10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Year Ended December 31, 2017

☐ 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: 000-27816

REDWOOD MORTGAGE INVESTORS VIII,

a California Limited Partnership

(Exact name of registrant as specified in its charter)

California	94-3158788
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

177 Bovet Road, Suite 520, San Mateo, CA	94402
(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 Interests

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☐  YES    ☒  NO

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ☐  YES    ☒  NO

Indicate by check mark whether the registrant (1) has filed all reports required 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    ☐  NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  YES    ☐  NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☒
		Emerging growth Company	☐
If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange  Act).    ☐  YES    ☒  NO

The registrant’s limited partnership units are not publicly traded and therefore have no market value.

The registrant had 147,329,043 limited partnership interests outstanding as of February 28, 2018.

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Index to Form 10-K

December 31, 2017

		Page No.
	Part I
Item 1	Business	1
Item 1A	Risk Factors	7
Item 1B	Unresolved Staff Comments	7
Item 2	Properties	7
Item 3	Legal Proceedings	8
Item 4	Mine Safety Disclosures	8
	Part II
Item 5	Market for the Registrant’s “Limited Partnership Units,” Related Unitholder Matters and Issuer Purchases of Equity Securities	9
Item 6	Selected Financial Data	10
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	19
Item 8	Consolidated Financial Statements and Supplementary Data	20
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	46
Item 9A	Controls and Procedures	46
Item 9B	Other Information	49
	Part III
Item 10	Directors, Executive Officers and Corporate Governance	50
Item 11	Executive Compensation	51
Item 12	Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters	51
Item 13	Certain Relationships and Related Transactions, and Director Independence	52
Item 14	Principal Accountant Fees & Services	52
	Part IV
Item 15	Exhibits and Financial Statement Schedules	53
Item 16	Form 10-K Summary…………………………………………………………………………………	53
Signatures		54

i

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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding the partnership’s expectations, hopes, intentions, beliefs and strategies regarding the future. Forward-looking statements, which are based on various assumptions (some of which are beyond our control), may be identified by reference to a future period or periods or by use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” “possible” or similar terms or variations on those terms or the negative of those terms. Forward-looking statements include statements regarding trends in the California real estate market, future interest rates and economic conditions and their effect on the partnership and its assets, estimates as to the allowance for loan losses, estimates of future redemptions of units, future funding of loans by the partnership, and beliefs relating to how the partnership will be affected by current economic conditions and trends in the financial and credit markets. Actual results may be materially different from what is projected by such forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following:

• changes in economic conditions, interest rates, and/or changes in California real estate markets;

• the impact of competition and competitive pricing for mortgage loans;

• our ability to grow our mortgage lending business;

• the general partners’ ability to make and arrange for loans that fit our investment criteria,

• the concentration of credit risks to which we are exposed;

• increases in payment delinquencies and defaults on our mortgage loans; and

• changes in government regulation and legislative actions affecting our business.

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.

Part I

Item 1 – Business

Redwood Mortgage Investors VIII, a California Limited Partnership (we, RMI VIII or the partnership), was formed in 1993 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily by first and second deeds of trust.

The ongoing sources of funds for loans are the proceeds (net of withdrawals from partner capital accounts, subject to limitations) from

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• earnings retained (i.e. not distributed) in partners’ capital accounts;

• REO sales; and

• to a lesser degree and, if obtained, a line of credit.

We are externally managed by Redwood Mortgage Corp., a general partner (RMC or the manager). The manager is solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the partners on specified matters. The manager acting alone has the power and authority to act for and bind the partnership. RMC provides the personnel and services necessary to conduct our business as we have no employees of our own.

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The mortgage loans we fund and/or invest in are arranged and generally are serviced by RMC. The general partner is required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

Limited partners representing a majority of the outstanding units may, without the consent of the general partners, vote to:

• dissolve the partnership;

• amend the partnership agreement subject to certain limitations;

• approve or disapprove the sale of all or substantially all of the assets of the partnership; and

• remove or replace one or all of the general partners.

A majority in interest of partnership units is required to elect a new general partner to continue the partnership business after a general partner ceases to be a general partner due to its withdrawal.

Profits and losses are allocated among the limited partners according to their respective capital accounts after one percent (1%) of profits and losses are allocated to the general partners. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the partnership to provide tax benefits of the type commonly associated with limited liability partnership tax shelter investments. Federal and state income taxes are the obligation of the partners, other than the annual California franchise tax and any California LLC cash receipts taxes paid by the partnership’s subsidiaries.

Distribution policy

At the time of their subscription for units, partners elect to have distributed to them their monthly, quarterly or annual allocation of profits, or to have profits allocated to their capital accounts be retained by the partnership to compound. Subject to certain limitations, those electing compounding may subsequently change their election. A partner’s election to receive cash distributions is irrevocable.

Liquidity, capital withdrawals and early withdrawals

Because there are substantial restrictions on transferability of units, there is no established public trading and/or secondary market for the units, and none is expected to develop. To provide liquidity to limited partners, the partnership agreement provides that limited partners, after the minimum five-year period, may withdraw all or a portion of their capital accounts in 20 quarterly installments or longer, as determined by the general partners in light of partnership cash flow, beginning the last day of the calendar quarter following the quarter in which the notice of withdrawal is given. A limited partner may liquidate all or a part of the 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, 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. There is also a limited right of liquidation for an investor’s heirs upon an investor’s death.

We have not established a cash reserve from which to fund withdrawals and, accordingly, our capacity to return a limited partner’s capital is subject to the availability of partnership cash. No more than 20% of the total limited partners’ capital account balances at the beginning of any year may be liquidated during any calendar year.

Investment objectives and lending guidelines

Our primary investment objectives are to:

• yield a high rate of return from mortgage lending, after the payment of certain fees and expenses to the general partners and their affiliates; and

• preserve and protect our capital.

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We generally fund loans:

• having monthly payments of interest only or of principal and interest at fixed rates, calculated on a 30-year amortization basis; and

• having maturities of 5 years or less.

The partnership’s loans generally have shorter maturity terms than typical mortgages. As a result, constraints on the ability of our borrowers to refinance their loans at maturity possibly would have a negative impact on their ability to repay their loans. In the event a borrower is unable to repay at maturity, the partnership may consider extending the term through a loan modification or foreclosing on the property. A reduction in loan repayments would reduce the partnership’s cash flows and restrict the partnership’s ability to invest in new loans and/or, if ongoing for an extended period, provide earnings distributions and redemptions of partners’ capital.

Generally, interest rates on our mortgage loans are not affected by market movements in interest rates. If, as expected, we continue to make and invest in fixed rate loans primarily, and interest rates were to rise, a possible result would be lower prepayments of our loans. This increase in the duration of the time loans are on the books may reduce overall liquidity, which itself may reduce our investment into new loans at higher interest rates. Conversely, if interest rates were to decline, we could see a significant increase in borrower prepayments. If we then invest in new loans at lower rates of interest, a lower yield to partners may possibly result.

The cash flow and the income generated by the real property securing the loan factor into the credit decisions, as does the general creditworthiness, experience and reputation of the borrower. However, for loans secured by real property, other than owner-occupied personal residences, such considerations are subordinate to a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. The amount of the loan combined with the outstanding debt and claims secured by a senior deed of trust on the real property generally will not exceed a specified percentage of the appraised value of the property (the loan-to-value ratio, or LTV) as determined by an independent written appraisal at the time the loan is made. The LTV generally will not exceed 80% for residential properties (including multi-family), 75% for commercial properties, and 50% for land. The excess of the value of the collateral securing the loan over our debt and any senior debt owing on the property is the “protective equity.”

We believe our LTV policy gives us more potential protective equity than competing lenders who fund loans with a higher LTV. However, we may be viewed as an “asset” lender based on our emphasis on LTV in our underwriting process. Being an “asset” lender may increase the likelihood of payment defaults by borrowers. Accordingly, we may have a higher level of payment delinquency and loans designated as impaired for financial reporting purposes than that of lenders, such as banks and other financial institutions subject to federal and state banking regulations, which are typically viewed as “credit” lenders.

See Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for a detailed presentation on our secured loan portfolio and on the allowance for loan losses, which presentation is incorporated by this reference into this Item 1.

Competition

The San Francisco Bay Area, including the South Bay/Silicon Valley, and the Los Angeles metropolitan area are our most significant locations of lending activity and the economic vitality of these regions – as well as the stability of the national economy and the financial markets – is of primary importance in determining the availability of new lending opportunities and the performance of previously made loans.

The mortgage lending business is highly competitive, and we compete with numerous established entities, some of which have more financial resources and experience in the mortgage lending business than RMC. We will encounter significant competition from banks, insurance companies, savings and loan associations, mortgage bankers, real estate investment trusts and other lenders with objectives similar in whole or in part to ours.

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Regulations

We are engaged in business as a mortgage lender and investor by making and holding-for-investment loans secured by California real estate, primarily through first and second deeds of trust.  We and RMC, which arranges and generally services our loans, are heavily regulated by laws governing lending practices at the federal, state and local levels. In addition, proposals for further regulation of the financial services industry continually are being introduced. The laws and regulations to which we and RMC are subject include rules and restrictions pertaining to:

• the conduct of a mortgage lending business by a licensed California real estate broker under state and federal law;

• real estate settlement procedures;

• fair lending;

• truth in lending;

• federal and state loan disclosure requirements;

• the establishment of maximum interest rates, finance charges and other charges;

• loan-servicing procedures;

• secured transactions and foreclosure proceedings;

• privacy regulations providing for the use and safeguarding of non-public personal financial information of borrowers; and

• with respect to the partnership, required filings with the Securities and Exchange Commission (“SEC”) pursuant to federal securities laws, including periodic reports such as Form 10-K and Form 10-Q, and required filings with the states’ securities agencies.

Key federal and state laws, regulations, and rules relating to the conduct of our business include the following:

• California Real Estate Law.

The California Real Estate Law, codified in California Business and Professions Code Sections 10000 et seq., together with the Real Estate Commissioner’s rules thereunder, govern the licensing, administration and activities of licensed real estate brokers (including mortgage loans brokers) in the State of California, including rules relating to, among other things, licensing, borrower and investor disclosures, compensation and fees, disciplinary action, and transactions involving trust deeds and real property sale contracts generally.  We are not a licensed real estate broker but our manager, RMC, is so licensed and will be subject to those laws and regulations.

RMC’s loan files and other books and records are subject to examination by the California Bureau of Real Estate.  Such examinations, as well as new regulations that may be issued in the future, could ultimately increase RMC’s and our administrative burdens and costs.

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• Dodd-Frank Wall Street Reform and Consumer Protection Act.

This federal law passed in 2010 imposes significant regulatory restrictions on the origination of residential mortgage loans, under sections concerning “Mortgage Reform and Anti-Predatory Lending.” For example, when a consumer loan is made, the lender is required to make a reasonable and good faith determination, based on verified and documented information concerning the consumer’s financial situation, as to whether the consumer has a reasonable ability to repay a residential mortgage loan before extending the loan. The act calls for regulations prohibiting a creditor from extending credit to a consumer secured by a high-cost mortgage without first receiving certification from an independent counselor approved by a government agency. The act also adds new provisions prohibiting balloon payments for defined high-cost mortgages. The act established the Consumer Financial Protection Bureau (CFPB), giving it regulatory authority over most federal consumer-lending laws, including those relating to residential mortgage lending, and oversight over companies that provide consumer financial products or services, including us. Many of the federal regulations governing mortgage lending have been significantly amended and expanded through the passage of the Dodd Frank Act.

The act also enhanced regulatory requirements on banking entities and other organizations considered significant to U.S. financial markets and provides for reform of the asset-backed securitization market. We do not expect these particular regulatory changes will have a material direct effect on our business or operations.

• Real Estate Settlement Procedures Act (“RESPA”).

RESPA is a federal law passed in 1974  with the purpose of establishing settlement procedures for consumer real estate purchase and refinance transactions on residential (1-4 unit) properties. It establishes rules relating to affiliated business relationships, escrow accounts for property taxes and hazard insurance and loan servicing, among other things. It prohibits unearned referral fees from being charged in a covered transaction. RESPA also governs the format of the Loan Estimate and the Closing Disclosure forms provided to consumers in real estate transactions.

• Truth in Lending Act (“TILA”).

TILA is a federal law passed in 1968 for the purpose of regulating consumer financing. For real estate lenders, TILA requires, among other things, advance disclosure of certain loan terms, calculation of the costs of the loan as demonstrated through an annual percentage rate, and the right of a consumer in a refinance transaction on their primary residence to rescind their loan within three days following signing of the loan document.

• Home Ownership and Equity Protection Act (“HOEPA”) and California Covered Loan Law.

HOEPA is a federal law passed in 1994 to provide additional disclosures for certain closed-end home mortgages. These “high-cost” closed-end home mortgages are loans with interest rates and fees in excess of certain percentage or amount thresholds. These regulations primarily focus on additional disclosure with respect to the terms of the loan to the borrower, the timing of such disclosures, and the prohibition of certain loan terms, including balloon payments and negative amortization. Failure to comply with the regulations will render the loan rescindable for up to three years. Lenders can be held liable for attorneys’ fees, finance charges and fees paid by the borrower and certain other money damages.  Similarly, in California, Financial Code Section 4970, et. seq., became effective in 2002. It provides for state regulation of “high-cost” consumer residential mortgage loans (also called “covered loans”) secured by liens on real property. Section 4970 defines covered loans as consumer loans in which the original principal balance of the loan does not exceed the most current conforming loan limit for a single-family first mortgage loan established by the Federal National Mortgage Association, with interest rates and/or fees exceeding one of the statutorily defined percentage or amount thresholds. The law prohibits certain lending practices with respect to high-cost loans, including the making of a loan without regard to the borrower’s income or obligations. When making such loans, lenders must provide borrowers with a consumer disclosure and provide for an additional rescission period prior to closing the loan.

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• Mortgage Disclosure Improvement Act.

This federal law enacted in 2008, regulates the timing and delivery of loan disclosures for all mortgage loan transactions governed under the Real Estate Settlement Procedures Act.

• Home Mortgage Disclosure Act (“HMDA”).

This federal law enacted in 1975 provides for public access to information on a lender’s loan activity. It requires lenders to report to their federal regulator certain information about mortgage loan applications it receives, such as the race and gender of its customers, the disposition of the mortgage application, income of the borrowers and interest rate (i.e. APR) information. Amendments to HMDA became effective on January 1, 2018. Under the amended regulation lenders will be required to report 40 additional data points on their loan applications, including borrower age and credit data, lender fees, debt-to-income ratios and loan-to-value ratios.

• Red Flags Rule.

This federal rule was issued in 2007 under Section 114 of the Fair and Accurate Credit Transactions Act of 2003 and amended by the Red Flag Program Clarification Act of 2010. It requires lenders and creditors to implement an identity theft prevention program to identify and respond to account activity in which the misuse of a consumer’s personal identification may be suspected.

• Gramm-Leach-Bliley Act (aka Financial Services Modernization Act of 1999).

This federal act passed in 1999 requires all businesses that have access to consumers’ personal identification information to implement a plan providing for security measures to protect that information. As part of this program, we provide applicants and borrowers with a copy of our privacy policy.

• The California Homeowner Bill of Rights (“HOBR”).

This series of state laws, which became effective January 1, 2013, is intended to ensure fair lending and borrowing practices for California homeowners by guaranteeing basic fairness and transparency during the foreclosure process. Key provisions include restrictions on dual-track foreclosures, a guaranteed single point of contact, civil penalties for lenders filing unverified documents, and protections for tenants of foreclosed properties. HOBR also provides borrowers with the authority to seek redress of material violations of its rules, such as by an injunction (prior to foreclosure sale) or recovery of damages (after foreclosure sale).

In addition, key federal and state laws, regulations, and rules are applicable as a result of the offering of our units.

• Federal Securities Laws: The Securities Act of 1933 and The Exchange Act of 1934

Because our offerings of limited partnership interests were registered under the Securities Act of 1933, as amended, and we have registered the limited partnership interests pursuant to Section 12(g) of the Exchange Act, we are subject to the requirements of a public reporting company. Public reporting companies are required to file annual, quarterly and other periodic reports with the SEC and comply with applicable provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the related rules and regulations promulgated by the SEC. However, as discussed in Item 9.A. of this report, the partnership is externally managed by RMC and many of the requirements of Sarbanes-Oxley are not directly applicable to us since we do not have a board of directors, including an independent board member. The registration of our limited partnership interests pursuant to Section 12(g) of the Exchange Act, along with the satisfaction of certain other requirements under the Employee Retirement Income Security Act of 1974 (“ERISA”), enables the units to qualify as “publicly-offered securities” for purposes of ERISA and regulations issued thereunder.

6

• Sarbanes-Oxley Act of 2002

RMC, as our manager, is responsible for establishing and maintaining adequate internal control over financial reporting with respect to us as required by Section 404 of Sarbanes-Oxley and rules and regulations of the SEC thereunder. RMC is required to review and evaluate on an annual basis our internal control over financial reporting, and on a quarterly basis, to evaluate changes in our internal control over financial reporting. See Section 9.A.

• Financial Industry Regulatory Authority Regulatory Notice 15-02

In 2015 the SEC approved amendments to rules of the Financial Industry Regulatory Authority (“FINRA”) applicable to securities of direct participation programs, such as our units and to non-listed real estate investment trusts. The amendments, which became effective on April 11, 2016, provide, among other things, that (i) FINRA members distributing our units must include in customer account statements our per unit estimated value that must be developed using a methodology reasonably designed to ensure our per unit estimated value’s reliability; and (ii) our per unit estimated value disclosed from and after 150 days following the second anniversary of the admission of investors in our public offering must be based on an appraised valuation methodology developed by, or with the material assistance of, a third-party expert and updated on at least an annual basis. The rule changes also provide that the account statements must include additional disclosure regarding the sources of our distributions to unit holders.

• State Blue Sky Laws

We are subject to the state securities laws (“blue sky laws”) of the states in which we sold limited partnership interests. Under these blue sky laws, we were required to register or obtain an exemption from registration for our limited partnership interests in each state we intended to sell our limited partnership interests before we could begin to sell in a state. Also, many states have adopted or apply the Mortgage Program Guidelines adopted by the North American Securities Administrators Association (“NASAA”). Some states required us to include certain offering terms in order to comply with certain provisions of the NASAA Mortgage Program Guidelines in effect at the time that we might not have included if we were not subject to the state blue sky laws.

Term of the partnership

The partnership will continue until 2032, unless sooner terminated as provided in the partnership agreement.

Item 1A – Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.  

Item 1B – Unresolved Staff Comments

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 2 – Properties

See Note 5 - Real Estate Owned (REO) to the financial statements included in Part II, Item 8 of this report for a description of REO properties which description is incorporated by this reference into this Item 2.

