of $20,872 in 2006.  The general
partners believed the reserve for loan losses of $323,916 and $294,507 as of
December 31, 2007 and 2006, respectively, was considered to be
adequate.





The
increase in professional services for 2007 and 2006 was due to increased fees
and the timing of professional services in 2006.  The increases were
in both general accounting and attorney costs.





The
increase in other expenses for both 2007 and 2006 was primarily due to costs
associated with the upkeep of existing real estate properties
held.  In 2007, 2006 and 2005 the upkeep costs were $18,687, $12,125,
and $8,507, respectively.





As of
September 2, 1989, the date the offering of the Partnership’s limited partner
Units was formally closed, the Partnership had sold 97,725.94 limited partner
Units and its contributed capital totaled $9,772,594 of the approved $12,000,000
issue, in Units of $100 each.  On December 31, 2007 the net capital of
limited and general partners totaled $6,116,615.





The
Partnership began funding loans in October 1987.  The Partnership’s
secured loans outstanding as of December 31, 2007, 2006 and 2005 were
$4,944,898, 5,493,828 and $2,021,973, respectively.  The average loan
balances over this time period have remained relatively stable until November,
2005 when two loans totaling $3,060,100 were paid off and the loan portfolio
balance reduced to $2,021,973.  It took a number of months to find and
select appropriate loan investments to replace the large loan repayments in late
2005.  The Partnership utilized income, loan pay offs and proceeds
from the sale of real estate held properties to meet limited partner capital
liquidations and make additional loans.  During the years ended
December 31, 2007, 2006 and 2005, loan principal collections and sale proceeds
of the properties exceeded limited partner liquidations and Partnership
expenses.





In 2007,
the Partnership funded $1,654,246 in new loans versus pay-offs of
$2,203,176.  The Partnership was unable to immediately invest all of
the pay-offs back into new loans.  Therefore, loans funded in 2007
appear substantially less than loan pay-offs.  Cash held by the
Partnership generated from these loan pay-offs is invested in interest bearing
accounts until a new loan opportunity is presented.





The
Partnership’s operating results and delinquencies are within the normal range of
the general partners’ expectations, based upon their experience in managing
similar partnerships over the last twenty years.  Foreclosures are a
normal aspect of Partnership operations and the general partners anticipate that
they will not have a material effect on liquidity.





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





15


Allowance
for Losses.





The
general partners periodically review the loan portfolio, examining the status of
delinquencies, the underlying collateral securing these loans, real estate held
expenses, sales activities, and borrower’s payment records and other data
relating to the loan portfolio.  Data on the local real estate market
and on the national and local economy are studied.  Based upon this
and other information, the allowance for loan losses is increased or
decreased.  Borrower foreclosures are a normal aspect of Partnership
operations.  The Partnership is not a credit based lender and hence
while it reviews the credit history and income of borrowers, and if applicable,
the income from income producing properties, the general partners expect we will
on occasion take back real estate security.  At December 31, 2007 the
Partnership had three loans past due 90 days or more in interest payments
totaling $541,952.  As of December 31, 2007 the Partnership had no
loans, past maturity in excess of 90 days.  The Partnership had no
filed notices of default at December 31, 2007.  The Partnership
occasionally enters into workout agreements with borrowers who are past maturity
or delinquent in their regular payments.  The Partnership had three
workout agreements as of December 31, 2007, totaling
$423,045.  Typically, a workout agreement allows the borrower to
extend the maturity date of the balloon payment and/or allows the borrower to
make current monthly payments while deferring for periods of time, past due
payments, or allows time to pay the loan in full.  These workout
agreements and foreclosures generally exist within our loan portfolio to greater
or lesser degrees, depending primarily on the health of the
economy.  Management expects the number of foreclosures and workout
agreements will rise during difficult times and conversely fall during good
economic times.  These workouts and delinquencies have been considered
when management arrived at an appropriate allowance for loan losses and based on
our experience, are reflective of our loan marketplace
segment.  Because of the number of variables involved, the magnitude
of possible swings and the general partners’ inability to control many of these
factors, actual results may and do sometimes differ significantly from estimates
made by the general partners.





As of
December 31, 2007, 2006 and 2005 the Partnership’s real estate held balance was
$130,215 in each year.  The Partnership has not taken back any
collateral security from borrowers in 2006 or 2007.  The Partnership’s
real estate held inventory consists of one property, an undeveloped piece of
land.  The land is located in East Palo Alto,
California.  The Partnership has held its interest in this land since
April, 1993.  The land is owned with two other affiliated
partnerships.  The general partners believe the current market value
of the property significantly exceeds the Partnership’s and its affiliates’ net
investment in the property.  This property is currently listed for
sale.





Management
provided $29,743 and recorded ($20,872) as (recovery)/provision for loan losses
for the years ended December 31, 2007 and 2006, respectively.  As of
December 31, 2007, the allowance for loan losses totaling $323,916 is considered
to be adequate.  The Partnership may restructure
loans.  This is done through the modification of an existing loan or
by re-writing a whole new loan.  It could involve, among other
changes, an extension in maturity date, a reduction in repayment amount, a
reduction in interest rate, or granting an additional loan.  In 2002,
the Partnership restructured four previously impaired loans into two new secured
loans with a lower interest rate, and two unsecured loans.  The amount
restructured was $3,060,100.  The two secured restructured loans were
paid off in November, 2005. During 2002, Redwood Mortgage Corp. provided an
indemnity to the Partnership whereby it has agreed to indemnify and hold
harmless, the Partnership from any expenses or losses (in excess of the then
established reserves) incurred by the Partnership with respect to these four
restructured loans.  A partial paydown has been received against the
two unsecured loans.  The balance remaining is reserved for in the
Partnership’s allowance for loan losses.





Borrower
Liquidity and Capital Resources.





The
Partnership relies upon loan payoffs and borrowers’ mortgage payments for the
source of funds for loans.  Over the past several years, mortgage
interest rates have decreased somewhat from those available at the inception of
the Partnership.  If interest rates were to increase substantially,
the yield of the Partnership’s loans may provide lower yields than other
comparable debt-related investments.  Additionally, since the
Partnership has historically made primarily fixed rate loans, if interest rates
were to rise, the likely result would be a slower prepayment rate for the
Partnership.  This could cause a lower degree of liquidity as well as
a slowdown in the ability of the Partnership to invest in loans at the then
current interest rates.  Conversely, in the event interest rates were
to decline, the Partnership could see significant borrower prepayments, which,
if the Partnership can only obtain the then existing lower rates of interest may
cause a dilution of the Partnership’s yield on loans, thereby lowering the
Partnership’s overall yield to the limited partners.  Cash is
constantly being generated from borrower payments of interest, principal and
loan payoffs.  Currently, cash flow exceeds Partnership expenses and
earnings distribution requirements.





16


At the
time of subscription to the Partnership, limited partners must elect either to
receive monthly, quarterly or annual cash distributions from the Partnership, or
to compound earnings in their capital account.  If one initially
elects to receive monthly, quarterly or annual distributions, such election,
once made, is irrevocable.  Earnings allocable to limited partners who
elect to compound earnings in their capital account, will be retained by the
Partnership for making further loans or for other proper Partnership purposes,
and such amounts will be added to such limited partners’ capital
accounts.





For the
years ended December 31, 2007, 2006 and 2005, the Partnership made distributions
of earnings to limited partners of $153,305, $152,775 and $146,271,
respectively.  Distribution of earnings to limited partners for the
years ended December 31, 2007, 2006 and 2005 to limited partners’ capital
accounts and not withdrawn was $225,337, $225,530, and $238,253,
respectively.  As of December 31, 2007, 2006 and 2005 limited partners
electing to withdraw earnings represented 40%, 40% and 40%, respectively, of the
limited partners’ outstanding capital accounts.





The
Partnership also allows the limited partners to withdraw their capital account
subject to certain limitations and penalties (see liquidation provisions of
Partnership Agreement).  For the years ended December 31, 2007, 2006
and 2005, $55,174, $13,239 and $30,322, respectively, were liquidated subject to
the 10% and/or 8% penalty for early withdrawal.  These withdrawals are
within the normally anticipated range the general partners would expect in their
experience in this and other partnerships.  The general partners
expect a small percentage of limited partners will elect to liquidate their
capital accounts over one year with a 10% and/or 8% early withdrawal
penalty.  In originally conceiving the Partnership, the general
partners wanted to provide limited partners needing their capital returned a
degree of liquidity.  Generally, limited partners electing to withdraw
over one year need to liquidate investments to raise cash.  The demand
the Partnership is experiencing in withdrawals by limited partners electing a
one year liquidation program represents a small percentage of limited partner
capital as of December 31, 2007, 2006 and 2005, respectively, and is expected by
the general partners to commonly occur at these levels.





Additionally,
for the years ended December 31, 2007, 2006 and 2005, $319,396, $302,952, and
$281,232, respectively, were liquidated by limited partners who have elected a
liquidation program over a period of five years or longer.  Once the
initial five-year hold period has passed, the general partners expect to see an
increase in liquidations due to the ability of limited partners to withdraw
without penalty.  This ability to withdraw after five years by limited
partners has the effect of providing limited partner liquidity.  The
general partners expect a portion of the limited partners to take advantage of
this provision.  This has the anticipated effect of the Partnership
growing, primarily through reinvestment of earnings in years one through
five.  The general partners expect to see increasing numbers of
limited partner withdrawals in years five through eleven, at which time the bulk
of those limited partners who have sought withdrawal will have been
liquidated.  After year eleven, liquidation generally
subsides.