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Item 3 – Legal Proceedings

In the normal course of our business, we may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect our interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the partnership. As of the date hereof, we are not involved in any legal proceedings other than those that would be considered part of the normal course of business.

Item 4 – Mine Safety Disclosures

Not applicable.

8

Part II

Item 5 – Market for the Registrant’s Units, Related Unitholder Matters and Issuer Purchases of Units

Because there are substantial restrictions on transferability of limited partnership interests, there is no established public trading and/or secondary market for the limited partnership interests, and none is expected to develop

In order to provide liquidity to partners, we provide certain liquidation rights. See “Liquidity, capital withdrawals and early withdrawals” in Part I of this report.  As of February 28, 2018, we had approximately 5,000 limited partners with approximately 147,329,000 units of limited partnership interest.

Recent sales of unregistered limited partnership interests

There were no sales of limited partnership interests by the partnership within the past three years.

Distributions

Cash distributions totaled $2,864,050 and $2,637,026 in 2017 and 2016, respectively.  See “Distribution policy” under Item 1- Business in Part I of this annual report, which discussion is incorporated by reference herein.

Liquidity and capital withdrawals

Withdrawals in 2017 and 2016 by quarter are presented in the following table ($ in thousands). All withdrawal payments are processed on the last day of the quarter, and are valued at $1 per unit.

Units redeemed	2017		2016
Q1	$	5,263	$	5,325
Q2		5,354		5,396
Q3		5,782		5,637
Q4		6,401		5,875
Total	$	22,800	$	22,233

Fair market value / unit value

RMC obtained information regarding fair market valuations and unit value as of December 31, 2017 for RMI VIII in compliance with FINRA Rule 2310 concerning direct-participation-program value per unit estimates. The valuation was performed by a qualified, nationally prominent firm in accordance with the objective, scope, and approach established by RMC, and is the sole responsibility of RMC. Industry standard valuation approaches, including the Discounted Cash Flow, Income, Market and Cost Approach were utilized in deriving the fair values as appropriate. There is no assurance that this estimated value is or will remain accurate, and it does not determine the amount that a member is entitled to receive upon withdrawal of units.

The fair value of a unit of RMI VIII was determined to be $0.98, after consideration of the fair values of the net assets held and the restrictions in the withdrawal provisions and the restrictions on transferability of units.

The fair value of the portfolio’s secured loans and REO is $140.3 million, representing a premium of approximately $3.4 million over the book value, per the analysis, based principally on discounted cash flow for the loans and market values for REO.

The assets are valued based on the appropriate application of industry standard valuation approaches including the discounted cash flow, income, market, and cost approaches. Although all four approaches are considered in a comprehensive valuation analysis, the nature of the asset and the availability of data will dictate which approaches are ultimately utilized to derive each asset’s value.

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Discounted Cash Flow Approach - The discounted cash flow method is comprised of four steps:

• project future cash flows for a certain discrete projection period;

• discount these cash flows to present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money;

• estimate the residual value of cash flows subsequent to the discrete projection period; and

• combine the present value of the residual cash flows with the discrete projection period cash flows to indicate the fair market value.

Income Approach - The income approach is a valuation technique that provides an estimation of the fair value of an asset, such as RMI VIII’s loans, based on the cash flows that an asset can be expected to generate over its estimated remaining economic term. This approach begins with an estimation of the annual cash flows a prudent investor would expect the subject asset to generate over a discrete projection period. The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows. The present value of the estimated cash flows is then added to the present value equivalent of the residual value of the asset at the end of the discrete projection period to arrive at an estimate of fair value.

Market Approach - The market approach measures value based on what other purchasers in the market have paid for assets that can be considered reasonably similar to those being valued. When the market approach is utilized, data are collected on the prices paid for reasonably comparable assets. Adjustments are made to the comparable assets to compensate for differences between those assets and the asset being valued. In the case of real estate for example, adjustments might be made for location, quality or construction, and/or building amenities. The application of the market approach results in an estimate of the price reasonably expected to be realized from the sale of the property.

Cost Approach - The cost approach is based on the premise that a prudent investor would pay no more for an asset than its replacement or reproduction costs. The cost to replace the asset would include the cost of constructing a similar asset of equivalent economic utility at prices applicable at the time of the valuation analysis. To arrive at an estimate of the fair value using the cost approach, the replacement cost new is determined and reduced for depreciation of the asset. In this context, depreciation has three components:

• physical depreciation;

• functional obsolescence; and

• economic obsolescence.

Physical deterioration is impairment to the condition of the asset brought about by wear and tear, disintegration, use in service, and the action of the elements. Functional obsolescence is the impairment in the efficiency of the asset brought about by such factors as overcapacity, inadequacy or a change in technology that affect the asset. Economic obsolescence is the impairment in the desirability of the asset arising from external economic forces, legislative enactment, or changes in supply and demand relationships.

The primary purpose of the valuation was to determine the fair value of a unit of partnership interest in RMI VIII. There is no assurance that this estimated value is or will remain accurate, and it does not determine the amount that a partner is entitled to receive upon redemption of units. RMC makes no representation, express or implied, that a unit of RMI VIII could or would be transferred by an investor for the stated fair value.

Item 6 – Selected Financial Data

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

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

The following discussion and analysis should be read in conjunction with the audited financial statements and notes thereto, which are included in Part II, Item 8 of this Report.

General Partners

See Notes 1 (Organization and General) and 3 (General Partners and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a detailed presentation of various partnership activities for which the general partners are compensated, including the formation loan, which presentation is incorporated by this reference into this Item 7.

Critical Accounting Policies

See Note 2 (Summary of Significant Accounting Policies) to the financial statements included in Part II, Item 8 of this report for a detailed presentation of critical accounting policies, which presentation is incorporated by this reference into this Item 7.

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Results of Operations

General economic conditions - California

All of our mortgage loans are secured by California real estate. Our secured-loan investment activity and the value of the real estate securing our loans is dependent significantly on economic activity and employment conditions in the California.  Wells Fargo’s Economics Group periodically provides timely, relevant information and analysis in its reports and commentary regarding California’s employment and economic conditions.  Highlights from a recently issued report from Wells Fargo Securities Economics Group is presented below.

In the publication “California Gets a Jump on 2018” dated March 9, 2018:

“Employers in the Golden State added 35,500 jobs in January, and the annual benchmarking process revised 2017 job gains higher.  California’s jobless rate ticked 0.1 percentage point lower to 4.4 percent in January.”

“California’s 35,500-job gain continued the momentum built in 2017, which was actually stronger than first reported.  California’s annual benchmark revision to payrolls revealed that employers actually added about 30,000 more jobs by the end of 2017 than originally estimated. Job growth accelerated further in January to a year-over-year increase of 2.2 percent, on a three month average basis, which represented a gain of 362,300 net new jobs. California’s payroll growth is on an upward trend and among the fastest in the nation, according to the September 2017 QCEW data, which inputs into the annual revisions. Only other states in the west added jobs faster than California.” …

“All of California’s main employment sectors are adding jobs, underscoring the broadening of the expansion beyond the tech and energy-driven growth that was the hallmark of the first half of the decade. That employers in all of California’s major metro areas added to payrolls over the past year is further evidence that more of the state is taking part in the economic expansion.  Construction job growth is being driven by strong demand for new homes, particularly on the more affordable end of the spectrum.  We expect construction payrolls to continue to grow rapidly, as long as workers can be found.  California is in serious need of more housing stock. Similarly, health care workers are in high demand, which has propelled the sector to one of California’s fastest growing.  The tech sector remains a potent job driver, and strength in that area offset losses elsewhere in the information sector over the past year.  Information payrolls rose 6,100 jobs despite a 10,300-job loss in the motion picture industry and a 2,800-job loss in telecommunication.  Manufacturing is another sector that endured a rough patch in recent years, and the newly revised data show the sector rebounding slightly earlier and stronger than first thought.” …

“California’s labor force grew slightly faster than its population but not enough for a meaningful improvement in the labor force participation rate, which still trails the nation. California’s labor market apparently has more slack to absorb, particularly if its strong job growth entices more workers into the labor force from the sidelines. Labor market slack is an increasingly rare commodity among states, as labor shortages seep into more regions and sectors.  Even though California’s labor force has more slack than much of the nation, it is now the tightest it has been since the series began in 1976 and is drifting lower. Employment growth exceeded the labor force again in January to push the jobless rate down 0.1 percentage points to 4.4 percent.  The national jobless rate has been stuck at 4.1 percent since October.”

12

Key performance indicators

Key performance indicators are presented in the following table for 2017 and 2016 ($ in thousands).

	2017			2016
Secured loans – average daily balance	$	116,124		$	81,457
Secured loans – end-of-period	$	129,955		$	94,851
Interest on loans	$	9,403		$	7,126
Portfolio interest rate(1)		8.1	%		8.3	%
Effective yield rate(2)		8.1	%		11.7	%
Provision for (recovery of) loan losses	$	(19	)	$	(50	)
Percent(2)		0.0	%		(0.1	)%
Real estate owned (REO)
REO – end of period	$	7,014		$	19,782
Mortgages payable – end-of-period	$	—		$	—
Rental operations, net	$	(576	)	$	1,702
Interest on mortgages payable	$	—		$	1,581
Rental operations, net after mortgage interest	$	(576	)	$	121
Realized gains on REO sales	$	1,211		$	2,592
Operations expense	$	5,431		$	5,166
Net Income	$	4,623		$	5,307
Percent(3)(4)		2.9	%		3.0	%
Partner Distributions	$	2,865		$	2,637
Percent (annual rate)(5)		3.1	%		2.5	%
Limited Partners’ capital – average balance	$	157,614		$	177,891
Limited Partners’ capital – end-of-period	$	146,791		$	167,879
Partner Liquidations(6)	$	22,800		$	22,233

(1) Stated note interest rate, weighted daily average

(2) Percent of secured loans – average daily balance

(3) Percent of limited partners’ capital – average balance

(4) Percent based on the net income available to limited partners (excluding 1% of profits and losses allocated to general partners)

(5) Percent distributed from limited partners’ capital accounts for partners electing periodic distributions.

(6) Scheduled liquidations as of December 31, 2017 were approximately $54,134,000. Additional detail regarding limited partner capital withdrawals is available under the caption “Cash flows and Liquidity” in this Management Discussion and Analysis. Scheduled liquidations as of December 31, 2016 were approximately $53,288,000.

13

Secured loans

The December 31, 2017 end-of-period secured loan balance was approximately $130.0 million, up 37.0% ($35.1 million) compared to the December 31, 2016 end-of-period secured loan balance of approximately $94.9 million. The increase balance of the secured loan portfolio is due to the 1) favorable economic environment generally and to the increased investment in California real estate markets specifically, and 2) the proceeds from the sale of REO properties being reinvested, both of which expands the opportunity for new loans.

Loans generally are funded at a fixed interest rate with a loan term of up to five years. Loans acquired are generally done so within the first six months of origination, and purchased at the current par value, which approximates fair value. As of December 31, 2017, 60 (83%) of the partnership’s 72 loans (representing 97% of the aggregate principal of the partnership’s loan portfolio) had a loan term of five years or less from inception. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment-penalty clause. As of December 31, 2017, 31 (43%) of the loans outstanding (representing 66% of the aggregate principal of the partnership’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity. The remaining loans require monthly payments of principal and interest, typically calculated on a 30 year amortization, with the remaining principal balance due at maturity.

We have sought to exercise strong discipline in underwriting loan applications and lending against collateral at amounts that create a mortgage portfolio that has substantial protective equity (i.e., safety margins to outstanding debt) as indicated by the overall conservative weighted-average loan-to-value ratio (LTV) which at December 31, 2017 was 55.6%. Thus, per the appraisal-based valuations at the time of loan inception, borrowers have, in the aggregate, equity of 44.4% in the property, and we as lenders have loaned in the aggregate 55.6% (including other senior liens on the property) against the properties we hold as collateral for the repayment of our loans.

See Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for detailed presentations on the secured loan portfolio and on the allowance for loan losses, which presentations are incorporated by this reference into this Item 7.

Performance overview

For 2017, net income available to limited partners as a percent of Limited Partners’ capital – average daily balance was 2.9%. Distributions to those limited partners electing periodic distributions was 3.1%.

For 2017, continuing improvement in interest on loans ($9.4 million in 2017, $7.1 million in 2016) is reflective of the growth in the portfolio of performing loans. For 2016, the effective yield rate on the loan portfolio was higher than the portfolio interest rate (11.7% and 8.3%, respectively) due to default-rate interest received on two loans collected in September 2016.

Net income for 2017 was approximately $4,623,000, a decrease of approximately $684,000 (12.9%) compared to 2016 due to the decrease in REO income, as a significant portion of the REO portfolio was liquidated and proceeds reinvested in loans. Total operations expense as a percent of interest income on loans was 57.8% and 72.5% for 2017 and 2016, respectively.

REO income decreased approximately $2,658,000 (81.8%) for 2017 compared to 2016, due primarily to the sale of certain REO properties and the overall reduction in the REO portfolio. As the REO portfolio continues to sell in a favorable real estate market, and the proceeds are reinvested in performing loans, REO income is expected to decline with offsetting increases to interest income. REO income includes earnings from rental operations, net of mortgage interest, holding costs of non-rental properties, and gains or losses on the sale of REO.

14

Analysis and discussion of income from operations 2017 v. 2016

Significant changes to revenue and expense for 2017 v. 2016 are summarized in the following table ($ in thousands).

										REO, net
				Provision for						Rental,						Holding
	Interest			(Recovery of)			Operations			Net After			Realized Gains			Costs,			Net
	on Loans			LoanLosses			Expense			Interest			on REO Sales			Net			Income
For the Year
2017	$	9,403		$	(19	)	$	5,431		$	(576	)	$	1,211		$	(44	)	$	4,623
2016		7,126			(50	)		5,166			121			2,592			536			5,307
Change	$	2,277		$	31		$	265		$	(697	)	$	(1,381	)	$	(580	)	$	(684	)
Explanation
Loan balance increase (decrease)		2,439			—			533			—			—			—			1,906
Effective yield rate		(162	)		—			—			—			—			—			(162	)
REO sales		—			—			—			(697	)		(1,381	)		(580	)		(2,658	)
Professional services		—			—			(244	)		—			—			—			244
Other		—			31			(24	)		—			—			—			(14	)
Change	$	2,277		$	31		$	265		$	(697	)	$	(1,381	)	$	(580	)	$	(684	)

      The table above displays only significant changes to net income for the period and is not intended to cross foot.

Interest on loans

Interest income increased approximately $2,277,000 for the year ended December 31, 2017 compared to the same period in 2016 due to growth of the secured loan portfolio. The secured loans- average daily balance increased approximately $34.7 million, or approximately 42.6%.

Provision for (recovery of) loan losses/allowance for loan losses

At December 31, 2017, the partnership had no allowance for loan losses as all loans had protective equity such that at December 31, 2017, collection was deemed probable for amounts owing.

Operations expense 2017 v. 2016

Significant changes to operations expense for 2017 v. 2016 are summarized in the following table ($ in thousands).

	Mortgage		Asset			Costs
	Servicing		Management			From			Professional
	Fees		Fees			RMC			Services			Other			Total
For the Year
2017	$	1,724	$	603		$	2,033		$	1,052		$	19		$	5,431
2016		1,191		678			1,963			1,344			(10	)		5,166
Change	$	533	$	(75	)	$	70		$	(292	)	$	29		$	265
Explanation
Loan balance increase (decrease)		533		—			—			—			—			533
Professional services rendered		—		—			48			(292	)		—			(244	)
Capital balance decrease		—		(75	)		(8	)		—			—			(83	)
Other		—		—			30			—			29			59
Change	$	533	$	(75	)	$	70		$	(292	)	$	29		$	265

15

•Mortgage servicing fees

The increase in mortgage servicing fees of approximately $533,000 from 2017 over 2016, is due to the increase in the average secured loan balance. Fees are charged at the annual rate of 1.5%.

•Asset management fees

The decrease in asset management fees of approximately $75,000 was due to the reduction in the total capital under management. Total partners’ capital at December 31, 2017 and 2016, was approximately $146.0 million and $167.0 million, respectively.

•Costs from RMC

The increase in costs from RMC of $70,000 was due primarily to increased operating expenses, particularly compliance costs, incurred by RMC.

•Professional services

Professional services, including audit & tax compliance fees, decreased approximately $292,000 due primarily to a decrease in audit, tax, and accounting fees relating to real estate transactions.

REO – rental operations, net after mortgage interest

At December 31, 2017, a significant portion of residential units were sold, with the remaining units expected to be sold in the first quarter of 2018.

REO – end-of-period balance, mortgages payable and realized gains/(losses) on REO sales and valuation adjustments

The December 31, 2017, REO balance, end of period, was approximately $7.0 million, down 64.5% ($12.8 million) compared to the December 31, 2016 balance of approximately $19.8 million.

See Note 5 (Real Estate Owned (REO)) to the financial statements included in Part II, Item 8 of this report for detailed presentations of REO sales transactions, rental activity, and additional information regarding REO activity during the period.

16

Summary comparison – 2017 4th quarter v. 3rd quarter

Significant changes to revenue and expense items for the three-month periods ended December 31, and September 30, are summarized in the following tabled ($ in thousands).

									REO, net
				Provision for					Rental,						Holding
	Interest			(Recovery of)		Operations			Net After			Realized Gains			Costs,			Net
	on Loans			LoanLosses		Expense			Interest			on REO Sales			Net			Income
For the Three Months Ended
December 31, 2017	$	2,597		$	6	$	1,371		$	(73	)	$	(91	)	$	(21	)	$	1,049
September 30, 2017		2,618			—		1,339			(179	)		441			(8	)		1,545
Change	$	(21	)	$	6	$	32		$	106		$	(532	)	$	(13	)	$	(496	)
Explanation
Loan balance increase (decrease)		(21	)		—		11			—			—			—			(32	)
REO sales		—			—		—			106			(532	)		(13	)		(439	)
Professional services		—			—		15			—			—			—			(15	)
Capital balance decrease		—			—		(4	)		—			—			—			4
Other		—			6		10			—			—			—			(14	)
Change	$	(21	)	$	6	$	32		$	106		$	(532	)	$	(13	)	$	(496	)

17

Cash flows and liquidity

Cash flows by business activity are presented in the following table ($ in thousands).