Actual
liquidation of both capital and earnings for the three years ended December 31,
2007 was:





Years
      ended December 31,





2007
            
            
            
            2006
            
            
            
            2005Earnings
            
            $
            153,305
            
            
            $
            152,775
            
            
            $
            146,271Capital*
            
            
            374,568
            
            
            
            316,191
            
            
            
            311,554Total
            
            $
            527,873
            
            
            $
            468,966
            
            
            $
            457,825





*These
amounts represent gross of early withdrawal penalties.





17


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





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





Current
Economic Conditions.





The
Partnership makes loans secured by California real estate.  The health
of the California economy and real estate market is of primary concern to the
Partnership as we rely upon the equity securing our loans for
repayment.  The majority of our loans are secured by property located
in Northern California, dominated by loans made in the nine counties of the San
Francisco Bay Area.  As of December 31, 2007, approximately 52.14% of
the loans held by the Partnership were located in the nine counties which
comprise the San Francisco Bay Area region.





The
California economy like the overall U.S. economy has slowed during the latter
part of 2007.  California unemployment decreased from 5.1% in December
of 2005, to 4.9% in December of 2006 and then steadily increased throughout 2007
to a rate of 5.9% as of December 2007.  According to UCLA Anderson
Forecast Economists Ryan Ratcliff and Jerry Nickelsburg, California’s economy is
expected to experience a slightly slower and prolonged period of sluggishness,
but no recession.  They expect unemployment to peak at 6.1% in late
2008, with non-farm payroll growth remaining below 1% through the end of next
year.  Real growth in Gross State Product and Personal Income is
expected to be in the 1-2% range over the same period.





Residential
real estate values are important to the Partnership as they provide the security
behind our loans.  During 2006, residential real estate sales volumes
began to decline from their highs in 2005.  The reduction in sales
volumes continued throughout 2007.  In 2006 California residential
real estate sales volumes declined 15.3% from 2005 and sales volumes further
declined 26% compared to 2006 according to the California Association of
Realtors (CAR).  In spite of these lower sales volumes, CAR reported
the median sales price of a single family home in California increased in 2007
by 0.3%, from $556,430 to $558,100.  These numbers indicate a
relatively stable market, but residential real estate values are very much
locally driven.  CAR indicated regional price reductions in their
median price value.  Examples include the California High Desert,
Central Valley, and Sacramento regions experiencing price reductions between 6%
and 10% in 2007.  Larger metropolitan regions such as the San
Francisco Bay Area, Los Angeles, Santa Clara and Santa Barbara experienced price
increases of 0.7% to 7.0%.  The slow down in residential real estate
appreciation and the price depreciation in various regions is of concern to the
Partnership as depreciation erodes the value of the real estate assets securing
our loans.





18


Commercial
real estate has fared well in 2007.  Rents continued to remain stable
or escalate.  As reported by NAI BT Commercial, the San Francisco Bay
Area as a whole reported a 40 basis-point decrease in vacancy from 2006 to push
vacancy rates to 11.25% at the close of 2007.  This marked the lowest
vacancy level for the Bay Area’s office market since the second quarter of
2001.  The overall average asking rate increased almost $0.50 during
2007 closing the year at $2.98 per square foot full service.  This
represented a 19% increase from 2006 and a 44% increase from $2.07 nearly four
years ago.  Strong commercial rents and occupancy combined to keep
values strong and stable a healthy result for the commercial portion of the
Partnership’s portfolio.





For the
Partnership loans outstanding at December 31, 2007, the Partnership had an
average loan-to-value of 58.00% computed based on appraised values and senior
liens as of the date the loan was made.  This percentage does not
account for any increases or decreases in property values since the date the
loan was made, nor does it include any reductions in principal on senior
indebtedness through amortization of payments after the loan was
made.  Management believes low loan-to value ratios will assist the
partnership in weathering loan delinquencies and foreclosures when they
occur.





Contractual Obligations Table. –None








Item
7a – Quantitative and Qualitative Disclosures About Market Risk





The
following table contains information about the cash held in money market
accounts, and loans held in the Partnership’s portfolio as of December 31,
2007.  The presentation, for each category of information, aggregates
the assets and liabilities by their maturity dates for maturities occurring in
each of the years 2008 through 2012 and separately aggregates the information
for all maturities arising after 2012.  The carrying values of these
assets and liabilities approximate their fair values as of December 31,
2007:





2008
            
            
            2009
            
            
            2010
            
            
            2011
            
            
            2012
            
            
            Thereafter
            
            
            TotalInterest
      earning assets:Money
      market accounts
            
            $
            192,971
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            192,971Average
      interest rate
            
            
            2.30
            %
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2.30
            %Unsecured
      loans
            
            
            
            
            
            
            
            
            
            
            
            $
            639,338
            
            
            
            
            
            $
            130,520
            
            
            $
            769,858Average
      interest rate
            
            
            
            
            
            
            
            
            
            
            
            
            0
            %
            
            
            
            
            
            0
            %
            
            
            0
            %Loans
      secured by deedsof
      trust
            
            $
            939,569
            
            
            $
            992,745
            
            
            $
            596,140
            
            
            $
            1,556,694
            
            
            $
            859,750
            
            
            $
            —
            
            
            $
            4,944,898Average
      interest rate
            
            
            9.43
            %
            
            
            10.05
            %
            
            
            9.25
            %
            
            
            9.25
            %
            
            
            9.34
            %
            
            
            0.00
            %
            
            
            9.46
            %





Unsecured
loans include two loans that have no stated rate of interest, for which the
Partnership is imputing interest.  One other loan, which has become
unsecured, with a coupon rate of 9.25% has been placed by the Partnership on
nonaccrual status.  As such, the average interest rate for unsecured
loans has been reflected as 0%.





Market
Risk.





The
Partnership’s primary market risk in terms of its profitability is the exposure
to fluctuations in earnings resulting from fluctuations in general interest
rates.  The majority of the Partnership’s mortgage loans earn interest
at fixed rates.  Changes in interest rates may also affect the value
of the Partnership’s investment in mortgage loans and the rates at which the
Partnership reinvests funds obtained from loan repayments and new capital
contributions from limited partners. If interest rates increase, the interest
rates the Partnership obtains from reinvested funds will generally increase, but
the value of the Partnership’s existing loans at fixed rates will generally tend
to decrease.  The risk is mitigated by the fact the Partnership does
not intend to sell its loan portfolio, rather such loans are held until they are
paid off.  If interest rates decrease, the amounts becoming available
to the Partnership for investment due to repayment of Partnership loans may be
reinvested at lower rates than the Partnership had been able to obtain in prior
investments, or than the rates on the repaid loans.  In addition,
interest rate decreases may encourage borrowers to refinance their loans with
the Partnership at a time where the Partnership is unable to reinvest in loans
of comparable value.





19


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








PORTFOLIO
REVIEW – For the years ended December 31, 2007, 2006 and
2005





Loan
Portfolio





The
Partnership’s loan portfolio consists primarily of short-term (one to five
years), fixed rate loans secured by real estate.  As of December 31,
2007, 2006 and2005,
the Partnership’s loans secured by real property collateral in the nine San
Francisco Bay Area counties (San Francisco, San Mateo, Santa Clara, Alameda,
Napa, Contra Costa, Marin, Solano and Sonoma) represented $2,578,339 (52.14%)
$3,462,918 (63.04%) and $1,478,632 (73%), respectively, of the outstanding
secured loan portfolio.  The remainder of loans held was secured
primarily by real estate located in counties adjacent to the San Francisco Bay
Area and in Northern California.





As of
December 31, 2007, 2006 and 2005 the Partnership held 24, 26 and 9 secured
loans, respectively, in the following categories:





December
      31,





2007
            
            2006
            
            2005





Single
      family (1-4 units)
            
            $
            2,851,528
            
            
            
            57.67
            %
            
            $
            4,345,689
            
            
            
            79.10
            %
            
            $
            1,703,472
            
            
            
            84.25
            %Apartments
      (5+ units)
            
            
            525,625
            
            
            
            10.63
            %
            
            
            342,500
            
            
            
            6.24
            %
            
            
            —
            
            
            
            —Commercial
            
            
            1,567,745
            
            
            
            31.70
            %
            
            
            805,639
            
            
            
            14.66
            %
            
            
            318,501
            
            
            
            15.75
            %Total
            
            $
            4,944,898
            
            
            
            100.00
            %
            
            $
            5,493,828
            
            
            
            100.00
            %
            
            $
            2,021,973
            
            
            
            100.00
            %





As of
December 31, 2007, the Partnership held 24 loans secured by deeds of
trust.  The following table sets forth the priorities, asset
concentrations and maturities of the loans held by the Partnership as of
December 31, 2007:








PRIORITIES,
ASSET CONCENTRATIONS AND MATURITIES OF LOANS


As
of December 31, 2007




#
      of Loans
            
            
            Amount
            
            
            Percent1st
      Mortgages
            
            
            12
            
            
            $
            2,764,524
            
            
            
            55.91
            %2nd
      Mortgages
            
            
            11
            
            
            
            1,980,374
            
            
            
            40.05
            %3rd
      Mortgages
            
            
            1
            
            
            
            200,000
            
            
            
            4.04
            %Total
            
            
            24
            
            
            $
            4,944,898
            
            
            
            100.00
            %Maturing
      12/31/08 and prior
            
            
            3
            
            
            $
            939,569
            
            
            
            19.00
            %Maturing
      between 01/01/09 and 12/31/09
            
            
            4
            
            
            
            992,745
            
            
            
            20.08
            %Maturing
      between 01/01/10 and 12/31/10
            
            
            3
            
            
            
            596,140
            
            
            
            12.05
            %Maturing
      after 12/31/10
            
            
            14
            
            
            
            2,416,444
            
            
            
            48.87
            %Total
            
            
            24
            
            
            $
            4,944,898
            
            
            
            100.00
            %Average
      Loan
            
            
            
            
            
            $
            206,037
            
            
            
            4.17
            %Largest
      Loan
            
            
            
            
            
            
            400,000
            
            
            
            8.09
            %Smallest
      Loan
            
            
            
            
            
            
            63,981
            
            
            
            1.29
            %Average
      Loan-to-Value, based upon appraisalsand
      senior liens at date of inception of loan
            
            
            
            
            
            
            
            
            
            
            58.00
            %





20


The
Partnership’s largest loan in the principal amount of $400,000 represents 8.09%
of outstanding secured loans and 6.53% of Partnership assets.  Larger
loans can sometimes represent over 10% of the secured loan portfolio or
Partnership assets as these amounts decrease due to limited partner withdrawals
and loan payoffs and also as a result of the restructuring several loans into
one loan.