	2017			2016
Partners' capital
Distributions	$	(2,865	)	$	(2,637	)
Formation loan, net of early withdrawal fees		650			650
Liquidations		(22,800	)		(22,233	)
Cash used in partners' capital		(25,015	)		(24,220	)
Loan earnings and payments
Interest		8,834			6,825
Other loan income		41			48
Operations expense		(5,360	)		(4,881	)
Principal payments and recoveries		17,536			41,498
Total cash from loan earnings		21,051			43,490
Loans originated, net		(51,618	)		(73,881	)
Loans acquired from affiliates		(1,000	)		—
Advances on loans		(420	)		(51	)
Total cash from loan production		(53,038	)		(73,932	)
Cash from loan earnings and production		(31,987	)		(30,442	)
REO operations, sales and development
Rental operations, net		(777	)		562
Holding costs		(44	)		536
Other assets		(253	)		3,411
Proceeds from real estate sales		14,476			68,485
Cash from REO operations, sales and development		13,402			72,994
Outside financing
Interest expense		—			(1,248	)
Principal, net		—			(28,434	)
Cash from outside financing		—			(29,682	)
Net cash increase/(decrease) before distributions to limited partners		(18,585	)		12,870
Net increase/(decrease) in cash	$	(43,600	)	$	(11,350	)
Cash, end of period	$	1,723		$	45,323

Withdrawals of limited partner capital

The table below sets forth withdrawals of limited partner capital ($ in thousands).

	For the Year Ended December 31,
	2017		2016
Capital liquidations-without penalty	$	18,525	$	16,947
Capital liquidations-subject to penalty		4,275		5,286
Total	$	22,800	$	22,233

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Scheduled limited partner capital withdrawals at December 31, 2017 are presented in the following table ($ in thousands).

2018	$	24,247
2019		14,994
2020		8,156
2021		4,779
2022		1,890
Thereafter		68
Total	$	54,134

The ongoing sources of funds for loans are the proceeds (net of withdrawals from partner capital accounts subject to limitations) from

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• earnings retained (i.e. not distributed) in partners’ capital accounts;

• REO sales; and;

• to a lesser degree and, if obtained, a line of credit.

The partnership’s loans generally have shorter maturity terms than typical mortgages. As a result, constraints on the ability of our borrowers to refinance their loans at maturity possibly would have a negative impact on their ability to repay their loans. In the event a borrower is unable to repay at maturity, the partnership may consider extending the term through a loan modification or foreclosing on the property. A reduction in loan repayments would reduce the partnership’s cash flows and restrict the partnership’s ability to invest in new loans and/or, if ongoing for an extended period, provide earnings distributions and redemptions of partners’ capital.

Generally, within a broad range, the partnership’s rates on mortgage loans is not affected by market movements in interest rates. If, as expected, we continue to make and invest in fixed rate loans primarily, and interest rates were to rise, a possible result would be lower prepayments of the partnership’s loans. This increase in the duration of time loans are on the books may reduce overall liquidity, which itself may reduce the partnership’s investment into new loans at higher interest rates. Conversely, if interest rates were to decline, we could see a significant increase in borrower prepayments. If we then invest in new loans at lower interest rates of interest, a lower yield to limited partners may possibly result.

Contractual obligations

The partnership’s only obligation is to fund capital account requests subject to cash available per the terms of the partnership agreement. See Note 3 (General Partners and Other Related Parties) and Note 7 (Commitments and Contingencies, Other Than Loan and REO Commitments) to the financial statements included in Part II, Item 8 of this report for detailed presentations on commitments and contingencies, which presentations are incorporated by this reference into this Item 7.

We had no off-balance sheet arrangements as such arrangements are not permitted by the partnership agreement.

Item 7A – Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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Item 8 – Consolidated Financial Statements and Supplementary Data

A – Consolidated Financial Statements

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

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets for December 31, 2017 and 2016

Consolidated Statements of Income for the Years Ended December 31, 2017 and 2016

Consolidated Statements of Changes in Partners’ Capital for the Years Ended December 31, 2017 and 2016

Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016

Notes to Consolidated Financial Statements

B – Consolidated Financial Statement Schedules

None.

20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

Redwood Mortgage Investors VIII

San Mateo, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Redwood Mortgage Investors VIII (a California Limited Partnership) (the “Company”) and subsidiaries as of December 31, 2017 and 2016, the related consolidated statements of income, changes in partners’ capital, and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/S/ BDO USA, LLP

We have served as the Company's auditor since 2015.

San Francisco, California

April 2, 2018

21

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Balance Sheets

December 31, 2017 and 2016

($ in thousands)

	December 31,		December 31,
	2017		2016
ASSETS
Cash, in banks	$	1,723	$	45,323
Loans
Secured by deeds of trust
Principal		129,955		94,851
Advances	484		63
Accrued interest		1,209	641
Loan balance, secured		131,648		95,555
Unsecured	24		46
Allowance for loan losses		—		—
Loans, net		131,672		95,601
Real estate owned (REO)		7,014		19,782
Other assets, net		124		444
Total assets	$	140,533	$	161,150

LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and other liabilities	$	158		$	387
Payable to affiliate		4			—
Total liabilities		162			387
Partners’ capital
Limited partners’ capital, subject to liquidation, net		146,791			167,879
General partners’ capital (deficit)		(786	)		(832	)
Total partners’ capital, net		146,005			167,047
Receivable from manager (formation loan)		(5,634	)		(6,284	)
Partners’ capital subject to liquidation, net of formation loan		140,371			160,763
Total liabilities and partners’ capital	$	140,533		$	161,150

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

22

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Income

For the Years Ended December 31, 2017 and 2016

($ in thousands)

	2017			2016
Revenues, net
Loans
Interest income	$	9,403		$	7,126
Late fees		41			48
Revenue, loans		9,444			7,174
Provision for (recovery of) loan losses		(19	)		(50	)
Loans, net		9,463			7,224
REO
Rental operations, net		(576	)		1,702
Interest on mortgages		—			(1,581	)
Rental operations, net of mortgage interest		(576	)		121
Realized gains/(losses) on sales		1,411			2,592
Impairment (loss)/gain		(200	)		—
Holding costs, net of other income		(44	)		536
REO, net		591			3,249
Total revenues, net		10,054			10,473
Operations Expense
Mortgage servicing fees		1,724			1,191
Asset management fees		603			678
Costs from Redwood Mortgage Corp.		2,033			1,963
Professional services		1,052			1,344
Other		19			(10	)
Total operations expense		5,431			5,166
Net income	$	4,623		$	5,307
Net income
Limited partners (99%)		4,577			5,254
General partners (1%)		46			53
	$	4,623		$	5,307

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

23

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Changes in Partners’ Capital

For the Years Ended December 31, 2017 and 2016

($ in thousands)

	Limited
	Partners’
	Capital			General			Total
	Subject to			Partners’			Partners’
	Liquidation,net			Capital(Deficit)			Capital
Balance, December 31, 2016	$	167,879		$	(832	)	$	167,047
Net income		4,577			46			4,623
Distributions		(2,865	)		—			(2,865	)
Liquidations		(22,800	)		—			(22,800	)
Balance, December 31, 2017	$	146,791		$	(786	)	$	146,005

	Limited
	Partners’
	Capital			General			Total
	Subject to			Partners’			Partners’
	Liquidation,net			Capital(Deficit)			Capital
Balance, December 31, 2015	$	187,495		$	(885	)	$	186,610
Net income		5,254			53			5,307
Distributions		(2,637	)		—			(2,637	)
Liquidations		(22,233	)		—			(22,233	)
Balance, December 31, 2016	$	167,879		$	(832	)	$	167,047

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

24

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2017 and 2016

($ in thousands)

	2017			2016
Cash from Operations
Interest received	$	8,834		$	6,825
Other loan income		41			48
Operations expense		(5,360	)		(4,785	)
Rental operations, net		(777	)		1,855
Holding costs		(44	)		536
Mortgage interest and borrowing related fees		—			(1,248	)
Other assets		—			3,411
Total cash provided (used) by operations		2,694			6,642
Cash from Investing Activities
Loans
Principal collected on loans - secured		17,514			41,425
Unsecured loan payments received		22			23
Loans originated		(51,618	)		(81,100	)
Loans sold to affiliates		—			7,219
Loans acquired from affiliates		(1,000	)		—
Advances on loans		(420	)		(51	)
Total - Loans		(35,502	)		(32,484	)
REO
Sales		14,476			68,485
Development and acquisition		(253	)		(1,339	)
Total - REO		14,223			67,146
Total cash provided (used) by investing activities		(21,279	)		34,662
Cash from Financing Activities
Debt activities
Principal payments		—			(28,434	)
Cash provided (used) by debt activities		—			(28,434	)
Distributions to partners
Cash – partner liquidations		(22,800	)		(22,233	)
Formation loan payment, net of early withdrawal fees		650			650
Cash – partner distributions		(2,865	)		(2,637	)
Cash Distributions to partners, net		(25,015	)		(24,220	)
Total cash provided (used) by financing activities		(25,015	)		(52,654	)
Net increase/(decrease) in cash		(43,600	)		(11,350	)
Cash and cash equivalents, beginning of period		45,323			56,673
Cash and cash equivalents, end of period	$	1,723		$	45,323

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

25

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2017 and 2016

($ in thousands)

Reconciliation of net income to net cash provided by (used in) operating activities:

	2017			2016
Cash flows from operations
Net income	$	4,623		$	5,307
Adjustments to reconcile net income to net cash provided by    (used in) operating activities
Amortization of borrowings-related origination fees		—			399
REO – loss/(gain) on disposal		(1,211	)		(2,592	)
Change in operation assets and liabilities
Accrued interest		(568	)		(301	)
Other assets		56			3,836
Accounts payable and other liabilities		(210	)		6
Payable to affiliate		4			(13	)
Net cash provided by (used in) operations	$	2,694		$	6,642
Supplemental disclosures of cash flow information
Non-cash investing activities
Real estate acquired through foreclosure/settlement on loans,    net of liabilities assumed	$	—		$	416
Cash paid for interest	$	—		$	1,647

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

26

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

NOTE 1 – ORGANIZATION AND GENERAL

Redwood Mortgage Investors VIII, a California Limited Partnership (RMI VIII or the partnership), was formed in 1993 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily by first and second deeds of trust.

The ongoing sources of funds for loans are the proceeds (net of withdrawals from partner capital accounts subject to limitations) from

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• earnings retained (i.e. not distributed) in partners’ capital accounts;

• REO sales; and

• to a lesser degree and, if obtained, a line of credit.

The partnership is externally managed by Redwood Mortgage Corp., a general partner (or RMC or the manager). The manager is solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the partners on specified matters. The manager acting alone has the power and authority to act for and bind the partnership. RMC provides the personnel and services necessary to conduct our business as we have no employees of our own.

The mortgage loans the partnership funds and/or invests in are arranged and generally are serviced by RMC. The general partner is required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

Limited partners representing a majority of the outstanding units may, without the consent of the general partners, vote to:

• dissolve the partnership;

• amend the partnership agreement subject to certain limitations;

• approve or disapprove the sale of all or substantially all of the assets of the partnership; and

• remove or replace one or all of the general partners.

A majority in interest of partnership units is required to elect a new general partner to continue the partnership business after a general partner ceases to be a general partner due to its withdrawal.

Profits and losses are allocated among the limited partners according to their respective capital accounts after one percent (1%) of profits and losses are allocated to the general partners. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the partnership to provide tax benefits of the type commonly associated with limited liability partnership tax shelter investments. Federal and state income taxes are the obligation of the partners, other than the annual California franchise tax and any California LLC cash receipts taxes paid by the partnership’s subsidiaries.

Distribution policy

At the time of their subscription for units, partners elect to have distributed to them their monthly, quarterly or annual allocation of profits, or to have profits allocated to their capital accounts be retained by the partnership to compound. Subject to certain limitations, those electing compounding may subsequently change their election. A partner’s election to receive cash distributions is irrevocable.

27

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Liquidity, capital withdrawals and early withdrawals

Because there are substantial restrictions on transferability of units, there is no established public trading and/or secondary market for the units, and none is expected to develop. To provide liquidity to limited partners, the partnership agreement provides that limited partners, after the minimum five-year period, may withdraw all or a portion of their capital accounts in 20 quarterly installments or longer, as determined by the general partners in light of partnership cash flow, beginning the last day of the calendar quarter following the quarter in which the notice of withdrawal is given. A limited partner may liquidate all or a part of the 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, 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. There is also a limited right of liquidation for an investor’s heirs upon an investor’s death.

The partnership has not established a cash reserve from which to fund withdrawals and, accordingly, the partnership’s capacity to return a limited partner’s capital is subject to the availability of partnership cash. No more than 20% of the total limited partners’ capital account balances at the beginning of any year may be liquidated during any calendar year.

Investment objectives and lending guidelines

The Partnership’s primary investment objectives are to

• yield a high rate of return from mortgage lending, after the payment of certain fees and expenses to the general partners and their affiliates; and

• preserve and protect the partnership’s capital.

The partnership generally funds loans

• having monthly payments of interest only or of principal and interest at fixed rates, calculated on a 30-year amortization basis; and

• having maturities of 5 years or less.

The partnership’s loans generally have shorter maturity than typical mortgages. In the event that a loan is performing, and collection is deemed probable at maturity, we may elect to extend the loans maturity. In the event a borrower is unable to repay in full the principal owing on the loan maturity, we may elect to modify the loan payment terms and place the designated loan as impaired, or may foreclose and take back the property for sale.

Generally, interest rates on the partnership’s mortgage loans are not affected by market movements in interest rates. If, as expected, we continue to make and invest in fixed rate loans primarily, and interest rates were to rise, a possible result would be lower prepayments of the partnership’s loans. This increase in the duration of the time loans are on the books may reduce overall liquidity, which itself may reduce the partnership’s investment into new loans at higher interest rates. Conversely, if interest rates were to decline, we could see a significant increase in borrower prepayments. If we then invest in new loans at lower rates of interest, a lower yield to partners may possibly result.

The cash flow and the income generated by the real property securing the loan factor into the credit decisions, as does the general creditworthiness, experience and reputation of the borrower. However, for loans secured by real property, other than owner-occupied personal residences, such considerations are subordinate to a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. The amount of the loan combined with the outstanding debt and claims secured by a senior deed of trust on the real property generally will not exceed a specified percentage of the appraised value of the property (the loan-to-value ratio, or LTV) as determined by an independent written appraisal at the time the loan is made. The LTV generally will not exceed 80% for residential properties (including multi-family), 75% for commercial properties, and 50% for land. The excess of the value of the collateral securing the loan over our debt and any senior debt owing on the property is the “protective equity.”

28

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

We believe our LTV policy gives us more potential protective equity than competing lenders who fund loans with a higher LTV. However, we may be viewed as an “asset” lender based on our emphasis on LTV in our underwriting process. Being an “asset” lender may increase the likelihood of payment defaults by borrowers. Accordingly, the partnership may have a higher level of payment delinquency and loans designated as impaired for financial reporting purposes than that of lenders, such as banks and other financial institutions subject to federal and state banking regulations, which are typically viewed as “credit” lenders.

Term of the partnership

The partnership will continue until 2032, unless sooner terminated as provided in the partnership agreement.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The partnership’s consolidated financial statements include the accounts of the partnership, its wholly-owned subsidiaries (consisting of single member limited liability companies owning a single real property asset). All significant intercompany transactions and balances have been eliminated in consolidation.

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, the valuation of impaired loans (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates.

Fair value estimates

GAAP 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. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are

• independent;

• knowledgeable;

• able to transact; and

• willing to transact.

29

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Fair values of assets and liabilities are determined based on the fair value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the partnership has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the partnership’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the partnership’s own data.

The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions. Appraisals of commercial real property generally present three approaches to estimating value:

• market comparables or sales approach;

• cost to replace; and

• capitalized cash flows or investment approach.

These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed, or for land when-entitled); and determining the unit of value (e.g. as a series of individual unit sales or as a bulk disposition).

Management has the requisite familiarity with the markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value, and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types.

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. At December 31, 2017, certain partnership cash balances in banks exceed federally insured limits.

Loans and interest income

Loans generally are stated at the unpaid principal balance (principal). Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the partnership’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums, and attorney fees. Advances generally are stated at the unpaid principal balance and accrue interest until repaid by the borrower.

30

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

The partnership may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. As monthly interest payments become due, the partnership funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction of principal.

If based upon current information and events, it is probable the partnership will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. If a valuation allowance had been established on an impaired loan, any subsequent payments on impaired loans are applied to late fees and then to reduce first the accrued interest, then advances, and then unpaid principal.

From time to time, the partnership negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the partnership’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the matured loan was previously designated as impaired.

Interest is accrued daily based on the unpaid principal balance of the loans. Impaired loans continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement.

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Delinquencies are identified and followed as part of the loan system. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss (i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

31

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Real estate owned (REO)

Real estate owned (REO) is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the lower of the amount owed on the loan (legal basis), plus any senior indebtedness, or at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expense. Any recovery in the fair value subsequent to such a write down is recorded, not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Rental income/ depreciation

Rental income is recognized when earned in accordance with the lease agreement. For commercial leases, the costs associated with originating the lease are amortized over the lease term. Residential lease terms generally range from month-to-month to one-year, and the expenses of originating the lease are expensed as incurred. Real estate owned that is designated held for sale is not depreciated. Real estate that was designated held for investment, and rented was depreciated on a straight-line basis over the estimated useful life of the property.

Recently issued accounting pronouncements

- Accounting and Financial Reporting for Revenue Recognition

On May 28, 2014, FASB issued a final standard on revenue from contracts with customers. The standard issued as ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective January 2018, and will be adopted using the modified retrospective approach.

The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and to develop guidance that would streamline and enhance revenue recognition requirements.  A core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.  Revenue is recognized when a performance obligation is satisfied by transferring goods or services to a customer. The FASB intentionally used the wording “be entitled” rather than “receive” or “collect” to distinguish collectability risk from other uncertainties that may exist under a contract.

RMC management’s evaluation is that the revenue standard will not have an impact on the partnership’s current revenue recognition policies. The scope of guidance is not applicable to financial instruments including loans and therefore will not have an impact on interest income or late fees. The partnership also does not expect that there will be changes to revenue recognition from the sale of REOs, however, there may be an impact to the gain on sale of real estate when the sale is financed by the partnership.

32

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

- Accounting and Financial Reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model and generally may result in allowances being recognized in earlier periods than under the current credit loss model.

RMI VIII invests in real estate secured loans made with the expectation of zero credit losses as a result of substantial protective equity provided by the underlying collateral. For a loss to be recognized under the CECL or incurred loss model, if the lending/loan-to-value guidelines are followed effectively, an intervening, subsequent-to-loan-funding, event must negatively impact the value of the underlying collateral of the loan in an amount greater than the amount of protective equity provided by the collateral. Such an event would be either (or both) of:

• an uninsured event(s) specifically impacting the collateral or

• a non-temporary decline in values in the applicable real estate market.

In both of these instances the treatment would be the same in the incurred loss and CECL models of approximately the same amount.  Other than in these events, the probable of occurrence criteria of the incurred loss model is not triggered and a loss is not recognized. Further, if the zero-expected-loss lending guideline is preserved and the protective equity provided by the collateral is not expected to be impaired over the life of the loans, then a loss is not required to be recognized under the CECL model.