At
December 31, 2007 and 2006, the Partnership had unsecured loans totaling
$769,858 and $712,643, respectively.  Two of the loans are noninterest
bearing and are due in monthly installments of $2,078 through May,
2009.  These monthly payments escalate at various times through the
loan maturity date.  Interest has been imputed on these loans at
interest rates for comparable loans made during the same
periods.  During 2006, a loan in the amount of $571,494 became
unsecured.  The Partnership has placed the loan on nonaccrual
status.  The Partnership is pursuing collection efforts against the
borrower for the entire amount of outstanding principal, advances and past due
interest.  The general partners have established an allowance for loan
losses for its unsecured loans as a protection against amounts that may
ultimately prove uncollectible.





ASSET
QUALITY





A
consequence of lending activities is occasionally losses will be experienced and
the amount of such losses will vary from time to time, depending upon the risk
characteristics of the loan portfolio as affected by economic conditions and the
financial experiences of borrowers.  Many of these factors are beyond
the control of the general partners.  There is no precise method of
predicting specific losses or amounts that ultimately may be charged off on
particular segments of the loan portfolio, especially in light of the current
economic environment.





The
conclusion a loan may become uncollectible, in whole or in part, is a matter of
judgment.  Although institutional lenders are subject to requirements
and regulations that, among other things, require them to perform ongoing
analyses of their portfolios, loan-to-value ratios, reserves, etc., and to
obtain and maintain current information regarding their borrowers and the
securing properties, the Partnership is not subject to these regulations and has
not adopted certain of these practices.  Rather, the general partners,
in connection with the periodic closing of the accounting records of the
Partnership and the preparation of the financial statements, determine whether
the allowance for loan losses is adequate to cover potential loan losses of the
Partnership.  As of December 31, 2007 the general partners have
determined the allowance for loan losses of $323,916 (5.30% of partners’
capital) is adequate in amount.  Because of the number of variables
involved, the magnitude of the swings possible 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.  As
of December 31, 2007, there were no secured loans matured 90 days or more, and
three secured loans delinquent in interest payments over 90 days, that were not
matured, totaling $541,952.





The
Partnership may also make loans requiring periodic disbursements of
funds.  These loans include ground up construction of buildings and
loans for rehabilitation of existing structures.  Interest on these
loans is computed at simple interest method and only on the amounts disbursed on
a daily basis. As of December 31, 2007 there were no such loans.








21


Item 8 – Financial
Statements and Supplementary Data





A
– Financial Statements





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





·
            Report
      of Independent Registered Public Accounting Firm·
            Balance
      Sheets – December 31, 2007 and 2006·
            Statements
      of Income for the years ended December 31, 2007, 2006 and
    2005·
            Statements
      of Changes in Partners’ Capital for the years ended December 31, 2007,
      2006 and 2005·
            Statements
      of Cash Flows for the years ended December 31, 2007, 2006 and
      2005·
            Notes
      to Financial Statements





B
– Financial Statement Schedules





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





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





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


22



































REDWOOD MORTGAGE INVESTORS
VI


(A CALIFORNIA LIMITED
PARTNERSHIP)


FINANCIAL
STATEMENTS


AND SUPPLEMENTAL
INFORMATION


AS OF
DECEMBER 31, 2007AND
2006


AND FOR EACH OF THE THREE
YEARS


IN THE PERIOD ENDED DECEMBER
31, 2007











23
























TABLE OF
CONTENTS








Page
      No.Report
      of Independent Registered Public Accounting Firm
            
            25Balance
      Sheets
            
            26Statements
      of Income
            
            27Statements
      of Changes in Partners’ Capital
            
            28Statements
      of Cash Flows
            
            29Notes
      to Financial Statements
            
            30Supplemental
      SchedulesSchedule
      II - Valuation and Qualifying Accounts
            
            44Schedule
      IV - Mortgage Loans on Real EstateRule
      12-29 Loans on Real Estate
            
            45





24



















REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM








To the
Partners


Redwood
Mortgage Investors VI


Redwood
City, California





We have
audited the accompanying balance sheets of Redwood Mortgage Investors VI (a
California limited partnership) as of December 31, 2007 and 2006 and the related
statements of income, changes in partners’ capital and cash flows for each of
the three years in the period ended December 31, 2007. These financial
statements are the responsibility of Redwood Mortgage Investors VI’s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Redwood Mortgage
Investors VI is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of Redwood
Mortgage Investors VI’s internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and 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, 2007 and 2006 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2007 in conformity
with accounting principles generally accepted in the United States of
America.





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











ARMANINO
McKENNA  LLP


San
Ramon, California


March 28,
2008


25


REDWOOD
MORTGAGE INVESTORS VI


(A
California Limited Partnership)


Balance
Sheets


December
31, 2007 and 2006





ASSETS




2007
            
            
            
            2006Cash
      and cash equivalents
            
            $
            515,852
            
            
            $
            161,114LoansLoans,
      secured by deeds of trust
            
            
            4,944,898
            
            
            
            5,493,828Loans,
      unsecured, net of discount of $85,627 and$97,860
      in 2007 and 2006, respectively
            
            
            769,858
            
            
            
            712,643Allowance
      for loan losses
            
            
            (323,916
            )
            
            
            (294,507
            )Net
      loans
            
            
            5,390,840
            
            
            
            5,911,964Interest
      and other receivablesAccrued
      interest and late fees
            
            
            77,320
            
            
            
            68,329Advances
      on loans
            
            
            578
            
            
            
            1,004Receivable
      from affiliate
            
            
            12,003
            
            
            
            3,414Total
      interest and other receivables
            
            
            89,901
            
            
            
            72,747Real
      estate held, net
            
            
            130,215
            
            
            
            130,215Total
      assets
            
            $
            6,126,808
            
            
            $
            6,276,040





LIABILITIES AND PARTNERS’
CAPITAL




LiabilitiesPayable
      to affiliate
            
            $
            10,193
            
            
            $
            10,194Total
      liabilities
            
            
            10,193
            
            
            
            10,194Partners’
      capitalLimited
      partners’ capital, subject to redemption
            
            
            6,106,854
            
            
            
            6,256,085General
      partners’ capital
            
            
            9,761
            
            
            
            9,761Total
      partners’ capital
            
            
            6,116,615
            
            
            
            6,265,846Total
      liabilities and partners’ capital
            
            $
            6,126,808
            
            
            $
            6,276,040








The
      accompanying notes are an integral part of these financial
      statements





26


REDWOOD
MORTGAGE INVESTORS VI


(A
California Limited Partnership)


Statements
of Income


For
the Years Ended December 31, 2007, 2006 and 2005







2007
            
            
            
            2006
            
            
            
            2005RevenuesInterest
      on loans
            
            $
            472,348
            
            
            $
            444,269
            
            
            $
            489,908Interest
      - interest bearing accounts
            
            
            24,995
            
            
            
            33,977
            
            
            
            16,750Late
      fees, prepayment penalties and fees
            
            
            14,261
            
            
            
            6,402
            
            
            
            15,624511,604
            
            
            
            484,648
            
            
            
            522,282ExpensesMortgage
      servicing fees
            
            
            ­
            
            
            
            34,885
            
            
            
            56,508Asset
      management fees
            
            
            7,785
            
            
            
            5,942
            
            
            
            12,031Clerical
      costs from Redwood Mortgage Corp.
            
            
            7,190
            
            
            
            8,406
            
            
            
            9,212Provisions
      for (recovery of) losses on loansand
      real estate held
            
            
            29,743
            
            
            
            (20,872
            )
            
            
            (1,685
            )Professional
      services
            
            
            58,469
            
            
            
            55,379
            
            
            
            41,706Other
            
            
            25,953
            
            
            
            18,782
            
            
            
            16,102129,140
            
            
            
            102,522
            
            
            
            133,874Net
      income
            
            
            382,464
            
            
            
            382,126
            
            
            
            388,408Net
      incomeGeneral
      partners (1%)
            
            $
            3,822
            
            
            $
            3,821
            
            
            $
            3,884Limited
      partners (99%)
            
            
            378,642
            
            
            
            378,305
            
            
            
            384,524$
            382,464
            
            
            $
            382,126
            
            
            $
            388,408Net
      income per $1,000 invested by limited partnersfor
      entire periodWhere
      income is reinvested
            
            $
            62
            
            
            $
            61
            
            
            $
            62Where
      partner receives income inmonthly
      distributions
            
            $
            61
            
            
            $
            60
            
            
            $
            60








The
      accompanying notes are an integral part of these financial
      statements





27


REDWOOD
MORTGAGE INVESTORS VI


(A
California Limited Partnership)


Statements
of Changes in Partners’ Capital


For
the Years Ended December 31, 2007, 2006 and 2005







Limited
            
            
            GeneralPartners
            
            
            Partners
            
            
            TotalBalances
      at December 31, 2004
            
            $
            6,420,047
            
            
            $
            9,761
            
            
            $
            6,429,808Net
      income
            
            
            384,524
            
            
            
            3,884
            
            
            
            388,408Early
      withdrawal penalties
            
            
            (2,256
            )
            
            
            —
            
            
            
            (2,256
            )Partners’
      withdrawals
            
            
            (455,569
            )
            
            
            (3,884
            )
            
            
            (459,453
            )Balances
      at December 31, 2005
            
            
            6,346,746
            
            
            
            9,761
            
            
            
            6,356,507Net
      income
            
            
            378,305
            
            
            
            3,821
            
            
            
            382,126Early
      withdrawal penalties
            
            
            (1,059
            )
            
            
            —
            
            
            
            (1,059
            )Partners’
      withdrawals
            
            
            (467,907
            )
            
            
            (3,821
            )
            
            
            (471,728
            )Balances
      at December 31, 2006
            
            
            6,256,085
            
            
            $
            9,761
            
            
            $
            6,265,846Net
      income
            
            
            378,642
            
            
            
            3,822
            
            
            
            382,464Early
      withdrawal penalties
            
            
            (4,423
            )
            
            
            —
            
            
            
            (4,423
            )Partners’
      withdrawals
            
            
            (523,450
            )
            
            
            (3,822
            )
            
            
            (527,272
            )Balances
      at December 31, 2007
            
            $
            6,106,854
            
            
            $
            9,761
            
            
            $
            6,116,615








The
      accompanying notes are an integral part of these financial
      statements





28


REDWOOD
MORTGAGE INVESTORS VI


(A
California Limited Partnership)


Statements
of Cash Flows


For
the Years Ended December 31, 2007, 2006 and 2005







2007
            
            
            
            2006
            
            
            
            2005Cash
      flows from operating activitiesNet
      income
            
            $
            382,464
            
            
            $
            382,126
            
            
            $
            388,408Adjustments
      to reconcile net income tonet
      cash provided by operating activitiesProvision
      for (recovery of) losses on loansand
      real estate held
            
            
            29,743
            
            
            
            (20,872
            )
            
            
            (1,685
            )Early
      withdrawal penalties credited to income
            
            
            (4,423
            )
            
            
            (1,059
            )
            
            
            (2,256
            )Change
      in discount on unsecured loans
            
            
            (12,233
            )
            
            
            (9,174
            
            
            
            13,212Change
      in operating assets and liabilitiesLoans,
      unsecured
            
            
            (44,982
            )
            
            
            9,319
            
            
            
            103,966Accrued
      interest and late fees
            
            
            (9,325
            )
            
            
            (80,937
            )
            
            
            39,226Advances
      on loans
            
            
            426
            
            
            
            (3,338
            )
            
            
            2,839Receivable
      from affiliate
            
            
            (8,589
            )
            
            
            (3,414
            )
            
            
            —Accounts
      payable
            
            
            —
            
            
            
            —
            
            
            
            (11,487
            )Payable
      to affiliate
            
            
            (1
            )
            
            
            1,622
            
            
            
            (3,969
            )Net
      cash provided by operating activities
            
            
            333,080
            
            
            
            274,273
            
            
            
            528,254Cash
      flows from investing activitiesPrincipal
      collected on loans
            
            
            2,203,176
            
            
            
            1,150,206
            
            
            
            5,061,405Loans
      originated
            
            
            (1,654,246
            )
            
            
            (5,153,620
            )
            
            
            (1,858,250
            )Proceeds
      from disposition of real estate
            
            
            —
            
            
            
            —
            
            
            
            —Net
      cash provided by (used in) investing activities
            
            
            548,930
            
            
            
            (4,003,414
            )
            
            
            3,203,155Cash
      flows from financing activitiesPartners’
      withdrawals
            
            
            (527,272
            )
            
            
            (471,728
            )
            
            
            (459,453
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            354,738
            
            
            
            (4,200,869
            )
            
            
            3,271,956Cash
      and cash equivalents at beginning of year
            
            
            161,114
            
            
            
            4,361,983
            
            
            
            1,090,027Cash
      and cash equivalents at end of year
            
            $
            515,852
            
            
            $
            161,114
            
            
            $
            4,361,983








The
      accompanying notes are an integral part of these financial
      statements


29


REDWOOD
MORTGAGE INVESTORS VI


(A
California Limited Partnership)


Notes
to Financial Statements


December
31, 2007, 2006 and 2005








1.
            Organization and
      General





Redwood
Mortgage Investors VI (the “Partnership”), a California Limited Partnership, was
organized in 1987.  The general partners are Michael R. Burwell, an
individual, and Gymno Corporation, a California corporation whose stockholders
are Michael R. Burwell and two trusts, both of whose trustee is Michael R.
Burwell.  The Partnership was organized to engage in business as a
mortgage lender for the primary purpose of making loans secured by deeds of
trust on California real estate.  Loans are being arranged and
serviced by Redwood Mortgage Corp., an affiliate of the general
partners.





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








2.
            Summary of Significant
      Accounting Policies





Management
estimates





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





Loans, secured by deeds of
trust





Loans
generally are stated at their outstanding unpaid principal balance with interest
thereon being accrued as earned.





If the
probable ultimate recovery of the carrying amount of a loan, with due
consideration for the fair value of collateral, is less than amounts due
according to the contractual terms of the loan agreement, and the shortfall in
the amounts due are not insignificant, the carrying amount of the loan is
reduced to the present value of future cash flows discounted at the loan’s
effective interest rate.  If a loan is collateral dependent, it is
valued at the estimated fair value of the related collateral.





If events
and or changes in circumstances cause management to have serious doubts about
the collectibility of the contractual payments, a loan may be categorized as
impaired and interest is no longer accrued. Any subsequent payments on impaired
loans are applied to reduce the outstanding loan balances, including accrued
interest and advances.  At December 31, 2007 and 2006 there was one
unsecured loan totaling $639,338 and $571,494, respectively, that was considered
impaired by the Partnership.  The average recorded investment in
impaired loans was $319,669 and $285,747 for the years ended December 31, 2007
and 2006, respectively.








30


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








2.
            Summary of Significant
      Accounting Policies
(continued)





Loans, secured by deeds of
trust (continued)





At
December 31, 2007 and 2006, the Partnership had three secured loans
respectively, past maturity or past due 90 days or more in interest payments or
principal, totaling $541,952 and $802,698, respectively.  In addition,
accrued interest, late charges and advances on these secured loans totaled
$28,007 and $25,829 at December 31, 2007 and 2006, respectively.  The
Partnership does not consider any of these secured loans to be impaired because
there is sufficient collateral to cover the amount outstanding to the
Partnership, and is still accruing interest on these loans.  At
December 31, 2007 and 2006, as presented in Note 9, the average loan to
appraised value of security based upon appraised values and prior indebtedness
at the time the loans were consummated was 58.00% and 64.22%
respectively.  When loans are considered impaired the allowance for
loan losses are updated to reflect the change in the valuation of collateral
security. However, a low loan to value ratio tends to minimize reductions for
impairment.





Allowance for loan
losses





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














31


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








2.
            Summary of Significant
      Accounting Policies
(continued)





Allowance for loan losses
(continued)





The
composition of the allowance for loan losses was as follows:





December
      31,2007
            
            
            2006Amount
            
            
            Percent
      of loans in each category to total loans
            
            
            Amount
            
            
            Percent
      of loans in each category to total loansBalance
      at End of YearApplicable
      to:DomesticReal
      estate - mortgageSingle
      family (1-4 units)
            
            $
            75,283
            
            
            
            57.67
            %
            
            $
            54,559
            
            
            
            79.10
            %Apartments
            
            
            3,942
            
            
            
            10.63
            %
            
            
            2,569
            
            
            
            6.24
            %Commercial
            
            
            19,597
            
            
            
            31.70
            %
            
            
            11,144
            
            
            
            14.66
            %Total
      real estate - mortgage
            
            $
            98,822
            
            
            
            100.00
            %
            
            $
            68,272
            
            
            
            100.00
            %Unsecured
      loans
            
            $
            225,094
            
            
            
            100.00
            %
            
            $
            226,235
            
            
            
            100.00
            %Total
      unsecured loans
            
            $
            225,094
            
            
            
            100.00
            %
            
            $
            226,235
            
            
            
            100.00
            %Total
      allowance for loan losses
            
            $
            323,916
            
            
            
            100.00
            %
            
            $
            294,507
            
            
            
            100.00
            %











32


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








2.
            Summary of Significant
      Accounting Policies
(continued)





Allowance for loan losses
(continued)





Activity
in the allowance for loan losses is as follows:





Years
      Ended December 31,





2007
            
            
            