This convergence between the CECL and incurred loss models as to loss recognition – as an event driven occurrence – in low LTV, real estate secured programs caused RMC to conclude that the CECL model will not materially impact the reported results of operations or financial position as compared to that which would be reported in the incurred loss model.  The manager expects to adopt the ASU for interim and annual reporting in 2020.

NOTE 3 –GENERAL PARTNERS AND OTHER RELATED PARTIES

The general partners, RMC and Michael R. Burwell (Burwell), are entitled to one percent (1%) of the profits and losses, which amounted to approximately $46,000 and $53,000 for 2017 and 2016, respectively. Beginning in 2010, and continuing until January 1, 2020, RMC assigned its right to two-thirds of one percent (0.66%) of profits and losses to Burwell in exchange for Burwell assuming one hundred percent (100%) of the general partners’ equity deficit.

• Mortgage servicing fees

RMC earns mortgage servicing fees of up to 1.5% annually of the unpaid principal balance of the loan portfolio. The mortgage servicing fees are accrued monthly on all loans. Remittance to RMC is made monthly unless the loan has been assigned a specific loss reserve, at which point remittance is deferred until the specific loss reserve is no longer required, or the property has been acquired by the partnership.

Mortgage servicing fees paid to RMC were approximately $1,724,000 and $1,191,000 for 2017 and 2016, respectively. No mortgage servicing fees were waived during any period reported.

33

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

• Assetmanagementfees

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). No asset management fees were waived in any period presented.

Asset management fees paid to the general partners were approximately $603,000 and $678,000, for 2017 and 2016 respectively.

• Costs from Redwood Mortgage Corp.

RMC is reimbursed by the partnership for operating expenses incurred on behalf of the partnership, including without limitation, accounting and audit fees, legal fees and expenses, postage and preparation of reports to limited partners, and out-of-pocket general and administration expenses. Other costs are allocated pro-rata based on the percentage of total capital of all mortgage funds managed by RMC. Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all mortgage funds. The decision to request reimbursement of any qualifying charges is made by RMC at its sole discretion.

For 2017 and 2016, operating expenses totaling approximately $2,033,000 and $1,963,000, respectively, were reimbursed to RMC.

Commissions and fees are paid by the borrowers to RMC

• Brokerage commissions, loan originations

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, the general partners may collect loan brokerage commissions (points) limited to an amount not to exceed 4% of the total partnership assets per year. The loan brokerage commissions are paid by the borrowers and thus, are not an expense of the partnership. The proceeds from loan brokerage commissions and other fees earned are the source of funds for the repayment of the formation loan by RMC.  

• Other fees

RMC receives fees for processing, notary, document preparation, credit investigation, reconveyance and other mortgage related fees. The amounts received are customary for comparable services in the geographical area where the property securing the loan is located, payable solely by the borrower and not by the partnership.

In the ordinary course of business, performing loans may be assigned, in-part or in-full, between the affiliated mortgage funds at par.

Formation loan/Commissions paid to broker-dealers

Commissions for sales of limited partnership units paid to broker-dealers (B/D sales commissions) were paid by RMC and were not paid directly by the partnership out of offering proceeds. Instead, the partnership advanced to RMC amounts sufficient to pay the B/D sales commissions and premiums paid to partners in connection with unsolicited orders up to 7% of offering proceeds. The receivable arising from the advances is unsecured, and non-interest bearing and is referred to as the “formation loan.”

The primary source of the repayments made by RMC on the formation loan is expected to be loan brokerage commissions. As of December 31, 2017, the partnership had made such advances of $22,567,000, of which $5,634,000 remain outstanding on the formation loan. If the general partners are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven, per the terms of the partnership agreement.

34

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

The formation loan activity is summarized in the following table ($ in thousands).

	2017
Balance, January 1	$	6,284
Early withdrawal penalties		(343	)
Repayments		(307	)
Balance, December 31	$	5,634

The future minimum payments on the formation loan as of December 31, 2017 are presented in the following table ($ in thousands).

2018	$	650
2019		650
2020		650
2021		650
2022		650
Thereafter		2,384
Total	$	5,634

The formation loan is forgiven if the general partners are removed and RMC is no longer receiving payments for services rendered, per the partnership agreement.

NOTE 4 – LOANS

Loans generally are funded at a fixed interest rate with a loan term of up to five years. As of December 31, 2017, 60 of the partnership’s 72 loans (representing 97% of the aggregate principal of the partnership’s loan portfolio) have a term of five years or less from loan inception. The remaining loans have terms longer than five years.  Substantially all loans are written without a prepayment penalty clause. As of December 31, 2017, 31 of the loans outstanding (representing 66% of the aggregate principal balance of the partnership’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity.  The remaining loans require monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity.

Loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table ($ in thousands).

	2017			2016
Principal, beginning of period	$	94,851		$	62,740
Loans funded		51,618			81,100
Loans acquired from affiliates		1,000			—
Principal payments received		(17,514	)		(41,425	)
Loans sold to affiliates		—			(7,219	)
Foreclosures		—			(345	)
Principal, end of period	$	129,955		$	94,851

During 2017 and 2016, the partnership renewed eleven and four loans, respectively, at then current market terms, with an aggregate principal of approximately $19,204,000 and $5,055,000, which were not included in the activity shown on the table above.

35

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Loan characteristics

Secured loans had the characteristics presented in the following table ($ in thousands).

	December 31,			December 31,
	2017			2016
Number of secured loans		72			75
Secured loans – principal	$	129,955		$	94,851
Secured loans – lowest interest rate (fixed)		5.0	%		5.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	1,805		$	1,265
Average principal as percent of total principal		1.4	%		1.3	%
Average principal as percent of partners’ capital, net of formation loan		1.3	%		0.8	%
Average principal as percent of total assets		1.3	%		0.8	%
Largest secured loan – principal	$	14,000		$	14,000
Largest principal as percent of total principal		10.8	%		14.8	%
Largest principal as percent of partners’ capital, net of formation loan		10.0	%		8.7	%
Largest principal as percent of total assets		10.0	%		8.7	%
Smallest secured loan – principal	$	44		$	48
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of partners’ capital, net of formation loan		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of counties where security is located (all California)	20				24
Largest percentage of principal in one county		20.8	%		23.1	%
Number of secured loans with a filed notice of default		2			1
Secured loans in foreclosure – principal	$	7,607		$	405
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—

As of December 31, 2017, the partnership’s largest loan, in the unpaid principal balance of $14,000,000 (representing 10.8% of outstanding secured loans and 10.0% of partnership total assets) has an interest rate of 7.25% and is secured by a commercial property located in Contra Costa County. As of December 31, 2017, the partnership had no construction loans outstanding and had no rehabilitation loans outstanding.

In compliance with California laws and regulations, all borrower receipts are deposited into a bank trust account maintained by RMC, and subsequently disbursed to the partnership after an appropriate holding period.  At December 31, 2017 the trust account held a balance relating to the partnership’s loan portfolio of $191,808, consisting of both interest and principal payments from borrowers, all of which was disbursed to the partnership on or before January 12, 2018. 

36

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Lien position

At funding secured loans had the following lien positions and are presented in the following table ($ in thousands).

	December 31, 2017								December 31, 2016
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		48	$	104,244			80	%		48	$	73,712			78	%
Second trust deeds		23		22,711			17			26		18,139			19
Third trust deeds		1		3,000			3			1		3,000			3
Total secured loans		72	$	129,955			100	%		75	$	94,851			100	%
Liens due other lenders at loan closing				52,444								35,054
Total debt			$	182,399							$	129,905
Appraised property value at loan closing			$	346,738							$	245,329
Percent of total debt to appraised values (LTV) at loan closing(1)				55.6	%							54.0	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing, nor does it include decreases or increases of the amount owing on senior liens to other lenders.

Property type

Secured loans summarized by property type are presented in the following table ($ in thousands).

	December 31, 2017						December 31, 2016
	Loans	Principal		Percent			Loans	Principal		Percent
Single family(2)	41	$	48,117		37	%	48	$	31,773		34	%
Multi-family	4		4,589	4			3		1,723	2
Commercial	26		76,799	58			22		59,380	61
Land	1		450	1			2		1,975	3
Total secured loans	72	$	129,955		100	%	75	$	94,851		100	%

(2) Single family property type as of December 31, 2017 consists of 18 loans with principal of approximately $12,681,000 that are owner occupied and 23 loans with principal of approximately $35,436,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 21 loans with principal of approximately $11,177,000 that were owner occupied and 27 loans with principal approximately of $20,596,000 that were non-owner occupied.

Single family properties include owner-occupied and non-owner occupied single family homes (1-4 unit residential buildings), condominium units, townhouses, and condominium complexes. As of December 31, 2017, and 2016, three and four, respectively, of the partnership’s loans with a principal balance of approximately $2,782,000, and $3,131000, respectively, were secured by condominium properties.

37

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Distribution by California Counties

The distribution of secured loans outstanding by the California county in which the primary collateral is located is presented in the following table ($ in thousands).

	December 31, 2017					December 31, 2016
	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
San Francisco Bay Area(3)
San Francisco	$	26,206		20.2	%	$	7,204		7.6	%
Contra Costa		16,856		13.1			16,863		17.7
San Mateo		15,506		11.9			11,267		11.9
Alameda		11,730		9.0			6,626		7.0
Santa Clara		6,873		5.3			9,938		10.5
Solano		2,875		2.2			1,875		2.0
Marin		1,597		1.2			849		0.9
Napa		569		0.4			956		1.0
		82,212		63.3			55,578		58.6
Other Northern California
Sacramento		3,300		2.4			2,118		2.2
El Dorado		2,044		1.6			2,044		2.2
Santa Cruz		769		0.6			852		0.9
Amador		754		0.6			770		0.8
Monterey		656		0.5			4,007		4.2
Lake		296		0.2			298		0.3
Mariposa		44		0.1			48		0.1
Calaveras		—		—			151		0.2
San Benito		—		—			94		0.1
		7,863		6.0			10,382		11.0
Total Northern California		90,075		69.3			65,960		69.6
Los Angeles & Coastal
Los Angeles		26,971		20.8			21,876		23.0
Orange		6,653		5.1			3,765		4.0
San Diego		164		0.1			2,464		2.6
Ventura		—		—			271		0.3
		33,788		26.0			28,376		29.9
Other Southern California
San Bernardino		5,900		4.5			124		0.1
Riverside		192		0.2			289		0.3
Kern		—		—			102		0.1
		6,092		4.7			515		0.5
Total Southern California		39,880		30.7			28,891		30.4
Total Secured Loans Balance	$	129,955		100.0	%	$	94,851		100.0	%

(3) Includes Silicon Valley

38

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table ($ in thousands).

Scheduled maturities, as of December 31, 2017	Loans		Principal		Percent
2018		25	$	54,227		42	%
2019		27		65,023		49
2020		10		7,035		5
2021		7		1,968		2
2022		2		933		1
Thereafter		1		769		1
Matured as of December 31, 2017		—		—		—
Total secured loan balance		72	$	129,955		100	%

It is the partnership’s experience loans may be repaid or refinanced before, at or after the contractual maturity date. For matured loans, the partnership may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

Matured loans

At December 31, 2017, and 2016, there were no loans past maturity.

Delinquency

Secured loans summarized by payment delinquency for are presented in the following table ($ in thousands).

	December 31, 2017				December 31, 2016
	Loans		Amount		Loans		Amount
Past Due
30-89 days		2	$	3,700		1	$	164
90-179 days		—		—		1		405
180 or more days		2		7,607		—		—
Total past due		4	$	11,307		2		569
Current		68		118,648		73		94,282
Total secured loan balance		72	$	129,955		75	$	94,851

Interest income of approximately $167,000 and $16,000 was accrued on loans contractually past due 90 days or more as to principal and/or interest payments during 2017 and 2016, respectively.  

39

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Loans in non-accrualstatus

Secured loans in nonaccrual status are summarized in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Number of loans		3		1
Principal	$	7,834	$	230
Advances		429		2
Accrued interest		322		2
Total recorded investment	$	8,585	$	234
Foregone interest	$	64	$	—

At December 31, 2017, no loans were contractually 90 or more days past due as to principal or interest and not in non-accrual status. At December 31, 2016, there was one loan with a loan balance of approximately $405,000 that was contractually 90 or more days past due as to principal or interest and not in non-accrual status.

Loans designated impaired

Impaired loans and the associated allowance for loan losses is presented in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Principal	$	7,834	$	634
Recorded investment(4)		8,585		656
Impaired loans without allowance		8,585		656
Impaired loans with allowance		—		—
Allowance for loan losses, impaired loans		—		—
Number of Loans		3		2

(4) Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.

Impaired loans had the average balances and interest income recognized and received in cash as presented in the following table as of and for the years ended December 31, 2017 and 2016 ($ in thousands).

	December 31,		December 31,
	2017		2016
Average recorded investment	$	4,410	$	720
Interest income recognized		607		27
Interest income received in cash		344		27

Allowance for loan losses

At December 31, 2017, and December 31, 2016, the partnership had no allowance for loan losses as all loans had protective equity such that at December 31, 2017, and December 31, 2016, collection was deemed probable for amounts owing.

40

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Modifications, workout agreements and troubled debt restructurings

At December 31, 2017, the partnership had no modifications, workout agreements, or troubled debt restructurings in effect. At December 31, 2016, the partnership had one workout agreement which qualified as troubled debt restructuring. This loan was paid in full in January 2017. 

NOTE 5 – REAL ESTATE OWNED (REO)

REO transactions and activity are presented in the following table ($ in thousands).

	2017			2016
Balance, beginning of period	$	19,782		$	82,949
Acquisitions		—			2,265
Dispositions		(13,066	)		(65,893	)
Improvements/betterments		253			461
Change in net book value		45			—
Depreciation		—			—
Balance, end of period	$	7,014		$	19,782

The following transactions closed during 2017.

• Sold 36 of 42 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $595,000

• Sold 5 of 8 units remaining at the beginning of the period, in a condominium complex in San Francisco County with a gain of approximately $643,000.

• Sold 3 commercial units and a parking lot in Ventura County for a gain of approximately $71,000 after taking into account a portion of a previously recorded valuation reserve.

The following transactions closed during 2016.

• Sold 28 of 70 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $206,000.

• Sold 4 of 4 units remaining at the beginning of the period, in a condominium complex in Alameda County with a gain of approximately $857,000.

• Sold 5 of the 13 units remaining at the beginning of the period, in a condominium complex in San Francisco County with a gain of approximately $704,000.

• Sold 29 of 29 units remaining at the beginning of the period, in a condominium complex in Contra Costa County with a loss of approximately $36,000. The units were sold with a seller-carryback of approximately 77% of the sale price, at then market rates (first deed of trust, 5% note rate, interest only monthly, eighteen months maturing March 1, 2018).

• Sold a commercial property in Amador County, financed by a seller carryback. No gain was recognized at the time of sale. The property was sold with a seller-carryback of approximately 70% of the sale price at then market rates (first deed of trust, 5% note rate, interest only monthly, five years maturing December 1, 2021, guaranteed by principal).

• Sold 126 of 126 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $862,000.

• Acquired a commercial/retail property and a parking lot located in Ventura County.

• Acquired remaining 36% interest in commercial land from affiliated funds. The property, located in Stanislaus County, was purchased at its estimated net realizable value of approximately $878,000.

41

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

REO summarized by property classification is presented in the following table ($ in thousands).

	December 31, 2017		December 31, 2016
	NBV		NBV
Property classification
Rental	$	3,606	$	16,174
Non-Rental		3,408		3,608
Total REO, net	$	7,014	$	19,782

Rental properties consist of the following at December 31, 2017.

• In Los Angeles County, 6 residential units in a condominium complex

• In San Francisco County, 3 residential units in a condominium complex

• In Contra Costa County, a commercial office property     

By September 30, 2017, all rental units had been made vacant in preparation for sale.

Non-Rental properties consist of the following three properties at December 31, 2017.

• In Fresno County, a partially completed home subdivision

• In Marin County, approximately 13 acres zoned for residential development

• In Stanislaus County, approximately 14 acres zoned commercial

.

The earnings from rental operations is presented in the following table for 2017 and 2016 ($ in thousands).

	2017			2016
Rental income	$	315		$	4,831
Operating expenses, rentals
Administration and payroll		91			675
Homeowner association fees		115			384
Professional services		25			113
Utilities and maintenance		472			1,001
Advertising and promotions		1			35
Property taxes		110			748
Other		74			155
Total operating expenses, rentals		888			3,111
Net operating income		(573	)		1,720
Depreciation		—			—
Receiver fees		3			18
Rental operations, net		(576	)		1,702
Interest on mortgages		—			1,581
Rental operation, net of mortgage interest	$	(576	)	$	121

Rental operations were substantially wound down as of December 31, 2017

Mortgages payable

The partnership had no mortgages payable at December 31, 2017, and December 31, 2016.

42

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

NOTE 6 – FAIR VALUE

The partnership does not record loans, REO, nor mortgages payable at fair value on a recurring basis.

The recorded amount of the performing loans (i.e., the loan balance) is deemed to approximate the fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized, such that the collection of the amount owed is assured, including foregone interest, if any).

Certain assets and liabilities are measured at fair value on a non-recurring basis, and these are listed below.

• Loans designated impaired with a specific reserve.

• REO acquired through foreclosure during the year.

• REO for which a valuation reserve has been recorded.

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2017 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year	$	—	$	—	$	—	$	—
REO for which a valuation reserve has been    recorded in the year	$	—	$	1,778	$	—	$	1,778

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2016 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		12/31/2016
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year(1)	$	—	$	416	$	—	$	416
REO for which a valuation reserve has been    recorded in the year	$	—	$	4,445	$	—	$	4,445

(1) The dollar amount presented is net of the fair value of the property at acquisition of the REO and the principal and interest owing on the first mortgage assumed of approximately $926,000. The mortgage was paid off in June 2016.

43

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

The following methods and assumptions are used when estimating fair value.

• Secured loans, performing (i.e. not designated as impaired) (Level 2) - Each loan is reviewed quarterly for its delinquency, LTV adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. Also considered is the limited resale market for the loans. Most companies or individuals making similar loans as the company intend to hold the loans until maturity as the average contractual term of the loans (and the historical experience of the time the loan is outstanding due to pre-payments) is shorter than conventional mortgages. As there are no prepayment penalties to be collected, loan buyers may be hesitant to risk paying above par. Due to these factors, sales of the loans are infrequent, because an active market does not exist. The recorded amount of the performing loans (i.e. the loan balance) is deemed to approximate the fair value, although the intrinsic value of the loans would reflect a premium due to the interest to be received.

• Secured loans, designated impaired (Level 2) - Secured loans designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions (Level 2 inputs).

The following methods and assumptions are used to determine the fair value of the collateral securing a loan.

Single family – Management’s preferred method for determining the fair market value of its single-family residential assets is the sale comparison method. Management primarily obtains sale comps via its subscription to the RealQuest service, but also uses free online services such as Zillow.com and other available resources to supplement this data. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, number of bedrooms and bathrooms, square footage, sale date, condition and year built.

If applicable sale comps are not available or deemed unreliable, management will seek additional information in the form of brokers’ opinions of value or appraisals.

Multi-family residential – Management’s preferred method for determining the aggregate retail value of its multifamily units is the sale comparison method. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, rental income, number of units, composition of units by the number of bedrooms and bathrooms, square footage, condition, amenities and year built.

Management’s secondary method for valuing its multifamily assets as income-producing rental operations is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to published data from reliable third-party sources such as the CBRE Cap Rate Survey. Management applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Commercial buildings – Where commercial rental income information is available, management’s preferred method for determining the fair value of its commercial real estate assets is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to reputable third-party sources such as the CBRE Cap Rate Survey. Management then applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing commercial rental project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

44

REDWOOD MORTGAGE INVESTORS VIII

(A California Limited Partnership)

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Management supplements the direct capitalization method with additional information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

Commercial land – Commercial land has many variations/uses, thus requiring management to employ a variety of methods depending upon the unique characteristics of the subject land. Management may rely on information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

• Unsecured loans (Level 3). Unsecured loans are valued at their principal less any discount or loss reserves established by management after taking into account the borrower’s creditworthiness and ability to repay the loan.

• Mortgages payable (Level 2). When the partnership had mortgages payable in 2016, the interest rates were deemed to be at market rates for the type and location of the securing property, the length of the mortgage, and the other terms and conditions are deemed to be customary.

NOTE 7 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS

Commitments

The partnership’s only commitment is to fund scheduled capital account withdrawal requests at December 31, 2017 as presented in the following table ($ in thousands).

2018	$	24,247
2019		14,994
2020		8,156
2021		4,779
2022		1,890
Thereafter		68
Total	$	54,134

Legal proceedings

In the normal course of its business, the partnership may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect its interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the partnership. 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.

NOTE 8 – SUBSEQUENT EVENTS

None.

45

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

None.

Item 9A – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The partnership is externally managed by RMC. The manager is solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the partnership. RMC provides the personnel and services necessary for us to conduct our business, as we have no employees of our own.

As a California limited partnership, we do not have a board of directors, nor, therefore, do we have an audit committee of the board of directors. Thus, there is not conventional independent oversight of the partnership’s financial reporting process. The manager, however, provides the equivalent functions of a board of directors and 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 and maintaining internal controls over our financial reporting.

RMC, as the manager, carried out an evaluation, with the participation of RMC's President (acting as principal executive officer/principal financial officer) of the effectiveness of the design and operation of the manager's controls and procedures over financial reporting and disclosure (as defined in Rule 13a-15 of the  Exchange Act ) for and as of the end of the period covered by this 2017 Annual Report on Form 10-K. Based upon that evaluation, RMC's principal executive officer/principal financial officer concluded that the manager's disclosure controls and procedures were effective as of December 31, 2017.

Manager’s Report on Internal Control over Financial Reporting

RMC, as the manager, is responsible for establishing and maintaining adequate internal control over financial reporting; as such term is defined in the Exchange Act Rule 13a-15(f). The internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

RMC, with the participation of RMC's principal executive officer/principal financial officer, conducted an evaluation of the effectiveness of the manager's internal control over financial reporting based on the Internal Control - Integrated Framework (1992 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, management concluded that its internal control over financial reporting was effective as of December 31, 2017.

Changes to Internal Control Over Financial Reporting

The conclusions that as of the quarters ended March 31, 2017, June 30, 2017 and December 31, 2016, RMC’s internal controls over financial reporting and disclosure controls and procedures were not effective were based upon then existing material weaknesses in internal control over financial reporting. The conclusion by RMC’s management as of December 31, 2016, did not preclude the partnership’s independent auditors from issuing an unqualified opinion on the 2016 financial statements included in the 2016 Annual Report on Form 10-K.

Beginning in 2014 and ongoing, RMC's management undertook a technology upgrade initiative. The objective of this program was to implement available, advanced -and proven - technologies to enable digital imaging and storage; concurrent, shared and remote processing; and more robust data management. These efforts culminated in the successful installation of and conversion to the Microsoft Dynamics general ledger and financial management software as of December 31, 2016.  MS Dynamics became the general ledger system of record on January 1, 2017.

46

Beginning in 2015, the manager enhanced its organizational effectiveness and oversight of its controls and procedures over financial reporting and disclosure processes by engaging legal and accounting firms with the appropriate financial, securities and/or regulatory expertise and experience to assist RMC’s Board of Directors and management in meeting their oversight and performance duties. These firms include:

• the San Francisco office of an international law firm for SEC filings;  

• a second law firm recognized as expert in FINRA and state-securities law and regulation for securities and corporate governance matters;

• two CPA firms headquartered in California- one for assistance with implementation of the MS Dynamics software and the 2017 internal control documentation, evaluation and testing in accordance with the COSO-2013 framework; the other CPA firm for federal and California tax compliance; and

• a national advisory firm for assistance in the determination of the fair value of partnership unit values and the fair values of the assets and liabilities held by RMC’s affiliated mortgage funds.

The broad scope of the system and organization changes necessitated a comprehensive re-evaluation of the internal controls for 2017 using the COSO 2013 framework. As previously disclosed, a California- headquartered CPA firm has been assisting in the documentation and the testing of the entity-level and the significant process level controls for internal control over financial reporting. The firm is an experienced, subject-matter expert in both the implementation of the control and processing of MS Dynamics and in the required internal control analysis and testing required by SEC regulation, particularly as to the COSO 2013 framework, including applicable and appropriate consideration of the COBIT guidance.

Based on the completion of the actions described above, the manager concluded the material weaknesses identified at December 31, 2016, were remedied as of September 30, 2017, as summarized below.

- Control Environment and Monitoring

The board of directors of RMC consists of the following officers of RMC:

• Mr. Michael R. Burwell, RMC’s President, Secretary, Treasurer (who serves as the principal executive officer and principal financial officer);

• Mr. Thomas R. Burwell, RMC’s Vice President of Investor Sales (the President's brother); and

• Ms. Lorene A. Randich, RMC’s Vice President of Loan Production and Underwriting.

There is no independent board member with financial background and experience, which increases the risk of management override.

RMC’s management consulted with its securities law firms and other professionals, including a CPA firm with a practice in COSO 2013 documentation and evaluations of internal controls, to determine best practices applicable:

• to the structure of RMC’s board given that the affiliated mortgage funds, including the partnership (and not RMC) are the SEC registrants; and

• to any other changes, appropriate to enhance internal controls for public reporting entities (and/or their sponsors) such as RMI VIII and RMC that are not subject to national securities exchange rules or other guidance.

47

RMC enhanced its organizational effectiveness and oversight of its financial reporting processes by engaging – on an ongoing basis, legal and accounting firms with the appropriate financial, securities and/or regulatory expertise and experience to assist RMC’s Board of Directors and management in meeting their oversight and performance duties. These firms include the San Francisco office of an international law firm for SEC filings matters and a second firm recognized as expert in FINRA and state-securities law and regulation for securities and corporate governance matters; two CPA firms headquartered in California for assistance with implementation of MS Dynamics and completion of the 2017 COSO-2013 evaluation and testing. One of the CPA firms also provides advice regarding federal and California tax compliance; and we have engaged a national advisory firm for assistance in the determination of the fair value of partnership unit values and the fair values of the assets and liabilities held by RMC’s affiliated mortgage funds, including the partnership.

- Information and Communication

At December 31, 2016, and for periods prior, access to RMC's then in place general ledger system did not require passwords with appropriate complexity. Further, during 2016 the President had administrator access to the general ledger as well as to RMC's loan servicing system. These weaknesses created a lack of segregation of duties and a risk of management override.

- RMC undertook to upgrade its in place processing controls generally, but particularly in accounting/finance, to enhance its capabilities as to internal and external financial reporting, planning and analysis and to better its internal controls and data reliability and integrity. To assist (and in some cases to lead) these efforts, RMC engaged qualified professionals and firms experienced in the successful implementation and utilization of these technologies. These efforts culminated in the successful installation of and conversion to the Microsoft Dynamics general ledger and financial management software suite at the close of business on December 31, 2016, and became the system of record on January 1, 2017.

- With the implementation of MS Dynamics, the deficiencies in control of administrative rights and password complexity were corrected. Additionally, the President’s (and all employees) access rights to the administrative controls of the general ledger (MS Dynamics) and the loan servicing system (TMO) has been assigned to the IT function which is outsourced to a third-party information technology contractor.  No RMC employee has administrative rights to either TMO or MS Dynamics.  

- The analysis and testing of the application controls of the installed MS Dynamics software and the IT general controls were completed in the third quarter of 2017. Management concluded that the IT controls surrounding MS Dynamics software and the IT general control environment are designed properly and operating effectively.

- Risk Assessment, Monitoring and Control Activities

At December 31, 2016, RMC had not sufficiently documented that its management review controls over financial reporting are performed to a level of precision compliant with COSO 2013 requirements and had similarly not sufficiently documented the process by which variances from expectations are investigated and resolved. Further, the operating effectiveness in 2016 of the activity-level control surrounding quarter-end and year-end cutoff was determined to be not sufficient to ensure revenue and/or expenses were being recorded in the correct period.  Management to offset the shortcomings inherent in the general ledger system then in effect had implemented these management review process and controls as an offset to the system shortcomings.  It was known that those processes and controls would be re-engineered and re-documented within scope of the MS Dynamics software implementation as of January 1, 2017. As to the deficiency of controls and documentation of quarter-end and year-end cutoff, these processes and controls were within scope of the implementation of the MS Dynamics, and – in addition – applied principally to transactions in the rental operations of the REO owned by RMI VIII and managed by firms contracted by RMC.  Substantially all of the remaining rental operations were discontinued as of June 30, 2017, as the last of the leased REO are sold or are being marketed for sale.

- The documentation and analysis of the entity-level and significant process-level controls for internal control over financial reporting was completed in the third quarter of 2017. Certain key entity-level controls have been identified and testing began with the quarter-ended June 30, 2017.

48

Item 9B – Other Information

None.

49

Part III

Item 10 – Directors, Executive Officers and Corporate Governance

The partnership is externally managed by Redwood Mortgage Corp., a general partner, (or RMC or the manager). The manager is solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the partners on specified matters. The manager acting alone has the power and authority to act for and bind the partnership. RMC provides the personnel and services necessary to conduct our business as we have no employees of our own.

The mortgage loans the partnership funds and/or invests in are arranged and generally are serviced by RMC. The general partner is required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

Limited partners representing a majority of the outstanding units may, without the consent of the general partners, vote to:

• dissolve the partnership;

• amend the partnership agreement subject to certain limitations;

• approve or disapprove the sale of all or substantially all of the assets of the partnership; and

• remove or replace one or all of the general partners.

A majority in interest of partnership units is required to elect a new general partner to continue the partnership business after a general partner ceases to be a general partner due to its withdrawal.

The Manager

Redwood Mortgage Corp. Redwood Mortgage Corp. is a licensed real estate broker incorporated in 1978 under the laws of the State of California, and is engaged primarily in the business of arranging and servicing mortgage loans. Redwood Mortgage Corp. will act as the loan broker and servicing agent in connection with loans, as it has done on behalf of several other affiliate of mortgage funds formed by the general partners.

Officers and Directors

Michael R. Burwell. Michael R. Burwell, age 61, President, Director, Chief Financial Officer, Redwood Mortgage Corp. (1979-present); Director, Secretary and Treasurer A & B Financial Services, Inc. (1980-2011); President, Director, Chief Financial Officer and Secretary of Gymno Corporation (1986-September 2011) and, the manager of Gymno LLC, the entity into which Gymno Corporation was converted (September 2011- June 30, 2015); President, Director, Secretary and Treasurer of The Redwood Group, Ltd. (1979-September 2011); past member of Board of Trustees and Treasurer, Mortgage Brokers Institute (1984-1986). Mr. Burwell is licensed as a real estate sales person. Mr. Burwell was a general partner of each of the RMI, RMI II, RMI III, RMI IV, RMI V, RMI VI and RMI VII limited partnerships. Mr. Burwell is a general partner of the RMI VIII limited partnerships. Mr. Burwell attended the University of California, at Davis from 1975-1979, playing NCAA soccer for three seasons.

Lorene A. Randich. Lorene A. Randich, age 60, joined Redwood Mortgage Corp. in 1991, and has served as a Director since November 2011. Ms. Randich has held the real estate broker’s license of record for Redwood Mortgage Corp. since November 2011. Since 2001, she has been Vice President of Loan Production and Underwriting. Ms. Randich has been a licensed real estate broker since 1996. She is a member of the National Association of Realtors, the California Mortgage Bankers Association, the California Association of Mortgage Professionals (Board Member–San Francisco/Peninsula Chapter) and the California Mortgage Association (Board Member and Education Committee Chairperson). Ms. Randich received a BA from UC Berkeley in 1980.

50

Thomas R. Burwell.Thomas R. Burwell, age 50, joined Redwood Mortgage Corp. in 2007 and has served as Marketing and Sales Director since 2012; Loan Officer-Builder Division Wells Fargo Bank, N.A (Westwood, CA 2005-2007); Loan Officer, Wells Fargo Bank, N.A. (Beverly Hills 2004-2005); Loan Officer Wells Fargo Bank, N.A. (New York, NY 2002-2004). Mr. Burwell is a member of the Financial Planning Association, San Francisco, CA. Mr. Burwell received a BA from the University of California at Davis in 1990. Mr. Burwell is a former ATP (Association of Tennis Professionals) world tour professional and was a NCAA Team and Individual Finalist, Team Captain, (Three-time) All-American, #1 Singles and #1 Doubles Player for University of California at Davis.Thomas R. Burwell is the brother of Michael R. Burwell.

Financial Oversight by Manager

The partnership does not have a board of directors or an audit committee. Accordingly, the manager serves 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

RMC has 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, option 5.

Item 11 – Executive Compensation

RMC and Michael Burwell are the general partners of the partnership. The mortgage loans the partnership invests in are arranged and are generally serviced by RMC. Michael R. Burwell is the president and majority shareholder (through his holdings and beneficial interests in certain trusts) of RMC.

As indicated above in Item 10, the partnership is externally managed and has no officers or directors. The general partners are solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the partners on specified matters.

The partnership does not pay any compensation to the officers and directors of RMC for the services they provide to our manager, except for ¼ (25%) of the Asset Management Fee paid directly to Burwell.

Compensation of the General Partners

The partnership’s partnership agreement permits certain fees and cost reimbursements to be paid to the general partners. See Note 3 (General Partners and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a presentation of fees and cost reimbursements to the general partners, which presentation is incorporated herein by reference.

In addition to the fees and reimbursements paid by the partnership, RMC receives compensation directly from borrowers, including brokerage commissions on loan originations. In 2017 RMC received brokerage commissions of $1,033,131 related to loan originations made by the partnership.

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

The general partners are allocated one percent (1%) of income and losses. At December 31, 2017, the general partners had a capital deficit of approximately $786,000. RMC also owns limited partnership units of RMI VIII. At December 31, 2017, RMC’s limited partner capital account was approximately $28,000 (0.01%). No person or entity owns beneficially more than five percent (5%) of the limited partnership units.

51

Item 13 – Certain Relationships and Related Transactions, and Director Independence

See Note 1 (Organization and General) and Note 3 (General Partners and Other Related Parties) to the Financial Statements in Part II item 8, which describes certain relationships and related transactions and related party fees.

The partnership is managed externally and 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 2017 and 2016 are as follows:

Audit Fees. The aggregate fees billed and accrued for 2017 and 2016 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, review of financial statements included in the partnership’s Quarterly Reports on Form 10-Q and for services provided in connection with regulatory filings were approximately $229,900 and $345,000, respectively.

Audit Related Fees. There were no fees billed for 2017 and 2016 for audit-related services.

Tax fees. There were no fees billed during 2017 and 2016 for tax related services.

All Other Fees. There were no other fees billed for 2017 and 2016.

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

52

Part IV

Item 15 – Exhibits and Financial Statement Schedules

A. Documents filed as part of this report are incorporated:

1. In Part II, Item 8 under A – Consolidated Financial Statements.

2. None.

3. Exhibits.

Exhibit No.	Description of Exhibits
3.1	Limited Partnership Agreement*
3.2	Form of Certificate of Limited Partnership Interest*
3.3	Certificate of Limited Partnership*
10.1	Servicing Agreement*
10.2	Form of Note secured by Deed of Trust*
10.3	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing*
10.4	Promissory Note for Formation Loan*
21.1	Subsidiaries of Redwood Mortgage Investors VIII
31.1	Certification of General Partner pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of General Partner pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated by reference to the item under the corresponding exhibit number in the registrant’s annual report on Form 10-K for the fiscal year ended December 31, 2015 (File no. 000-27816).

Item 16- Form 10-K Summary

None.

53

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 the2nd day of April, 2018.

	REDWOOD MORTGAGE INVESTORS VIII,
	a California Limited Partnership
	(Registrant)
Date: April 02, 2018	By:	Redwood Mortgage Corp., a General Partner
		By:	/s/ Michael R. Burwell
		Name:	Michael R. Burwell
		Title:	President, Secretary and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity indicated on the 2^nd day of April, 2018.

Signature	Title
/s/ Michael R. Burwell
Michael R. Burwell	President, Secretary/Treasurer Redwood Mortgage Corp. (Principal Executive, Financial, and Accounting Officer); Director of Redwood Mortgage Corp.
/s/ Lorene A. Randich
Lorene A Randich	Director of Redwood Mortgage Corp.
/s/ Thomas R. Burwell
Thomas R. Burwell	Director of Redwood Mortgage Corp.

54

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF REDWOOD MORTGAGE INVESTORS VIII AS OF DECEMBER 31, 2017

	Jurisdiction of Formation
Altura Property Company, LLC	California
Huron Property Company, LLC	California
MCD Stockton Land, LLC	California
San Pablo Dam Road Property Company, LLC	California
Silver Park Property Company, LLC	California

EX-31.1

Exhibit 31.1

PRESIDENT’S CERTIFICATION

I, Michael R. Burwell, certify that:

1. I have reviewed this annual report on Form 10-K of Redwood Mortgage Investors VIII, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and 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 report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) disclosed in this report any change in the registrant’s internal 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,

(principal executive officer and principal financial officer)

Redwood Mortgage Corp.

General Partner

April 02, 2018

EX-32.1

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 VIII (the “Partnership”) on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.