            2006
            
            
            
            2005Balance
      at beginning of year
            
            $
            294,507
            
            
            $
            315,379
            
            
            $
            315,751Charge-offsDomesticReal
      estate - mortgageSingle
      family (1-4 units)
            
            
            (334
            )
            
            
            —
            
            
            
            —Apartments
            
            
            —
            
            
            
            —
            
            
            
            —Commercial
            
            
            —
            
            
            
            —
            
            
            
            —(334
            )
            
            
            —
            
            
            
            —RecoveriesDomesticReal
      estate - mortgageSingle
      family (1-4 units)
            
            
            —
            
            
            
            —
            
            
            
            —Apartments
            
            
            —
            
            
            
            —
            
            
            
            —Commercial
            
            
            —
            
            
            
            —
            
            
            
            ——
            
            
            
            —
            
            
            
            —Net
      charge-offs
            
            
            (334
            )
            
            
            —
            
            
            
            —Additions/(recovery)
      charge to operations
            
            
            29,743
            
            
            
            (20,872
            )
            
            
            (1,685
            )Transfer
      from real estate held reserve
            
            
            —
            
            
            
            —
            
            
            
            1,313Balance
      at end of year
            
            $
            323,916
            
            
            $
            297,507
            
            
            $
            315,379Ratio
      of net charge-offs during the period toaverage
      secured loans outstanding duringthe
      period
            
            
            0.00
            %
            
            
            0.00
            %
            
            
            0.00
            %














33


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








2.
            Summary of Significant
      Accounting Policies
(continued)





Cash and cash
equivalents





The
Partnership considers all highly liquid financial instruments with maturities of
three months or less at the time of purchase to be cash
equivalents.  Periodically, Partnership cash balances exceed federally
insured limits.





Real estate
held





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





The
Partnership periodically compares the carrying value of real estate to expected
future undiscounted cash flows for the purpose of assessing the recoverability
of the recorded amounts. If the carrying value exceeds future undiscounted cash
flows, the assets are reduced to fair value.





Income
taxes





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





Net income per $1,000
invested





Amounts
reflected in the statements of income as net income per $1,000 invested by
limited partners for the entire period are amounts allocated to limited partners
who held their investment throughout the period and have elected to either leave
their earnings to compound or have elected to receive 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.





Late fee
revenue





Late fees
are generally charged at 6% of the monthly installment payment past
due.  During 2007, 2006 and 2005, late fee revenue of $6,041, $4,868,
and $7,184, respectively, was recorded.  The Partnership has a late
fee receivable at December 31, 2007 and 2006 of $2,349 and $1,818,
respectively.








34


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








2.
            Summary of Significant
      Accounting Policies
(continued)





Recently issued accounting
pronouncements





In March
2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets, an amendment of FASB Statement No. 140” (SFAS 156), which permits,
but does not require, an entity to account for one or more classes of servicing
rights (i.e., mortgage servicing rights) at fair value, with the changes in fair
value recorded in the statement of income.  SFAS 156 is effective in
the first quarter of 2007.  The adoption of SFAS 156 is not expected
to have a material impact on the Partnership’s financial condition and results
of operations.







On
September 15, 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (SFAS 157).  SFAS 157 defines fair value, establishes a
framework for measuring fair value under GAAP and enhances disclosures about
fair value measurements.  SFAS 157 defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the
measurement date.  SFAS 157 is effective for the Partnership’s
financial statements issued for the year beginning on January 1, 2008, with
earlier adoption permitted. Management is currently evaluating the impact and
timing of the adoption of SFAS 157 on the Partnership’s financial condition and
results of operations.






On
February 15, 2007, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” (SFAS 159), which allows
an entity the irrevocable option to elect fair value for the initial and
subsequent measurement for certain financial assets and liabilities on a
contract-by-contract basis.  Subsequent changes in fair value of these
financial assets and liabilities would be recognized in earnings when they
occur.  SFAS 159 further establishes certain additional disclosure
requirements.  SFAS 159 is effective for the Partnership’s financial
statements for the year beginning on January 1, 2008, with earlier adoption
permitted.  Management is currently evaluating the impact and timing
of the adoption of SFAS 159 on the Partnership’s financial condition and results
of operations.






In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (SFAS
160).  SFAS 160’s objective is to improve the relevance,
comparability, and transparency of the financial information a reporting entity
provides in its consolidated financial statements by establishing accounting and
reporting standards for the noncontrolling interest in a
subsidiary.  SFAS 160 is effective for fiscal years beginning on or
after December 15, 2008, along with the interim periods within those fiscal
years.  Early adoption is prohibited.  Management is
currently evaluating the impact and timing of the adoption of SFAS 160 on the
Partnership’s financial condition.






On
July 13, 2006, the FASB released FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement
No. 109” (FIN 48).  FIN 48 clarifies the accounting and reporting
for income taxes where interpretation of the tax law may be
uncertain.  FIN 48 prescribes a comprehensive model for the financial
statement recognition, measurement, presentation and disclosure of income tax
uncertainties with respect to positions taken or expected to be taken in income
tax returns.  The Partnership adopted FIN 48 in the first quarter of
2007.  The adoption of FIN 48 did not have a material impact on the
Partnership’s financial condition and results of operations.






On
September 13, 2006, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 108 “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements” (SAB 108).  SAB 108 expresses the SEC Staff’s views
regarding the process of quantifying financial statement
misstatements.  SAB 108 states that in evaluating the materiality of
financial statement misstatements, an entity must quantify the impact of
correcting misstatements, including both the carryover and reversing effects of
prior year misstatements, on the current year financial
statements.  SAB 108 was effective for the year ended
December 31, 2006.  The application of SAB 108 did not have an
impact on the Partnership’s financial condition and results of
operations.





35


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








3.         Other Partnership
Provisions





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





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





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





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





Election to receive monthly,
quarterly or annual distributions





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





Profits and
losses





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





Liquidity, capital
withdrawals and early withdrawals





There are
substantial restrictions on transferability of Partnership units and accordingly
an investment in the Partnership is non-liquid.  Limited partners had
no right to withdraw from the Partnership or to obtain the return of their
capital account for at least one year from the date of purchase of Partnership
units.





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





36


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








3.         Other Partnership Provisions
(continued)





Liquidity, capital
withdrawals and early withdrawals (continued)





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





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








4.
            General Partners and
      Related Parties





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





Mortgage brokerage
commissions





For fees
in connection with the review, selection, evaluation, negotiation and extension
of loans, an affiliate of the general partners may collect an amount not to
exceed 4% of the total Partnership assets per year.  The loan
brokerage commissions are paid by the borrowers, and thus, are not an expense of
the Partnership.  In 2007, 2006 and 2005, loan brokerage commissions
paid by the borrowers were $42,839, $124,116, and $52,248,
respectively.





Mortgage servicing
fees





Monthly
mortgage servicing fees of up to 1/8 of 1% (1.5% annual) of the unpaid principal
are paid to Redwood Mortgage Corp., an affiliate of the general partners, based
on the unpaid principal balance of the loan portfolio, or such lesser amount as
is reasonable and customary in the geographic area where the property securing
the mortgage is located.  Once a loan is categorized as impaired,
mortgage servicing fees are no longer accrued.  Additional service
fees are recorded upon the receipt of any subsequent payments on impaired
loans.  Mortgage servicing fees of $0, $34,885 and $56,508, were
incurred for 2007, 2006 and 2005, respectively.  The Partnership has a
payable to Redwood Mortgage Corp. for servicing fees of $10,193 and $10,194 at
December 31, 2007 and 2006, respectively.  During 2007 and 2006,
Redwood Mortgage Corp. waived $48,506 and $9,824 of mortgage servicing fees,
respectively.





37


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








4.
            General Partners and
      Related Parties (continued)





Asset management
fee









The
general partners receive monthly fees for managing the Partnership’s loan
portfolio and operations of up to 1/32 of 1% of the “net asset value” (3/8 of 1%
annually).  Asset management fees of $7,785, $5,942, and $12,031, were
incurred for 2007, 2006 and 2005, respectively.  During 2007 2006 and
2005, the general partners waived $15,571, $15,867 and $12,061 of asset
management fees, respectively.





Other
fees





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





Operating
expenses





The
Partnership receives certain operating and administrative services from Redwood
Mortgage Corp.  Redwood Mortgage Corp. may be reimbursed by the
Partnership for operating expenses incurred on behalf of the Partnership,
including without limitation, out-of-pocket general and administration expenses
of the Partnership, accounting and audit fees, legal fees and expenses, postage
and preparation of reports to limited partners.  During 2007, 2006 and
2005, operating expenses totaling $7,190, $8,406 and $9,212, respectively, were
reimbursed to Redwood Mortgage Corp.  To the extent that some
operating and administrative services were not reimbursed, the financial
position and results of Partnership operation may be different.








5.
            Real Estate
      Held





The
following schedule reflects the costs of real estate acquired through
foreclosure and the recorded reductions to estimated fair values, including
estimated costs to sell, as of December 31, 2007 and 2006:




2007
            
            
            
            2006Costs
      of properties
            
            $
            130,215
            
            
            $
            130,215Reduction
      in value
            
            
            —
            
            
            
            —Real
      estate held, net
            
            $
            130,215
            
            
            $
            130,215





38


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








6.
            Income
      Taxes





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




2007
            
            
            
            2006Partners’
      capital per financial statements
            
            $
            6,116,615
            
            
            $
            6,265,846Allowance
      for loan losses and real estate
            
            
            323,916
            
            
            
            294,507Partners’
      capital tax basis
            
            $
            6,440,531
            
            
            $
            6,560,353





In 2007
and 2006, approximately 73% and 72%, respectively, of taxable income was
allocated to tax-exempt organizations (e.g., retirement plans).