A signed original of this written statement required by Section 906 has been provided to Redwood Mortgage Investors VIII and will be retained by Redwood Mortgage Investors VIII and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Michael R. Burwell

Michael R. Burwell, President,

(principal executive officer and principal financial officer)

Redwood Mortgage Corp.

General Partner

April 02, 2018

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 28, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	CK0000889123
Entity Registrant Name	REDWOOD MORTGAGE INVESTORS VIII
Entity Central Index Key	0000889123
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		147,329,043
Entity Public Float	$ 0

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
ASSETS
Cash, in banks	$ 1,723	$ 45,323
Loans, Secured by deeds of trust
Principal	129,955	94,851
Advances	484	63
Accrued interest	1,209	641
Loan balance, secured	131,648	95,555
Unsecured	24	46
Allowance for loan losses	0	0
Loans, net	131,672	95,601
Real estate owned (REO)	7,014	19,782
Other assets, net	124	444
Total assets	140,533	161,150
Liabilities
Accounts payable and other liabilities	158	387
Payable to affiliate	4
Total liabilities	162	387
Partners’ capital
Limited partners’ capital, subject to liquidation, net	146,791	167,879
General partners’ capital (deficit)	(786)	(832)
Total partners’ capital, net	146,005	167,047
Receivable from manager (formation loan)	(5,634)	(6,284)
Partners’ capital subject to liquidation, net of formation loan	140,371	160,763
Total liabilities and partners’ capital	$ 140,533	$ 161,150

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Loans
Interest income	$ 9,403	$ 7,126
Late fees	41	48
Revenue, loans	9,444	7,174
Provision for (recovery of) loan losses	(19)	(50)
Loans, net	9,463	7,224
REO
Rental operations, net	(576)	1,702
Interest on mortgages		(1,581)
Rental operations, net of mortgage interest	(576)	121
Realized gains/(losses) on sales	1,411	2,592
Impairment (loss)/gain	(200)
Holding costs, net of other income	(44)	536
REO, net	591	3,249
Total revenues, net	10,054	10,473
Operations Expense
Mortgage servicing fees	1,724	1,191
Asset management fees	603	678
Costs from Redwood Mortgage Corp.	2,033	1,963
Professional services	1,052	1,344
Other	19	(10)
Total operations expense	5,431	5,166
Net income	4,623	5,307
Limited partners (99%)	4,577	5,254
General partners (1%)	$ 46	$ 53

XML

Consolidated Statements of Income (Parenthetical)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Limited partners	99.00%	99.00%
General partners	1.00%	1.00%

XML

Consolidated Statements of Changes in Partners' Capital - USD ($) $ in Thousands	Total	Capital Subject to Liquidation Net [Member] Limited Partner [Member]	Partners Capital (Deficit) [Member] General Partner [Member]	Capital Units [Member]
Beginning balance at Dec. 31, 2015		$ 187,495	$ (885)	$ 186,610
Net income	$ 5,307	5,254	53	5,307
Distributions		(2,637)		(2,637)
Liquidations		(22,233)		(22,233)
Ending balance at Dec. 31, 2016	160,763	167,879	(832)	167,047
Net income	4,623	4,577	46	4,623
Distributions		(2,865)		(2,865)
Liquidations		(22,800)		(22,800)
Ending balance at Dec. 31, 2017	$ 140,371	$ 146,791	$ (786)	$ 146,005

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Cash from Operations
Interest received	$ 8,834	$ 6,825
Other loan income	41	48
Operations expense	(5,360)	(4,785)
Rental operations, net	(777)	1,855
Holding costs	(44)	536
Mortgage interest and borrowing related fees		(1,248)
Other assets		3,411
Total cash provided (used) by operations	2,694	6,642
Cash from Investing Activities
Principal collected on loans - secured	17,514	41,425
Unsecured loan payments received	22	23
Loans originated	(51,618)	(81,100)
Loans sold to affiliates		7,219
Loans acquired from affiliates	(1,000)
Advances on loans	(420)	(51)
Total - Loans	(35,502)	(32,484)
Sales	14,476	68,485
Development and acquisition	(253)	(1,339)
Total - REO	14,223	67,146
Total cash provided (used) by investing activities	(21,279)	34,662
Debt activities
Principal payments		(28,434)
Cash provided (used) by debt activities		(28,434)
Distributions to partners
Cash – partner liquidations	(22,800)	(22,233)
Formation loan payment, net of early withdrawal fees	650	650
Cash – partner distributions	(2,865)	(2,637)
Cash Distributions to partners, net	(25,015)	(24,220)
Total cash provided (used) by financing activities	(25,015)	(52,654)
Net increase/(decrease) in cash	(43,600)	(11,350)
Cash and cash equivalents, beginning of period	45,323	56,673
Cash and cash equivalents, end of period	1,723	45,323
Net income	4,623	5,307
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Amortization of borrowings-related origination fees		399
REO – loss/(gain) on disposal	(1,211)	(2,592)
Change in operation assets and liabilities
Accrued interest	(568)	(301)
Other assets	56	3,836
Accounts payable and other liabilities	(210)	6
Payable to affiliate	4	(13)
Total cash provided (used) by operations	$ 2,694	6,642
Supplemental disclosures of cash flow information Non-cash investing activities
Real estate acquired through foreclosure/settlement on loans, net of liabilities assumed		416
Cash paid for interest		$ 1,647

XML

Organization and General

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Organization and General

NOTE 1 – ORGANIZATION AND GENERAL

Redwood Mortgage Investors VIII, a California Limited Partnership (RMI VIII or the partnership), was formed in 1993 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily by first and second deeds of trust.

The ongoing sources of funds for loans are the proceeds (net of withdrawals from partner capital accounts subject to limitations) from

• loan payoffs;

• borrowers’ monthly principal and interest payments;

• earnings retained (i.e. not distributed) in partners’ capital accounts;

• REO sales; and

• to a lesser degree and, if obtained, a line of credit.

The partnership is externally managed by Redwood Mortgage Corp., a general partner (or RMC or the manager). The manager is solely responsible for managing the business and affairs of the partnership, subject to the voting rights of the partners on specified matters. The manager acting alone has the power and authority to act for and bind the partnership. RMC provides the personnel and services necessary to conduct our business as we have no employees of our own.

The mortgage loans the partnership funds and/or invests in are arranged and generally are serviced by RMC. The general partner is required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members.

Limited partners representing a majority of the outstanding units may, without the consent of the general partners, vote to:

• dissolve the partnership;

• amend the partnership agreement subject to certain limitations;

• approve or disapprove the sale of all or substantially all of the assets of the partnership; and

• remove or replace one or all of the general partners.

A majority in interest of partnership units is required to elect a new general partner to continue the partnership business after a general partner ceases to be a general partner due to its withdrawal.

Profits and losses are allocated among the limited partners according to their respective capital accounts after one percent (1%) of profits and losses are allocated to the general partners. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the partnership to provide tax benefits of the type commonly associated with limited liability partnership tax shelter investments. Federal and state income taxes are the obligation of the partners, other than the annual California franchise tax and any California LLC cash receipts taxes paid by the partnership’s subsidiaries.

Distribution policy

At the time of their subscription for units, partners elect to have distributed to them their monthly, quarterly or annual allocation of profits, or to have profits allocated to their capital accounts be retained by the partnership to compound. Subject to certain limitations, those electing compounding may subsequently change their election. A partner’s election to receive cash distributions is irrevocable.

Liquidity, capital withdrawals and early withdrawals

Because there are substantial restrictions on transferability of units, there is no established public trading and/or secondary market for the units, and none is expected to develop. To provide liquidity to limited partners, the partnership agreement provides that limited partners, after the minimum five-year period, may withdraw all or a portion of their capital accounts in 20 quarterly installments or longer, as determined by the general partners in light of partnership cash flow, beginning the last day of the calendar quarter following the quarter in which the notice of withdrawal is given. A limited partner may liquidate all or a part of the 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, 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. There is also a limited right of liquidation for an investor’s heirs upon an investor’s death.

The partnership has not established a cash reserve from which to fund withdrawals and, accordingly, the partnership’s capacity to return a limited partner’s capital is subject to the availability of partnership cash. No more than 20% of the total limited partners’ capital account balances at the beginning of any year may be liquidated during any calendar year.

Investment objectives and lending guidelines

The Partnership’s primary investment objectives are to

• yield a high rate of return from mortgage lending, after the payment of certain fees and expenses to the general partners and their affiliates; and

• preserve and protect the partnership’s capital.

The partnership generally funds loans

• having monthly payments of interest only or of principal and interest at fixed rates, calculated on a 30-year amortization basis; and

• having maturities of 5 years or less.

The partnership’s loans generally have shorter maturity than typical mortgages. In the event that a loan is performing, and collection is deemed probable at maturity, we may elect to extend the loans maturity. In the event a borrower is unable to repay in full the principal owing on the loan maturity, we may elect to modify the loan payment terms and place the designated loan as impaired, or may foreclose and take back the property for sale.

Generally, interest rates on the partnership’s mortgage loans are not affected by market movements in interest rates. If, as expected, we continue to make and invest in fixed rate loans primarily, and interest rates were to rise, a possible result would be lower prepayments of the partnership’s loans. This increase in the duration of the time loans are on the books may reduce overall liquidity, which itself may reduce the partnership’s investment into new loans at higher interest rates. Conversely, if interest rates were to decline, we could see a significant increase in borrower prepayments. If we then invest in new loans at lower rates of interest, a lower yield to partners may possibly result.

The cash flow and the income generated by the real property securing the loan factor into the credit decisions, as does the general creditworthiness, experience and reputation of the borrower. However, for loans secured by real property, other than owner-occupied personal residences, such considerations are subordinate to a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. The amount of the loan combined with the outstanding debt and claims secured by a senior deed of trust on the real property generally will not exceed a specified percentage of the appraised value of the property (the loan-to-value ratio, or LTV) as determined by an independent written appraisal at the time the loan is made. The LTV generally will not exceed 80% for residential properties (including multi-family), 75% for commercial properties, and 50% for land. The excess of the value of the collateral securing the loan over our debt and any senior debt owing on the property is the “protective equity.”

We believe our LTV policy gives us more potential protective equity than competing lenders who fund loans with a higher LTV. However, we may be viewed as an “asset” lender based on our emphasis on LTV in our underwriting process. Being an “asset” lender may increase the likelihood of payment defaults by borrowers. Accordingly, the partnership may have a higher level of payment delinquency and loans designated as impaired for financial reporting purposes than that of lenders, such as banks and other financial institutions subject to federal and state banking regulations, which are typically viewed as “credit” lenders.

Term of the partnership

The partnership will continue until 2032, unless sooner terminated as provided in the partnership agreement.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The partnership’s consolidated financial statements include the accounts of the partnership, its wholly-owned subsidiaries (consisting of single member limited liability companies owning a single real property asset). All significant intercompany transactions and balances have been eliminated in consolidation.

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, the valuation of impaired loans (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates.

Fair value estimates

GAAP 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. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are

• independent;

• knowledgeable;

• able to transact; and

• willing to transact.

Fair values of assets and liabilities are determined based on the fair value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the partnership has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the partnership’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the partnership’s own data.

The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions. Appraisals of commercial real property generally present three approaches to estimating value:

• market comparables or sales approach;

• cost to replace; and

• capitalized cash flows or investment approach.

These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed, or for land when-entitled); and determining the unit of value (e.g. as a series of individual unit sales or as a bulk disposition).

Management has the requisite familiarity with the markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value, and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types.

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. At December 31, 2017, certain partnership cash balances in banks exceed federally insured limits.

Loans and interest income

Loans generally are stated at the unpaid principal balance (principal). Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the partnership’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums, and attorney fees. Advances generally are stated at the unpaid principal balance and accrue interest until repaid by the borrower.

The partnership may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. As monthly interest payments become due, the partnership funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction of principal.

If based upon current information and events, it is probable the partnership will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. If a valuation allowance had been established on an impaired loan, any subsequent payments on impaired loans are applied to late fees and then to reduce first the accrued interest, then advances, and then unpaid principal.

From time to time, the partnership negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the partnership’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the matured loan was previously designated as impaired.

Interest is accrued daily based on the unpaid principal balance of the loans. Impaired loans continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement.

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Delinquencies are identified and followed as part of the loan system. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss (i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

Real estate owned (REO)

Real estate owned (REO) is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the lower of the amount owed on the loan (legal basis), plus any senior indebtedness, or at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expense. Any recovery in the fair value subsequent to such a write down is recorded, not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Rental income/ depreciation

Rental income is recognized when earned in accordance with the lease agreement. For commercial leases, the costs associated with originating the lease are amortized over the lease term. Residential lease terms generally range from month-to-month to one-year, and the expenses of originating the lease are expensed as incurred. Real estate owned that is designated held for sale is not depreciated. Real estate that was designated held for investment, and rented was depreciated on a straight-line basis over the estimated useful life of the property.

Recently issued accounting pronouncements

- Accounting and Financial Reporting for Revenue Recognition

On May 28, 2014, FASB issued a final standard on revenue from contracts with customers. The standard issued as ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective January 2018, and will be adopted using the modified retrospective approach.

The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and to develop guidance that would streamline and enhance revenue recognition requirements.  A core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.  Revenue is recognized when a performance obligation is satisfied by transferring goods or services to a customer. The FASB intentionally used the wording “be entitled” rather than “receive” or “collect” to distinguish collectability risk from other uncertainties that may exist under a contract.

RMC management’s evaluation is that the revenue standard will not have an impact on the partnership’s current revenue recognition policies. The scope of guidance is not applicable to financial instruments including loans and therefore will not have an impact on interest income or late fees. The partnership also does not expect that there will be changes to revenue recognition from the sale of REOs, however, there may be an impact to the gain on sale of real estate when the sale is financed by the partnership.

- Accounting and Financial Reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model and generally may result in allowances being recognized in earlier periods than under the current credit loss model.

RMI VIII invests in real estate secured loans made with the expectation of zero credit losses as a result of substantial protective equity provided by the underlying collateral. For a loss to be recognized under the CECL or incurred loss model, if the lending/loan-to-value guidelines are followed effectively, an intervening, subsequent-to-loan-funding, event must negatively impact the value of the underlying collateral of the loan in an amount greater than the amount of protective equity provided by the collateral. Such an event would be either (or both) of:

• an uninsured event(s) specifically impacting the collateral or

• a non-temporary decline in values in the applicable real estate market.

In both of these instances the treatment would be the same in the incurred loss and CECL models of approximately the same amount.  Other than in these events, the probable of occurrence criteria of the incurred loss model is not triggered and a loss is not recognized. Further, if the zero-expected-loss lending guideline is preserved and the protective equity provided by the collateral is not expected to be impaired over the life of the loans, then a loss is not required to be recognized under the CECL model.

This convergence between the CECL and incurred loss models as to loss recognition – as an event driven occurrence – in low LTV, real estate secured programs caused RMC to conclude that the CECL model will not materially impact the reported results of operations or financial position as compared to that which would be reported in the incurred loss model.  The manager expects to adopt the ASU for interim and annual reporting in 2020.

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General Partners and Other Related Parties

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

General Partners and Other Related Parties

NOTE 3 –GENERAL PARTNERS AND OTHER RELATED PARTIES

The general partners, RMC and Michael R. Burwell (Burwell), are entitled to one percent (1%) of the profits and losses, which amounted to approximately $46,000 and $53,000 for 2017 and 2016, respectively. Beginning in 2010, and continuing until January 1, 2020, RMC assigned its right to two-thirds of one percent (0.66%) of profits and losses to Burwell in exchange for Burwell assuming one hundred percent (100%) of the general partners’ equity deficit.

• Mortgage servicing fees

RMC earns mortgage servicing fees of up to 1.5% annually of the unpaid principal balance of the loan portfolio. The mortgage servicing fees are accrued monthly on all loans. Remittance to RMC is made monthly unless the loan has been assigned a specific loss reserve, at which point remittance is deferred until the specific loss reserve is no longer required, or the property has been acquired by the partnership.

Mortgage servicing fees paid to RMC were approximately $1,724,000 and $1,191,000 for 2017 and 2016, respectively. No mortgage servicing fees were waived during any period reported.

• Assetmanagementfees

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). No asset management fees were waived in any period presented.

Asset management fees paid to the general partners were approximately $603,000 and $678,000, for 2017 and 2016 respectively.

• Costs from Redwood Mortgage Corp.

RMC is reimbursed by the partnership for operating expenses incurred on behalf of the partnership, including without limitation, accounting and audit fees, legal fees and expenses, postage and preparation of reports to limited partners, and out-of-pocket general and administration expenses. Other costs are allocated pro-rata based on the percentage of total capital of all mortgage funds managed by RMC. Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all mortgage funds. The decision to request reimbursement of any qualifying charges is made by RMC at its sole discretion.

For 2017 and 2016, operating expenses totaling approximately $2,033,000 and $1,963,000, respectively, were reimbursed to RMC.

Commissions and fees are paid by the borrowers to RMC

• Brokerage commissions, loan originations

For fees in connection with the review, selection, evaluation, negotiation and extension of loans, the general partners may collect loan brokerage commissions (points) limited to an amount not to exceed 4% of the total partnership assets per year. The loan brokerage commissions are paid by the borrowers and thus, are not an expense of the partnership. The proceeds from loan brokerage commissions and other fees earned are the source of funds for the repayment of the formation loan by RMC.  

• Other fees

RMC receives fees for processing, notary, document preparation, credit investigation, reconveyance and other mortgage related fees. The amounts received are customary for comparable services in the geographical area where the property securing the loan is located, payable solely by the borrower and not by the partnership.

In the ordinary course of business, performing loans may be assigned, in-part or in-full, between the affiliated mortgage funds at par.

Formation loan/Commissions paid to broker-dealers

Commissions for sales of limited partnership units paid to broker-dealers (B/D sales commissions) were paid by RMC and were not paid directly by the partnership out of offering proceeds. Instead, the partnership advanced to RMC amounts sufficient to pay the B/D sales commissions and premiums paid to partners in connection with unsolicited orders up to 7% of offering proceeds. The receivable arising from the advances is unsecured, and non-interest bearing and is referred to as the “formation loan.”

The primary source of the repayments made by RMC on the formation loan is expected to be loan brokerage commissions. As of December 31, 2017, the partnership had made such advances of $22,567,000, of which $5,634,000 remain outstanding on the formation loan. If the general partners are removed and RMC is no longer receiving payments for services rendered, the formation loan is forgiven, per the terms of the partnership agreement.

The formation loan activity is summarized in the following table ($ in thousands).

	2017
Balance, January 1	$	6,284
Early withdrawal penalties		(343	)
Repayments		(307	)
Balance, December 31	$	5,634

The future minimum payments on the formation loan as of December 31, 2017 are presented in the following table ($ in thousands).

2018	$	650
2019		650
2020		650
2021		650
2022		650
Thereafter		2,384
Total	$	5,634

The formation loan is forgiven if the general partners are removed and RMC is no longer receiving payments for services rendered, per the partnership agreement.

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Loans

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Loans

NOTE 4 – LOANS

Loans generally are funded at a fixed interest rate with a loan term of up to five years. As of December 31, 2017, 60 of the partnership’s 72 loans (representing 97% of the aggregate principal of the partnership’s loan portfolio) have a term of five years or less from loan inception. The remaining loans have terms longer than five years.  Substantially all loans are written without a prepayment penalty clause. As of December 31, 2017, 31 of the loans outstanding (representing 66% of the aggregate principal balance of the partnership’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity.  The remaining loans require monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity.

Loans unpaid principal balance (principal)

Secured loan transactions are summarized in the following table ($ in thousands).

	2017			2016
Principal, beginning of period	$	94,851		$	62,740
Loans funded		51,618			81,100
Loans acquired from affiliates		1,000			—
Principal payments received		(17,514	)		(41,425	)
Loans sold to affiliates		—			(7,219	)
Foreclosures		—			(345	)
Principal, end of period	$	129,955		$	94,851

During 2017 and 2016, the partnership renewed eleven and four loans, respectively, at then current market terms, with an aggregate principal of approximately $19,204,000 and $5,055,000, which were not included in the activity shown on the table above.

Loan characteristics

Secured loans had the characteristics presented in the following table ($ in thousands).

	December 31,			December 31,
	2017			2016
Number of secured loans		72			75
Secured loans – principal	$	129,955		$	94,851
Secured loans – lowest interest rate (fixed)		5.0	%		5.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	1,805		$	1,265
Average principal as percent of total principal		1.4	%		1.3	%
Average principal as percent of partners’ capital, net of formation loan		1.3	%		0.8	%
Average principal as percent of total assets		1.3	%		0.8	%
Largest secured loan – principal	$	14,000		$	14,000
Largest principal as percent of total principal		10.8	%		14.8	%
Largest principal as percent of partners’ capital, net of formation loan		10.0	%		8.7	%
Largest principal as percent of total assets		10.0	%		8.7	%
Smallest secured loan – principal	$	44		$	48
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of partners’ capital, net of formation loan		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of counties where security is located (all California)	20				24
Largest percentage of principal in one county		20.8	%		23.1	%
Number of secured loans with a filed notice of default		2			1
Secured loans in foreclosure – principal	$	7,607		$	405
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—

As of December 31, 2017, the partnership’s largest loan, in the unpaid principal balance of $14,000,000 (representing 10.8% of outstanding secured loans and 10.0% of partnership total assets) has an interest rate of 7.25% and is secured by a commercial property located in Contra Costa County. As of December 31, 2017, the partnership had no construction loans outstanding and had no rehabilitation loans outstanding.

In compliance with California laws and regulations, all borrower receipts are deposited into a bank trust account maintained by RMC, and subsequently disbursed to the partnership after an appropriate holding period.  At December 31, 2017 the trust account held a balance relating to the partnership’s loan portfolio of $191,808, consisting of both interest and principal payments from borrowers, all of which was disbursed to the partnership on or before January 12, 2018. 

Lien position

At funding secured loans had the following lien positions and are presented in the following table ($ in thousands).

	December 31, 2017								December 31, 2016
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		48	$	104,244			80	%		48	$	73,712			78	%
Second trust deeds		23		22,711			17			26		18,139			19
Third trust deeds		1		3,000			3			1		3,000			3
Total secured loans		72	$	129,955			100	%		75	$	94,851			100	%
Liens due other lenders at loan closing				52,444								35,054
Total debt			$	182,399							$	129,905
Appraised property value at loan closing			$	346,738							$	245,329
Percent of total debt to appraised values (LTV) at loan closing(1)				55.6	%							54.0	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing, nor does it include decreases or increases of the amount owing on senior liens to other lenders.

Property type

Secured loans summarized by property type are presented in the following table ($ in thousands).

	December 31, 2017						December 31, 2016
	Loans	Principal		Percent			Loans	Principal		Percent
Single family(2)	41	$	48,117		37	%	48	$	31,773		34	%
Multi-family	4		4,589	4			3		1,723	2
Commercial	26		76,799	58			22		59,380	61
Land	1		450	1			2		1,975	3
Total secured loans	72	$	129,955		100	%	75	$	94,851		100	%

(2) Single family property type as of December 31, 2017 consists of 18 loans with principal of approximately $12,681,000 that are owner occupied and 23 loans with principal of approximately $35,436,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 21 loans with principal of approximately $11,177,000 that were owner occupied and 27 loans with principal approximately of $20,596,000 that were non-owner occupied.

Single family properties include owner-occupied and non-owner occupied single family homes (1-4 unit residential buildings), condominium units, townhouses, and condominium complexes. As of December 31, 2017, and 2016, three and four, respectively, of the partnership’s loans with a principal balance of approximately $2,782,000, and $3,131000, respectively, were secured by condominium properties.

Distribution by California Counties

The distribution of secured loans outstanding by the California county in which the primary collateral is located is presented in the following table ($ in thousands).

	December 31, 2017					December 31, 2016
	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
San Francisco Bay Area(3)
San Francisco	$	26,206		20.2	%	$	7,204		7.6	%
Contra Costa		16,856		13.1			16,863		17.7
San Mateo		15,506		11.9			11,267		11.9
Alameda		11,730		9.0			6,626		7.0
Santa Clara		6,873		5.3			9,938		10.5
Solano		2,875		2.2			1,875		2.0
Marin		1,597		1.2			849		0.9
Napa		569		0.4			956		1.0
		82,212		63.3			55,578		58.6
Other Northern California
Sacramento		3,300		2.4			2,118		2.2
El Dorado		2,044		1.6			2,044		2.2
Santa Cruz		769		0.6			852		0.9
Amador		754		0.6			770		0.8
Monterey		656		0.5			4,007		4.2
Lake		296		0.2			298		0.3
Mariposa		44		0.1			48		0.1
Calaveras		—		—			151		0.2
San Benito		—		—			94		0.1
		7,863		6.0			10,382		11.0
Total Northern California		90,075		69.3			65,960		69.6
Los Angeles & Coastal
Los Angeles		26,971		20.8			21,876		23.0
Orange		6,653		5.1			3,765		4.0
San Diego		164		0.1			2,464		2.6
Ventura		—		—			271		0.3
		33,788		26.0			28,376		29.9
Other Southern California
San Bernardino		5,900		4.5			124		0.1
Riverside		192		0.2			289		0.3
Kern		—		—			102		0.1
		6,092		4.7			515		0.5
Total Southern California		39,880		30.7			28,891		30.4
Total Secured Loans Balance	$	129,955		100.0	%	$	94,851		100.0	%

(3) Includes Silicon Valley

Scheduled maturities

Secured loans are scheduled to mature as presented in the following table ($ in thousands).

Scheduled maturities, as of December 31, 2017	Loans		Principal		Percent
2018		25	$	54,227		42	%
2019		27		65,023		49
2020		10		7,035		5
2021		7		1,968		2
2022		2		933		1
Thereafter		1		769		1
Matured as of December 31, 2017		—		—		—
Total secured loan balance		72	$	129,955		100	%

It is the partnership’s experience loans may be repaid or refinanced before, at or after the contractual maturity date. For matured loans, the partnership may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

Matured loans

At December 31, 2017, and 2016, there were no loans past maturity.

Delinquency

Secured loans summarized by payment delinquency for are presented in the following table ($ in thousands).

	December 31, 2017				December 31, 2016
	Loans		Amount		Loans		Amount
Past Due
30-89 days		2	$	3,700		1	$	164
90-179 days		—		—		1		405
180 or more days		2		7,607		—		—
Total past due		4	$	11,307		2		569
Current		68		118,648		73		94,282
Total secured loan balance		72	$	129,955		75	$	94,851

Interest income of approximately $167,000 and $16,000 was accrued on loans contractually past due 90 days or more as to principal and/or interest payments during 2017 and 2016, respectively.  

Loans in non-accrual status

Secured loans in nonaccrual status are summarized in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Number of loans		3		1
Principal	$	7,834	$	230
Advances		429		2
Accrued interest		322		2
Total recorded investment	$	8,585	$	234
Foregone interest	$	64	$	—

At December 31, 2017, no loans were contractually 90 or more days past due as to principal or interest and not in non-accrual status. At December 31, 2016, there was one loan with a loan balance of approximately $405,000 that was contractually 90 or more days past due as to principal or interest and not in non-accrual status.

Loans designated impaired

Impaired loans and the associated allowance for loan losses is presented in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Principal	$	7,834	$	634
Recorded investment(4)		8,585		656
Impaired loans without allowance		8,585		656
Impaired loans with allowance		—		—
Allowance for loan losses, impaired loans		—		—
Number of Loans		3		2

(4) Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.

Impaired loans had the average balances and interest income recognized and received in cash as presented in the following table as of and for the years ended December 31, 2017 and 2016 ($ in thousands).

	December 31,		December 31,
	2017		2016
Average recorded investment	$	4,410	$	720
Interest income recognized		607		27
Interest income received in cash		344		27

Allowance for loan losses

At December 31, 2017, and December 31, 2016, the partnership had no allowance for loan losses as all loans had protective equity such that at December 31, 2017, and December 31, 2016, collection was deemed probable for amounts owing.

Modifications, workout agreements and troubled debt restructurings

At December 31, 2017, the partnership had no modifications, workout agreements, or troubled debt restructurings in effect. At December 31, 2016, the partnership had one workout agreement which qualified as troubled debt restructuring. This loan was paid in full in January 2017. 

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Real Estate Owned (REO)

12 Months Ended

Dec. 31, 2017

Real Estate [Abstract]

Real Estate Owned (REO)

NOTE 5 – REAL ESTATE OWNED (REO)

REO transactions and activity are presented in the following table ($ in thousands).

	2017			2016
Balance, beginning of period	$	19,782		$	82,949
Acquisitions		—			2,265
Dispositions		(13,066	)		(65,893	)
Improvements/betterments		253			461
Change in net book value		45			—
Depreciation		—			—
Balance, end of period	$	7,014		$	19,782

The following transactions closed during 2017.

• Sold 36 of 42 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $595,000

• Sold 5 of 8 units remaining at the beginning of the period, in a condominium complex in San Francisco County with a gain of approximately $643,000.

• Sold 3 commercial units and a parking lot in Ventura County for a gain of approximately $71,000 after taking into account a portion of a previously recorded valuation reserve.

The following transactions closed during 2016.

• Sold 28 of 70 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $206,000.

• Sold 4 of 4 units remaining at the beginning of the period, in a condominium complex in Alameda County with a gain of approximately $857,000.

• Sold 5 of the 13 units remaining at the beginning of the period, in a condominium complex in San Francisco County with a gain of approximately $704,000.

• Sold 29 of 29 units remaining at the beginning of the period, in a condominium complex in Contra Costa County with a loss of approximately $36,000. The units were sold with a seller-carryback of approximately 77% of the sale price, at then market rates (first deed of trust, 5% note rate, interest only monthly, eighteen months maturing March 1, 2018).

• Sold a commercial property in Amador County, financed by a seller carryback. No gain was recognized at the time of sale. The property was sold with a seller-carryback of approximately 70% of the sale price at then market rates (first deed of trust, 5% note rate, interest only monthly, five years maturing December 1, 2021, guaranteed by principal).

• Sold 126 of 126 units remaining at the beginning of the period, in a condominium complex in Los Angeles County with a gain of approximately $862,000.

• Acquired a commercial/retail property and a parking lot located in Ventura County.

• Acquired remaining 36% interest in commercial land from affiliated funds. The property, located in Stanislaus County, was purchased at its estimated net realizable value of approximately $878,000.

REO summarized by property classification is presented in the following table ($ in thousands).

	December 31, 2017		December 31, 2016
	NBV		NBV
Property classification
Rental	$	3,606	$	16,174
Non-Rental		3,408		3,608
Total REO, net	$	7,014	$	19,782

Rental properties consist of the following at December 31, 2017.

• In Los Angeles County, 6 residential units in a condominium complex

• In San Francisco County, 3 residential units in a condominium complex

• In Contra Costa County, a commercial office property     

By September 30, 2017, all rental units had been made vacant in preparation for sale.

Non-Rental properties consist of the following three properties at December 31, 2017.

• In Fresno County, a partially completed home subdivision

• In Marin County, approximately 13 acres zoned for residential development

• In Stanislaus County, approximately 14 acres zoned commercial

.

The earnings from rental operations is presented in the following table for 2017 and 2016 ($ in thousands).

	2017			2016
Rental income	$	315		$	4,831
Operating expenses, rentals
Administration and payroll		91			675
Homeowner association fees		115			384
Professional services		25			113
Utilities and maintenance		472			1,001
Advertising and promotions		1			35
Property taxes		110			748
Other		74			155
Total operating expenses, rentals		888			3,111
Net operating income		(573	)		1,720
Depreciation		—			—
Receiver fees		3			18
Rental operations, net		(576	)		1,702
Interest on mortgages		—			1,581
Rental operation, net of mortgage interest	$	(576	)	$	121

Rental operations were substantially wound down as of December 31, 2017

Mortgages payable

The partnership had no mortgages payable at December 31, 2017, and December 31, 2016.

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Fair Value

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value

NOTE 6 – FAIR VALUE

The partnership does not record loans, REO, nor mortgages payable at fair value on a recurring basis.

The recorded amount of the performing loans (i.e., the loan balance) is deemed to approximate the fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized, such that the collection of the amount owed is assured, including foregone interest, if any).

Certain assets and liabilities are measured at fair value on a non-recurring basis, and these are listed below.

• Loans designated impaired with a specific reserve.

• REO acquired through foreclosure during the year.

• REO for which a valuation reserve has been recorded.

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2017 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year	$	—	$	—	$	—	$	—
REO for which a valuation reserve has been    recorded in the year	$	—	$	1,778	$	—	$	1,778

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2016 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		12/31/2016
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year(1)	$	—	$	416	$	—	$	416
REO for which a valuation reserve has been    recorded in the year	$	—	$	4,445	$	—	$	4,445

(1) The dollar amount presented is net of the fair value of the property at acquisition of the REO and the principal and interest owing on the first mortgage assumed of approximately $926,000. The mortgage was paid off in June 2016.

The following methods and assumptions are used when estimating fair value.

• Secured loans, performing (i.e. not designated as impaired) (Level 2) - Each loan is reviewed quarterly for its delinquency, LTV adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. Also considered is the limited resale market for the loans. Most companies or individuals making similar loans as the company intend to hold the loans until maturity as the average contractual term of the loans (and the historical experience of the time the loan is outstanding due to pre-payments) is shorter than conventional mortgages. As there are no prepayment penalties to be collected, loan buyers may be hesitant to risk paying above par. Due to these factors, sales of the loans are infrequent, because an active market does not exist. The recorded amount of the performing loans (i.e. the loan balance) is deemed to approximate the fair value, although the intrinsic value of the loans would reflect a premium due to the interest to be received.

• Secured loans, designated impaired (Level 2) - Secured loans designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions (Level 2 inputs).

The following methods and assumptions are used to determine the fair value of the collateral securing a loan.

Single family – Management’s preferred method for determining the fair market value of its single-family residential assets is the sale comparison method. Management primarily obtains sale comps via its subscription to the RealQuest service, but also uses free online services such as Zillow.com and other available resources to supplement this data. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, number of bedrooms and bathrooms, square footage, sale date, condition and year built.

If applicable sale comps are not available or deemed unreliable, management will seek additional information in the form of brokers’ opinions of value or appraisals.

Multi-family residential – Management’s preferred method for determining the aggregate retail value of its multifamily units is the sale comparison method. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, rental income, number of units, composition of units by the number of bedrooms and bathrooms, square footage, condition, amenities and year built.

Management’s secondary method for valuing its multifamily assets as income-producing rental operations is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to published data from reliable third-party sources such as the CBRE Cap Rate Survey. Management applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Commercial buildings – Where commercial rental income information is available, management’s preferred method for determining the fair value of its commercial real estate assets is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to reputable third-party sources such as the CBRE Cap Rate Survey. Management then applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing commercial rental project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals.

Management supplements the direct capitalization method with additional information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

Commercial land – Commercial land has many variations/uses, thus requiring management to employ a variety of methods depending upon the unique characteristics of the subject land. Management may rely on information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal.

• Unsecured loans (Level 3). Unsecured loans are valued at their principal less any discount or loss reserves established by management after taking into account the borrower’s creditworthiness and ability to repay the loan.

• Mortgages payable (Level 2). When the partnership had mortgages payable in 2016, the interest rates were deemed to be at market rates for the type and location of the securing property, the length of the mortgage, and the other terms and conditions are deemed to be customary.

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Commitments and Contingencies, Other Than Loan Commitments

12 Months Ended

Dec. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies, Other Than Loan Commitments

NOTE 7 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS

Commitments

The partnership’s only commitment is to fund scheduled capital account withdrawal requests at December 31, 2017 as presented in the following table ($ in thousands).

2018	$	24,247
2019		14,994
2020		8,156
2021		4,779
2022		1,890
Thereafter		68
Total	$	54,134

Legal proceedings

In the normal course of its business, the partnership may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect its interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the partnership. 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.

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Subsequent Events

12 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

NOTE 8 – SUBSEQUENT EVENTS

None.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The partnership’s consolidated financial statements include the accounts of the partnership, its wholly-owned subsidiaries (consisting of single member limited liability companies owning a single real property asset). All significant intercompany transactions and balances have been eliminated in consolidation.

Management Estimates

Management estimates

The preparation of financial statements in conformity with GAAP 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, when applicable, the valuation of impaired loans (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates.

Fair Value Estimates

Fair value estimates

GAAP 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. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are

• independent;

• knowledgeable;

• able to transact; and

• willing to transact.

Fair values of assets and liabilities are determined based on the fair value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the partnership has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data.

• Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the partnership’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the partnership’s own data.

The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions. Appraisals of commercial real property generally present three approaches to estimating value:

• market comparables or sales approach;

• cost to replace; and

• capitalized cash flows or investment approach.

These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed, or for land when-entitled); and determining the unit of value (e.g. as a series of individual unit sales or as a bulk disposition).

Management has the requisite familiarity with the markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value, and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types.

Cash and Cash Equivalents

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. At December 31, 2017, certain partnership cash balances in banks exceed federally insured limits.

Loans and Interest Income

Loans and interest income

Loans generally are stated at the unpaid principal balance (principal). Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the partnership’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums, and attorney fees. Advances generally are stated at the unpaid principal balance and accrue interest until repaid by the borrower.

The partnership may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. As monthly interest payments become due, the partnership funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction of principal.

If based upon current information and events, it is probable the partnership will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. If a valuation allowance had been established on an impaired loan, any subsequent payments on impaired loans are applied to late fees and then to reduce first the accrued interest, then advances, and then unpaid principal.