7.
            Fair Value of
      Financial Instruments





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





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





(b)
            Secured
      loans carrying value was $4,944,898 and $5,493,828 at December 31, 2007
      and 2006, respectively.  The fair value of these loans
      $4,899,012 and $5,567,904, respectively, was estimated based upon
      projected cash flows discounted at the estimated current interest rates at
      which similar loans would be made.  The applicable amount of the
      allowance for loan losses along with accrued interest and advances related
      thereto should also be considered in evaluating the fair value versus the
      carrying value.





(c)
      Unsecured loans carrying value was $769,858 and $712,643 at December 31,
      2007 and 2006, respectively.  The fair value of these loans
      approximates their carrying value after consideration of the allowance for
      loan losses established by the general partners on these
      loans.





39


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








8.
            Non-Cash
      Transactions





During
2006, a previously secured loan became unsecured which resulted in a decrease to
secured loans, advances and accrued interest of $531,559, $2,385 and $34,745,
respectively, and an increase to unsecured loans of $568,689.








9.
            Loan Concentrations
      and Characteristics




Most
loans are secured by recorded deeds of trust.  At December 31, 2007
and 2006, there were 24 and 26 secured loans outstanding respectively, with the
following characteristics:





2007
            
            
            
            2006Number
      of secured loans outstanding
            
            
            24
            
            
            
            26Total
      secured loans outstanding
            
            $
            4,944,898
            
            
            $
            5,493,828Average
      secured loan outstanding
            
            $
            206,037
            
            
            $
            211,301Average
      secured loan as percent of total secured loans
            
            
            4.17
            %
            
            
            3.85
            %Average
      secured loan as percent of partners’ capital
            
            
            3.37
            %
            
            
            3.37
            %Largest
      secured loan outstanding
            
            $
            400,000
            
            
            $
            500,000Largest
      secured loan as percent of total secured loans
            
            
            8.09
            %
            
            
            9.10
            %Largest
      secured loan as percent of partners’ capital
            
            
            6.54
            %
            
            
            7.98
            %Largest
      secured loan as percent of total assets
            
            
            6.53
            %
            
            
            7.97
            %Number
      of counties where securityis
      located (all California)
            
            
            14
            
            
            
            15Largest
      percentage of secured loans in one county
            
            
            22.26
            %
            
            
            19.29
            %Number
      of secured loans in foreclosure
            
            
            —
            
            
            
            1Amounts
      of secured loans in foreclosure
            
            $
            —
            
            
            $
            400,000











40


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








9.
            Loan Concentrations
      and Characteristics
(continued)





The
following categories of secured loans were held at December 31, 2007 and
2006:




2007
            
            
            
            2006First
      trust deeds
            
            $
            2,764,524
            
            
            $
            3,365,234Second
      trust deeds
            
            
            1,980,374
            
            
            
            2,128,594Third
      trust deeds
            
            
            200,000
            
            
            
            —Total
      loans
            
            
            4,944,898
            
            
            
            5,493,828Prior
      liens due other lenders at time of loan
            
            
            5,715,592
            
            
            
            5,177,399Total
      debt
            
            $
            10,660,490
            
            
            $
            10,671,227Appraised
      property value at time of loan
            
            $
            18,380,414
            
            
            $
            16,617,341Average
      secured loan to appraised valueof
      security based on appraised values and priorliens
      at time loan was consummated
            
            
            58.00
            %
            
            
            64.22
            %Loans
      by type of propertySingle
      family (1-4 units)
            
            $
            2,851,528
            
            
            $
            4,345,689Apartments
            
            
            525,625
            
            
            
            342,500Commercial
            
            
            1,567,745
            
            
            
            805,639$
            4,944,898
            
            
            $
            5,493,828





Interest
rates on the loans range from 8.50% to 10.50% at December 31, 2007 and
2006.





Scheduled
maturity dates of secured loans as of December 31, 2007 are as
follows:




Year
      Ending December 31,2008
            
            $
            939,5692009
            
            
            992,7452010
            
            
            596,1402011
            
            
            1,556,6942012
            
            
            859,750Thereafter
            
            
            —$
            4,944,898








41


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








9.
            Loan Concentrations
      and Characteristics
(continued)





The
scheduled maturities for 2008 had no loans which were past maturity at December
31, 2007.  Occasionally, the Partnership allows borrowers to continue
to make the payments on loans past maturity for periods of time.  It
is the Partnership’s experience loans can be refinanced or repaid before the
maturity date.  Therefore, the above tabulation for scheduled
maturities is not a forecast of future cash receipts.








10.
            Commitments and
      Contingencies





Workout
agreements





The
Partnership periodically negotiates various contractual workout agreements with
borrowers.  The Partnership is not obligated to fund additional money
as of December 31, 2007.  There are three loans in a workout agreement
as of December 31, 2007.





Legal
proceedings





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








42


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Notes
      to Financial Statements


December
      31, 2007, 2006 and 2005








11.         Selected Financial
Information (Unaudited)





Calendar
      Quarter





First
            
            Second
            
            Third
            
            Fourth
            
            AnnualRevenues2007
            $  130,633
            
            $   120,180
            
            $   128,359
            
            $   132,432
            
            $   511,6042006
            $    79,665
            
            $   133,238
            
            $   137,961
            
            $   133,784
            
            $   484,648Expenses2007
            $    34,199
            
            $     24,210
            
            $     33,066
            
            $     37,665
            
            $   129,1402006
            $
      (14,355)
            
            $     39,440
            
            $     40,648
            
            $     36,789
            
            $   102,522Net
      income allocatedto
      general partners2007
            $         964
            
            $          960
            
            $          953
            
            $          945
            
            $       3,8222006
            $         940
            
            $          938
            
            $          973
            
            $          970
            
            $       3,821Net
      income allocatedto
      limited partners2007
            $    95,470
            
            $     95,010
            
            $     94,340
            
            $     93,822
            
            $   378,6422006
            $    93,080
            
            $     92,860
            
            $     96,340
            
            $     96,025
            
            $   378,305Net
      income per $1,000 investedWhere
      income isReinvested2007
            $           15
            
            $            15
            
            $            16
            
            $            16
            
            $            622006
            $           15
            
            $            15
            
            $            15
            
            $            16
            
            $            61Withdrawn2007
            $           15
            
            $            15
            
            $            15
            
            $            16
            
            $            612006
            $           15
            
            $            15
            
            $            15
            
            $            15
            
            $            60





43


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Schedule
      II


Valuation
      and Qualifying Accounts


For
      the Years Ended December 31, 2007, 2006 and
2005








B
            
            
            C -
      Additions
            
            
            
            
            
            
            EBalance
      at
            
            
            Charged
      to
            
            
            Charged
      to
            
            
            
            
            
            BalanceA
            
            
            Beginning
            
            
            Costs
      and
            
            
            Other
            
            
            
            D
            
            
            at
      End ofDescription
            
            
            of
      Period
            
            
            Expenses
            
            
            Accounts
            
            
            Deductions
            
            
            PeriodYear
      Ended December 31, 2005Deducted
      from asset accountsAllowance
      for loan losses
            
            
            $
            315,751
            
            
            $
            (1,685
            )
            
            $
            1,313
            
            
            $
            —
            
            
            $
            315,379Cumulative
      write-down ofreal
      estate held (REO)
            
            
            
            1,313
            
            
            
            —
            
            
            
            (1,313
            )
            
            
            —
            
            
            
            —$
            317,064
            
            
            $
            (1,685
            )
            
            $
            —
            
            
            $
            —
            
            
            $
            315,379Year
      Ended December 31, 2006Deducted
      from asset accountsAllowance
      for loan losses
            
            
            $
            315,379
            
            
            $
            (20,872
            )
            
            $
            —
            
            
            $
            —
            
            
            $
            294,507Cumulative
      write-down ofreal
      estate held (REO)
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —$
            315,379
            
            
            $
            (20,872
            )
            
            $
            —
            
            
            $
            —
            
            
            $
            294,507Year
      Ended December 31, 2007Deducted
      from asset accountsAllowance
      for loan losses
            
            
            $
            294,507
            
            
            $
            29,743
            
            
            $
            —
            
            
            $
            (334
            )
            
            $
            323,916Cumulative
      write-down ofreal
      estate held (REO)
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —$
            294,507
            
            
            $
            29,743
            
            
            $
            —
            
            
            $
            (334
            )
            
            $
            323,916Note
      (a) - Represents sales of REO.


44


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Schedule
      IV


Mortgage
      Loans on Real Estate


Rule
      12-29 Loans on Real Estate


December
      31, 2007








Col.
      HPrincipalCol.
      F
            
            
            
            
            
            Amount
      ofFace
            
            
            Col.
      G
            
            
            LoansCol.
      C
            
            Col.
      D
            
            
            
            
            
            Amount
            
            
            Carry
            
            
            Subject
      to
            
            
            Col.
      JCol.
      B
            
            Final
            
            Periodic
            
            
            Col.
      E
            
            
            of
      Mortgage
            
            
            Amount
      of
            
            
            Delinquent
            
            Col.
      I
            CaliforniaCol.
      A
            
            Interest
            
            Maturity
            
            Payment
            
            
            Prior
            
            
            Original
            
            
            Mortgage
            
            
            Principal
            
            Type
      of
            GeographicDescription
            
            Rate
            
            Date
            
            Terms
            
            
            Liens
            
            
            Amount
            
            
            Investment
            
            
            or
      Interest
            
            Lien
            LocationRes.
            
            
            8.50
            %
            03/01/08
            
            
            1,771
            
            
            
            —
            
            
            
            250,000
            
            
            
            250,000
            
            
            
            —
            
            1st
            MontereyRes.
            
            
            9.25
            %
            06/01/10
            
            
            2,057
            
            
            
            198,779
            
            
            
            250,000
            
            
            
            245,515
            
            
            
            —
            
            2nd
            AlamedaComm.
            
            
            9.50
            %
            02/01/09
            
            
            2,078
            
            
            
            —
            
            
            
            262,500
            
            
            
            262,500
            
            
            
            —
            
            1st
            San
      JoaquinRes.
            
            
            9.63
            %
            03/01/08
            
            
            2,326
            
            
            
            —
            
            
            
            290,000
            
            
            
            289,569
            
            
            
            289,569
            
            1st
            ButteRes.
            
            
            9.63
            %
            04/01/11
            
            
            1,062
            
            
            
            173,882
            
            
            
            125,000
            
            
            
            121,671
            
            
            
            —
            
            2nd
            MariposaComm.
            
            
            9.88
            %
            04/01/08
            
            
            3,292
            
            
            
            —
            
            
            
            400,000
            
            
            
            400,000
            
            
            
            —
            
            1st
            AlamedaRes.
            
            
            8.88
            %
            04/01/11
            
            
            517
            
            
            
            580,000
            
            
            
            64,644
            
            
            
            63,981
            
            
            
            —
            
            2nd
            Contra
      CostaRes.
            
            
            9.63
            %
            05/01/11
            
            
            850
            
            
            
            —
            
            
            
            100,000
            
            
            
            99,021
            
            
            
            —
            
            1st
            Los
      AngelesRes.
            
            
            9.75
            %
            06/01/11
            
            
            601
            
            
            
            75,015
            
            
            
            70,000
            
            
            
            69,481
            
            
            
            —
            
            2nd
            San
      BernardinoRes.
            
            
            9.75
            %
            06/01/11
            
            
            859
            
            
            
            255,618
            
            
            
            100,000
            
            
            
            99,383
            
            
            
            99,383
            
            2nd
            MontereyRes.
            
            
            8.88
            %
            07/01/11
            
            
            2,958
            
            
            
            866,667
            
            
            
            400,000
            
            
            
            400,000
            
            
            
            —
            
            2nd
            San
      FranciscoRes.
            
            
            9.00
            %
            06/01/11
            
            
            1,609
            
            
            
            1,020,306
            
            
            
            200,000
            
            
            
            197,967
            
            
            
            —
            
            2nd
            Los
      AngelesApts.
            
            
            9.25
            %
            01/01/10
            
            
            1,932
            
            
            
            424,606
            
            
            
            242,500
            
            
            
            250,625
            
            
            
            —
            
            2nd
            San
      FranciscoRes.
            
            
            9.75
            %
            10/01/11
            
            
            932
            
            
            
            —
            
            
            
            108,500
            
            
            
            107,835
            
            
            
            —
            
            1st
            ShastaRes.
            
            
            9.00
            %
            12/06/11
            
            
            1,950
            
            
            
            —
            
            
            
            260,000
            
            
            
            259,973
            
            
            
            —
            
            1st
            AlamedaRes.
            
            
            10.00
            %
            01/01/12
            
            
            1,275
            
            
            
            —
            
            
            
            153,000
            
            
            
            153,000
            
            
            
            153,000
            
            1st
            Contra
      CostaRes.
            
            
            9.75
            %
            12/01/11
            
            
            1,186
            
            
            
            —
            
            
            
            138,000
            
            
            
            137,382
            
            
            
            —
            
            1st
            San
      BernardinoApts.
            
            
            9.25
            %
            01/01/10
            
            
            771
            
            
            
            —
            
            
            
            100,000
            
            
            
            100,000
            
            
            
            —
            
            1st
            San
      FranciscoRes.
            
            
            9.75
            %
            05/01/12
            
            
            926
            
            
            
            163,230
            
            
            
            107,800
            
            
            
            107,543
            
            
            
            —
            
            2nd
            StanislausRes.
            
            
            9.25
            %
            06/01/12
            
            
            2,057
            
            
            
            445,918
            
            
            
            250,000
            
            
            
            249,207
            
            
            
            —
            
            2nd
            OrangeComm.
            
            
            10.50
            %
            07/01/09
            
            
            3,212
            
            
            
            —
            
            
            
            450,000
            
            
            
            355,245
            
            
            
            —
            
            1st
            SolanoComm.
            
            
            9.00
            %
            07/01/12
            
            
            2,625
            
            
            
            —
            
            
            
            350,000
            
            
            
            350,000
            
            
            
            —
            
            1st
            San
      FranciscoComm.
            
            
            10.00
            %
            03/01/09
            
            
            1,667
            
            
            
            475,698
            
            
            
            200,000
            
            
            
            200,000
            
            
            
            —
            
            3rd
            El
      DoradoApts.
            
            
            10.00
            %
            02/01/09
            
            
            1,458
            
            
            
            1,035,873
            
            
            
            175,000
            
            
            
            175,000
            
            
            
            —
            
            2nd
            San
      JoaquinTotal
            
            
            
            
            
            
            $
            39,971
            
            
            $
            5,715,592
            
            
            $
            5,046,944
            
            
            $
            4,944,898
            
            
            $
            541,952








Note:  Most
      loans have balloon payments due at
maturity.





45


REDWOOD
      MORTGAGE INVESTORS VI


(A
      California Limited Partnership)


Schedule
      IV


Mortgage
      Loans on Real Estate


Rule
      12-29 Loans on Real Estate
(Continued)








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





Year
      ended December 31,





2007
            
            
            
            2006
            
            
            
            2005Balance
      at beginning of year
            
            $
            5,493,828
            
            
            $
            2,021,973
            
            
            $
            5,225,128Additions
      during periodNew
      loans
            
            
            1,654,246
            
            
            
            5,153,620
            
            
            
            1,858,250Other
            
            
            —
            
            
            
            —
            
            
            
            —Total
      additions
            
            
            1,654,246
            
            
            
            5,153,620
            
            
            
            1,858,250Deductions
      during periodCollections
      of principal
            
            
            2,203,176
            
            
            
            1,150,206
            
            
            
            5,061,405Foreclosures
            
            
            —
            
            
            
            —
            
            
            
            —Cost
      of loans sold
            
            
            —
            
            
            
            —
            
            
            
            —Amortization
      of premium
            
            
            —
            
            
            
            —
            
            
            
            —Other
            
            
            —
            
            
            
            531,559
            
            
            
            —Total
      deductions
            
            
            2,203,176
            
            
            
            1,681,765
            
            
            
            5,061,405Balance
      at close of year
            
            $
            4,944,898
            
            
            $
            5,493,828
            
            
            $
            2,021,973


46


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





There
were no disagreements with the Partnership’s independent registered public
accounting firm during the years ended December 31, 2007 and 2006.





Item 9a – Controls and
Procedures





The
Partnership carried out an evaluation, under the supervision and with the
participation of the general partners of the effectiveness of the design and
operation of the Partnership’s disclosure controls and procedures as of the end
of the period covered by this report pursuant to Rule 13a-15 of the Securities
Exchange Act of 1934, as amended.  Based upon that evaluation, the
general partners concluded the Partnership’s disclosure controls and procedures
were effective in timely alerting the general partners to material information
related to the Partnership that is required to be included in our periodic
filings with the Securities and Exchange Commission.





There
were no significant changes in the Partnership’s internal control over financial
reporting during the Partnership’s fourth fiscal quarter that have materially
affected, or are likely to materially affect, the Partnership’s internal control
over financial reporting.





Item 9b – Other
Information





None





Part III





Item 10 – Directors,
Executive Officers and Corporate Governance





The
Partnership has no Officers or Directors.  Rather, the activities of
the Partnership are managed by the two general partners, one of whom is an
individual, Michael R. Burwell.  The second general partner is Gymno
Corporation, a California corporation, formed in
1986.  Mr. Burwell is one of the three shareholders of Gymno
Corporation, a California corporation, and has a 50% interest in the
corporation.  The remaining two shareholders are trusts as to which
Mr. Burwell is the trustee of each trust.





The
General Partners.





Michael R. Burwell.Michael R.
Burwell, age 51, General Partner, past member of Board of Trustees and
Treasurer, Mortgage Brokers Institute (1984-1986); President, Director, Chief
Financial Officer, Redwood Mortgage Corp. (1979-present); Director, Secretary
and Treasurer A & B Financial Services, Inc. (1980-present); President,
Director, Chief Financial Officer and Secretary (since 1986) of Gymno
Corporation; President, Director, Secretary and Treasurer of The Redwood Group,
Ltd. (1979-present).  Mr. Burwell is licensed as a real estate
sales person.





Gymno Corporation.Gymno
Corporation, General Partner, is a California corporation formed in 1986 for the
purpose of acting as a general partner of this Partnership and of other limited
partnerships formed by the individual general partners.  The shares in
Gymno Corporation are held equally by Michael R. Burwell and two trusts, each of
which Michael R. Burwell is the trustee.  Michael R. Burwell is a
director of Gymno and the director position held by D. Russell Burwell is
currently vacant.  Michael R. Burwell is its President, Chief
Financial Officer and Secretary.  Michael R. Burwell has a controlling
interest in this company through his ownership of stock and as trustee of the
Burwell trusts.





47


Financial
Oversight by General Partners.





The
Partnership does not have a board of directors or an audit
committee.  Accordingly, the general partners serve the equivalent
function of an audit committee for, among other things, the following purposes:
appointment, compensation, review and oversight of the work of our independent
public accountants, and establishing the enforcing of the Code of
Ethics.  However, since the Partnership does not have an audit
committee and the general partners are not independent of the partnership, the
Partnership does not have an “audit committee financial expert.”





Code
of Ethics.





The
general partners have adopted a Code of Ethics applicable to the general
partners and to any agents, employees or independent contractors engaged by the
general partners to perform the functions of a principal financial officer,
principal accounting officer or controller of the partnership, if
any.  You may obtain a copy of this Code of Ethics, without charge,
upon request by calling our Investor Services Department at (650)
365-5341.








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, 2007.  All such
compensation is in compliance with the guidelines and limitations set forth in
the partnership agreement.





Entity
      Receiving Compensation
            Description
      of Compensation and Services Rendered
            
            AmountI. Redwood Mortgage
      Corp.
            Loan
      Servicing Fee for servicing loans
            
            $
            0General
      Partners &/or Affiliates
            Asset
      Management Fee for managing assets
            
            $
            7,785General
      Partners
            1%
      interest in profits
            
            $
            3,822





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





Redwood
      Mortgage Corp.
            Mortgage
      Brokerage Commissions for services in connectionwith
      the review, selection, evaluation, negotiation, and
    extensionof
      the loans paid by the borrowers and not by the Partnership
            
            $
            42,839Redwood
      Mortgage Corp.
            Processing
      and Escrow Fees for services in connection withnotary,
      document preparation, credit investigation, and escrowfees
      payable by the borrowers and not by the Partnership
            
            $
            3,562Gymno
      Corporation
            Reconveyance
      Fee
            
            $
            239





III.
IN ADDITION, THE GENERAL PARTNERS AND/OR RELATED COMPANIES PAY CERTAIN EXPENSES
ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . . . . . . . . . . $7,190





48


Item 12 – Security Ownership
of Certain Beneficial Owners and Management, and Related Stockholder
Matters





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, and Director
Independence





Refer to
footnotes 3 and 4 of the Notes to Financial Statements in Part II item 8, which
describes related party fees and data.





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





Since the
Partnership does not have a board of directors and since the general partners
are not considered independent of the Partnership, the Partnership does not have
the equivalent of independent directors.








Item 14 – Principal
Accountant Fees and Services





Fees for
services performed for the Partnership by the principal accountant for 2007 and
2006 are as follows:





Audit Fees  The
aggregate fees billed during the years ended December 31, 2007 and 2006 for
professional services rendered for the audit of the Partnership’s annual
financial statements included in the Partnership’s Annual Report on Form 10-K
and review of financial statements included in the Partnership’s Quarterly
Reports on Form 10-Q were $47,120 and $51,581, respectively.





Audit Related
Fees  There were no fees billed during the years ended December
31, 2007 and 2006 for audit-related services.





Tax fees  The
aggregate fees billed for tax services for the years ended December 31, 2007 and
2006 were $4,338 and $4,138, respectively. These fees relate to professional
services rendered primarily for tax compliance.





All Other
Fees  There were no other fees billed during the years ended
December 31, 2007 and 2006.





All audit
and non-audit services are approved by the general partner prior to the
accountant being engaged by the Partnership.





49





Part
IV








Item 15 – Exhibits,
Financial Statements and Schedules








A.          Documents
filed as part of this report:





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





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





3.
Exhibits.








Exhibit
      No
            
            Description
      of Exhibits





3.1
            
            Limited
      Partnership Agreement3.2
            
            Form
      of Certificate of Limited Partnership Interest3.3
            
            Certificate
      of Limited Partnership10.1
            
            Escrow
      Agreement10.2
            
            Servicing
      Agreement10.3
            (a)
            Form
      of Note secured by Deed of Trust which provides for principal and interest
      payments(b)
            Form
      of Note secured by Deed of Trust which provides principal and interest
      payments and right of assumption(c)
            Form
      of Note secured by Deed of Trust which provides for interest only
      payments(d)
            Form
      of Note10.4
            (a)
            Deed
      of Trust and Assignment of Rents to accompany Exhibits 10.3 (a) and
      (c)(b)
            Deed
      of Trust and Assignment of Rents to accompany Exhibits 10.3
      (b)(c)
            Deed
      of Trust to accompany Exhibit 10.3 (d)10.5
            
            Promissory
      Note for Formation Loan10.6
            
            Agreement
      to Seek a Lender31.1
            
            Certification
      of General Partner pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
            
            Certification
      of General Partner pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232.1
            
            Certification
      of General Partner pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
            
            Certification
      of General Partner pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002








All of
the above exhibits other than 31.1, 31.2, 32.1 and 32.2, were previously filed
as the exhibits to Registrant’s Statement on Form S-11 (Registration No.
33-12519) and incorporated by reference herein.








B.           See
(A) 3 above








C.
            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.








50


Signatures





Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized on the 31st day of March,
2008.





REDWOOD
      MORTGAGE INVESTORS VI








By:
            /S/
      Michael R. BurwellMichael
      R. Burwell, General PartnerBy:
            Gymno
      Corporation, General PartnerBy:
            /S/
      Michael R. BurwellMichael
      R. Burwell, President, Secretary
              &
      Chief Financial Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the registrant and in the
capacity indicated on the 31st day of March, 2008.





Signature
            Title
            Date











/S/
      Michael R. BurwellMichael
      R. Burwell
            
            General
      Partner
            
            March
      31, 2008








/S/
      Michael R. BurwellMichael
      R. Burwell
            
            President,
      Secretary & Chief Financial Officer of Gymno Corporation (Principal
      Financial and Accounting Officer);
              Director
      of Gymno Corporation
            
            March
      31, 2008








51


Exhibit
31.1





GENERAL
PARTNER CERTIFICATION





I,
      Michael R. Burwell, certify that:





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





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





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





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





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





(b)
            evaluated
      the effectiveness of the Registrant’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
  and





(c)
            disclosed
      in this report any change in the Registrant’s control over financial
      reporting that occurred during the Registrant’s most recent fiscal quarter
      (the Registrant’s fourth fiscal quarter in the case of an annual report)
      that has materially affected, or is reasonably likely to materially
      affect, the Registrant’s internal control over financial reporting;
      and





5.
            The
      Registrant’s other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the Registrant’s auditors and the audit committee of the Registrant’s
      board of directors (or persons performing the equivalent
      functions):





(a)
            all
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the Registrant’s ability to record,
      process, summarize and report financial information;
  and





(b)
            any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the Registrant’s internal control
      over financial reporting.














/s/
Michael R. Burwell


____________________________


Michael
R. Burwell, General Partner


March 31,
2008


52


Exhibit
31.2





PRESIDENT
AND CHIEF FINANCIAL OFFICER CERTIFICATION





I,
Michael R. Burwell, certify that:





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





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





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





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





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





(b)
            evaluated
      the effectiveness of the Registrant’s disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
  and





(c)
            disclosed
      in this report any change in the Registrant’s control over financial
      reporting that occurred during the Registrant’s most recent fiscal quarter
      (the Registrant’s fourth fiscal quarter in the case of an annual report)
      that has materially affected, or is reasonably likely to materially
      affect, the Registrant’s internal control over financial reporting;
      and





5.         The
Registrant’s other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
Registrant’s auditors and the audit committee of the Registrant’s board of
directors (or persons performing the equivalent functions):





(a)
            all
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the Registrant’s ability to record,
      process, summarize and report financial information;
  and





(b)
            any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the Registrant’s internal control
      over financial reporting.














/s/
Michael R. Burwell


___________________________


Michael
R. Burwell, President and


Chief
Financial Officer of Gymno


Corporation,
General Partner


March 31,
2008


53


Exhibit
32.1





CERTIFICATION
PURSUANT TO


18 U.S.C
SECTION 1350,


AS
ADOPTED PURSUANT TO


SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002








In
connection with the Annual Report of Redwood Mortgage Investors VI (the
“Partnership”) on Form 10-K for the period ended December 31, 2007 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”),
pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, certify that to the best of
my knowledge:





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





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





This
Certification has not been, and shall not be deemed, “filed” with the Securities
and Exchange Commission.

















/s/
Michael R. Burwell


_____________________________


Michael
R. Burwell, General Partner


March 31,
2008





54





Exhibit
32.2





CERTIFICATION
PURSUANT TO


18 U.S.C.
SECTION 1350


AS
ADOPTED PURSUANT TO


SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002








In
connection with the Annual Report of Redwood Mortgage Investors VI (the
“Partnership”) on Form 10-K for the period ended December 31, 2007 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”),
pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, I, Michael R. Burwell, certify that to the best of
my knowledge:





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





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





This
Certification has not been, and shall not be deemed, “filed” with the Securities
and Exchange Commission.

















/s/
Michael R. Burwell


_____________________________


Michael
R. Burwell, President and


Chief
Financial Officer of Gymno


Corporation,
General Partner


March 31,
2008








55