From time to time, the partnership negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the partnership’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the matured loan was previously designated as impaired.

Interest is accrued daily based on the unpaid principal balance of the loans. Impaired loans continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Impaired loans are placed on non-accrual status if 180 days delinquent or at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement.

Allowance for Loan Losses

Allowance for loan losses

Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Delinquencies are identified and followed as part of the loan system. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate.

For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value.

Loans determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss (i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed.

The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible.

At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses.

Real Estate Owned (REO)

Real estate owned (REO)

Real estate owned (REO) is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the lower of the amount owed on the loan (legal basis), plus any senior indebtedness, or at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expense. Any recovery in the fair value subsequent to such a write down is recorded, not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing.

Rental Income/Depreciation

Rental income/ depreciation

Rental income is recognized when earned in accordance with the lease agreement. For commercial leases, the costs associated with originating the lease are amortized over the lease term. Residential lease terms generally range from month-to-month to one-year, and the expenses of originating the lease are expensed as incurred. Real estate owned that is designated held for sale is not depreciated. Real estate that was designated held for investment, and rented was depreciated on a straight-line basis over the estimated useful life of the property.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements

- Accounting and Financial Reporting for Revenue Recognition

On May 28, 2014, FASB issued a final standard on revenue from contracts with customers. The standard issued as ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective January 2018, and will be adopted using the modified retrospective approach.

The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and to develop guidance that would streamline and enhance revenue recognition requirements.  A core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.  Revenue is recognized when a performance obligation is satisfied by transferring goods or services to a customer. The FASB intentionally used the wording “be entitled” rather than “receive” or “collect” to distinguish collectability risk from other uncertainties that may exist under a contract.

RMC management’s evaluation is that the revenue standard will not have an impact on the partnership’s current revenue recognition policies. The scope of guidance is not applicable to financial instruments including loans and therefore will not have an impact on interest income or late fees. The partnership also does not expect that there will be changes to revenue recognition from the sale of REOs, however, there may be an impact to the gain on sale of real estate when the sale is financed by the partnership.

- Accounting and Financial Reporting for Expected Credit Losses

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from the current incurred credit loss model and generally may result in allowances being recognized in earlier periods than under the current credit loss model.

RMI VIII invests in real estate secured loans made with the expectation of zero credit losses as a result of substantial protective equity provided by the underlying collateral. For a loss to be recognized under the CECL or incurred loss model, if the lending/loan-to-value guidelines are followed effectively, an intervening, subsequent-to-loan-funding, event must negatively impact the value of the underlying collateral of the loan in an amount greater than the amount of protective equity provided by the collateral. Such an event would be either (or both) of:

• an uninsured event(s) specifically impacting the collateral or

• a non-temporary decline in values in the applicable real estate market.

In both of these instances the treatment would be the same in the incurred loss and CECL models of approximately the same amount.  Other than in these events, the probable of occurrence criteria of the incurred loss model is not triggered and a loss is not recognized. Further, if the zero-expected-loss lending guideline is preserved and the protective equity provided by the collateral is not expected to be impaired over the life of the loans, then a loss is not required to be recognized under the CECL model.

This convergence between the CECL and incurred loss models as to loss recognition – as an event driven occurrence – in low LTV, real estate secured programs caused RMC to conclude that the CECL model will not materially impact the reported results of operations or financial position as compared to that which would be reported in the incurred loss model.  The manager expects to adopt the ASU for interim and annual reporting in 2020.

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General Partners and Other Related Parties (Tables)

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Schedule of Formation Loan Activity

The formation loan activity is summarized in the following table ($ in thousands).

	2017
Balance, January 1	$	6,284
Early withdrawal penalties		(343	)
Repayments		(307	)
Balance, December 31	$	5,634

Formation Loan, Future Minimum Payments

The future minimum payments on the formation loan as of December 31, 2017 are presented in the following table ($ in thousands).

2018	$	650
2019		650
2020		650
2021		650
2022		650
Thereafter		2,384
Total	$	5,634

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Loans (Tables)

12 Months Ended

Dec. 31, 2017

Secured Loan Principal Transactions

Secured loan transactions are summarized in the following table ($ in thousands).

	2017			2016
Principal, beginning of period	$	94,851		$	62,740
Loans funded		51,618			81,100
Loans acquired from affiliates		1,000			—
Principal payments received		(17,514	)		(41,425	)
Loans sold to affiliates		—			(7,219	)
Foreclosures		—			(345	)
Principal, end of period	$	129,955		$	94,851

Secured Loans Characteristics

Secured loans had the characteristics presented in the following table ($ in thousands).

	December 31,			December 31,
	2017			2016
Number of secured loans		72			75
Secured loans – principal	$	129,955		$	94,851
Secured loans – lowest interest rate (fixed)		5.0	%		5.0	%
Secured loans – highest interest rate (fixed)		10.5	%		10.5	%
Average secured loan – principal	$	1,805		$	1,265
Average principal as percent of total principal		1.4	%		1.3	%
Average principal as percent of partners’ capital, net of formation loan		1.3	%		0.8	%
Average principal as percent of total assets		1.3	%		0.8	%
Largest secured loan – principal	$	14,000		$	14,000
Largest principal as percent of total principal		10.8	%		14.8	%
Largest principal as percent of partners’ capital, net of formation loan		10.0	%		8.7	%
Largest principal as percent of total assets		10.0	%		8.7	%
Smallest secured loan – principal	$	44		$	48
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of partners’ capital, net of formation loan		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%
Number of counties where security is located (all California)	20				24
Largest percentage of principal in one county		20.8	%		23.1	%
Number of secured loans with a filed notice of default		2			1
Secured loans in foreclosure – principal	$	7,607		$	405
Number of secured loans with an interest reserve		—			—
Interest reserves	$	—		$	—

Secured Loans by Lien Position in the Collateral

At funding secured loans had the following lien positions and are presented in the following table ($ in thousands).

	December 31, 2017								December 31, 2016
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		48	$	104,244			80	%		48	$	73,712			78	%
Second trust deeds		23		22,711			17			26		18,139			19
Third trust deeds		1		3,000			3			1		3,000			3
Total secured loans		72	$	129,955			100	%		75	$	94,851			100	%
Liens due other lenders at loan closing				52,444								35,054
Total debt			$	182,399							$	129,905
Appraised property value at loan closing			$	346,738							$	245,329
Percent of total debt to appraised values (LTV) at loan closing(1)				55.6	%							54.0	%

(1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing, nor does it include decreases or increases of the amount owing on senior liens to other lenders.

Secured Loans by Property Type of the Collateral

Secured loans summarized by property type are presented in the following table ($ in thousands).

	December 31, 2017						December 31, 2016
	Loans	Principal		Percent			Loans	Principal		Percent
Single family(2)	41	$	48,117		37	%	48	$	31,773		34	%
Multi-family	4		4,589	4			3		1,723	2
Commercial	26		76,799	58			22		59,380	61
Land	1		450	1			2		1,975	3
Total secured loans	72	$	129,955		100	%	75	$	94,851		100	%

(1) Single family property type as of December 31, 2017 consists of 18 loans with principal of approximately $12,681,000 that are owner occupied and 23 loans with principal of approximately $35,436,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 21 loans with principal of approximately $11,177,000 that were owner occupied and 27 loans with principal approximately of $20,596,000 that were non-owner occupied.

Secured Loans Distributed within California

The distribution of secured loans outstanding by the California county in which the primary collateral is located is presented in the following table ($ in thousands).

	December 31, 2017					December 31, 2016
	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
San Francisco Bay Area(3)
San Francisco	$	26,206		20.2	%	$	7,204		7.6	%
Contra Costa		16,856		13.1			16,863		17.7
San Mateo		15,506		11.9			11,267		11.9
Alameda		11,730		9.0			6,626		7.0
Santa Clara		6,873		5.3			9,938		10.5
Solano		2,875		2.2			1,875		2.0
Marin		1,597		1.2			849		0.9
Napa		569		0.4			956		1.0
		82,212		63.3			55,578		58.6
Other Northern California
Sacramento		3,300		2.4			2,118		2.2
El Dorado		2,044		1.6			2,044		2.2
Santa Cruz		769		0.6			852		0.9
Amador		754		0.6			770		0.8
Monterey		656		0.5			4,007		4.2
Lake		296		0.2			298		0.3
Mariposa		44		0.1			48		0.1
Calaveras		—		—			151		0.2
San Benito		—		—			94		0.1
		7,863		6.0			10,382		11.0
Total Northern California		90,075		69.3			65,960		69.6
Los Angeles & Coastal
Los Angeles		26,971		20.8			21,876		23.0
Orange		6,653		5.1			3,765		4.0
San Diego		164		0.1			2,464		2.6
Ventura		—		—			271		0.3
		33,788		26.0			28,376		29.9
Other Southern California
San Bernardino		5,900		4.5			124		0.1
Riverside		192		0.2			289		0.3
Kern		—		—			102		0.1
		6,092		4.7			515		0.5
Total Southern California		39,880		30.7			28,891		30.4
Total Secured Loans Balance	$	129,955		100.0	%	$	94,851		100.0	%

(1) Includes Silicon Valley

Secured Loans Scheduled Maturities

Secured loans are scheduled to mature as presented in the following table ($ in thousands).

Scheduled maturities, as of December 31, 2017	Loans		Principal		Percent
2018		25	$	54,227		42	%
2019		27		65,023		49
2020		10		7,035		5
2021		7		1,968		2
2022		2		933		1
Thereafter		1		769		1
Matured as of December 31, 2017		—		—		—
Total secured loan balance		72	$	129,955		100	%

Secured Loans in Non-Accrual Status

Secured loans in nonaccrual status are summarized in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Number of loans		3		1
Principal	$	7,834	$	230
Advances		429		2
Accrued interest		322		2
Total recorded investment	$	8,585	$	234
Foregone interest	$	64	$	—

By Days Past Due [Member]

Past Due Financing Receivables

Secured loans summarized by payment delinquency for are presented in the following table ($ in thousands).

	December 31, 2017				December 31, 2016
	Loans		Amount		Loans		Amount
Past Due
30-89 days		2	$	3,700		1	$	164
90-179 days		—		—		1		405
180 or more days		2		7,607		—		—
Total past due		4	$	11,307		2		569
Current		68		118,648		73		94,282
Total secured loan balance		72	$	129,955		75	$	94,851

Impaired Loans [Member]

Impaired Financing Receivables

Impaired loans and the associated allowance for loan losses is presented in the following table ($ in thousands).

	December 31,		December 31,
	2017		2016
Principal	$	7,834	$	634
Recorded investment(4)		8,585		656
Impaired loans without allowance		8,585		656
Impaired loans with allowance		—		—
Allowance for loan losses, impaired loans		—		—
Number of Loans		3		2

(4) Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.

Average Balances And Interest Income [Member]

Impaired Financing Receivables

Impaired loans had the average balances and interest income recognized and received in cash as presented in the following table as of and for the years ended December 31, 2017 and 2016 ($ in thousands).

	December 31,		December 31,
	2017		2016
Average recorded investment	$	4,410	$	720
Interest income recognized		607		27
Interest income received in cash		344		27

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Real Estate Owned (REO) (Tables)

12 Months Ended

Dec. 31, 2017

Real Estate [Abstract]

REO Held for Sale

REO transactions and activity are presented in the following table ($ in thousands).

	2017			2016
Balance, beginning of period	$	19,782		$	82,949
Acquisitions		—			2,265
Dispositions		(13,066	)		(65,893	)
Improvements/betterments		253			461
Change in net book value		45			—
Depreciation		—			—
Balance, end of period	$	7,014		$	19,782

REO Held for Sale by Property Type

REO summarized by property classification is presented in the following table ($ in thousands).

	December 31, 2017		December 31, 2016
	NBV		NBV
Property classification
Rental	$	3,606	$	16,174
Non-Rental		3,408		3,608
Total REO, net	$	7,014	$	19,782

Earnings/(Loss) from Rental Operations of the Real Estate Owned, Held as Investment

The earnings from rental operations is presented in the following table for 2017 and 2016 ($ in thousands).

	2017			2016
Rental income	$	315		$	4,831
Operating expenses, rentals
Administration and payroll		91			675
Homeowner association fees		115			384
Professional services		25			113
Utilities and maintenance		472			1,001
Advertising and promotions		1			35
Property taxes		110			748
Other		74			155
Total operating expenses, rentals		888			3,111
Net operating income		(573	)		1,720
Depreciation		—			—
Receiver fees		3			18
Rental operations, net		(576	)		1,702
Interest on mortgages		—			1,581
Rental operation, net of mortgage interest	$	(576	)	$	121

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements, Nonrecurring

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2017 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year	$	—	$	—	$	—	$	—
REO for which a valuation reserve has been    recorded in the year	$	—	$	1,778	$	—	$	1,778

Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2016 are presented in the following table ($ in thousands).

	Fair Value Measurement at Report Date Using
	Quoted Prices		Significant
	In Active		Other		Significant
	Markets For		Observable		Unobservable		Total
	Identical Assets		Inputs		Inputs		As Of
Item	(Level 1)		(Level 2)		(Level 3)		12/31/2016
Impaired loans with specific allowance, net for    which an adjustment was recorded in the year	$	—	$	—	$	—	$	—
REO acquired through foreclosure during the year(1)	$	—	$	416	$	—	$	416
REO for which a valuation reserve has been    recorded in the year	$	—	$	4,445	$	—	$	4,445

(1) The dollar amount presented is net of the fair value of the property at acquisition of the REO and the principal and interest owing on the first mortgage assumed of approximately $926,000. The mortgage was paid off in June 2016.

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Commitments and Contingencies, Other Than Loan Commitments (Tables)

12 Months Ended

Dec. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Scheduled Capital Account Withdrawal Requests

The partnership’s only commitment is to fund scheduled capital account withdrawal requests at December 31, 2017 as presented in the following table ($ in thousands).

2018	$	24,247
2019		14,994
2020		8,156
2021		4,779
2022		1,890
Thereafter		68
Total	$	54,134

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Organization and General - Additional Information (Details) - Installment	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Organizational and General Details [Line Items]
Ownership interest held by the general partner	1.00%	1.00%
Minimum Amount of Time Before Leaving Partnership Without Penalty	5 years
Early Withdrawal Penalty Percentage	10.00%
Maximum Percentage of Total Limited Partners Capital Available for Liquidation During One Year	20.00%
Loans Receivable, Amortization Term	30 years
Commercial [Member]
Organizational and General Details [Line Items]
Loan-to-value ratio percentage	75.00%
Land Loan [Member]
Organizational and General Details [Line Items]
Loan-to-value ratio percentage	50.00%
Minimum [Member]
Organizational and General Details [Line Items]
Formation Loan Repayment Period	5 years
Maximum [Member] | Multi-family [Member]
Organizational and General Details [Line Items]
Loan-to-value ratio percentage	80.00%
Limited Partner [Member]
Organizational and General Details [Line Items]
Number of Quarterly Installments for Withdrawal From Partnership	4
Limited Partner [Member] | After Five Year Period [Member]
Organizational and General Details [Line Items]
Number of Quarterly Installments for Withdrawal From Partnership	20
RMC [Member]
Organizational and General Details [Line Items]
Ownership interest held by the general partner	0.10%

XML

Summary of Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2017 Approach
Summary of Significant Accounting Policies Details [Line Items]
Estimating real property value, number of approaches	3
Cash and cash equivalents, maximum initial maturity	3 months
Interest reserve minimum length	1 year
Interest reserve maximum length	2 years
Threshold period past due for impaired loans placed on non-accrual status	180 days
Maximum [Member]
Summary of Significant Accounting Policies Details [Line Items]
Residential lease term	1 year

XML

General Partners and Other Related Parties - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
General Partners And Other Related Parties Details [Line Items]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 4,623,000	$ 5,307,000
Chargeable by RMC	1,724,000	1,191,000
Asset management fees	$ 603,000	678,000
Management fee, description	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 waived	$ 0	0
Operating Expenses	$ 2,033,000	1,963,000
Loan Brokerage Commissions, Maximum Percent of Assets	4.00%
Formation Loan [Member]
General Partners And Other Related Parties Details [Line Items]
Formation loan, advances	$ 22,567,000
Receivable from affiliate (formation loan)	5,634,000
RMC [Member]
General Partners And Other Related Parties Details [Line Items]
Mortgage Servicing Fees Waived	0	0
Operating Expenses	$ 2,033,000	1,963,000
Maximum [Member]
General Partners And Other Related Parties Details [Line Items]
Annual mortgage servicing fees, percentage	1.50%
Percentage of offering proceeds	7.00%
RMC and Burwell [Member]
General Partners And Other Related Parties Details [Line Items]
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Profit (Loss) Percentage	1.00%
Burwell [Member]
General Partners And Other Related Parties Details [Line Items]
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Profit (Loss) Percentage	0.66%
Equity Deficit Assumed by a General Partner	100.00%
One Percent of Profits and Losses [Member] | General Partner [Member]
General Partners And Other Related Parties Details [Line Items]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 46,000	$ 53,000

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General Partners and Other Related Parties - Formation Loan Activity (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)
Formation Loan - Transactions [Abstract]
Balance, January 1	$ 6,284
Early withdrawal penalties	(343)
Repayments	(307)
Balance, December 31	$ 5,634

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General Partners and Other Related Parties - Formation Loan, Future Minimum Payments (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Formation Loan Future Minimum Payments [Abstract]
2018	$ 650
2019	650
2020	650
2021	650
2022	650
Thereafter	2,384
Total	$ 5,634

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Loans - Additional Information (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Loan Interest MortgageLoan	Dec. 31, 2016 USD ($) Loan MortgageLoan	Dec. 31, 2015 USD ($)
Loans Details [Line Items]
Loans Receivable, Term	5 years
Loans Receivable Number of Loans | Loan	72	75
Loans Receivable, Number of Interest Only Loans | Interest	31
Loans Receivable, Amortization Term	30 years
Mortgage Loans on Real Estate, Number of Loans Renewed | MortgageLoan	11	4
Loans - principal renewed (in Dollars)	$ 19,204,000	$ 5,055,000
Loans Receivable Largest Loan (in Dollars)	$ 14,000,000	$ 14,000,000
Loans Receivable, Percent	100.00%	100.00%
Balance relating to loan portfolio held in bank trust account	$ 191,808
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	72	75
Principal	$ 129,955,000	$ 94,851,000	$ 62,740,000
Revenue, loans	9,463,000	7,224,000
Allowance for loan losses	$ 0	$ 0
Past Due 90 Days Or More [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	0	1
Loans Receivable, Interest Accrual, Period	90 days	90 days
Revenue, loans	$ 167,000	$ 16,000
Mortgage Loan balance		$ 405,000
Past Maturity [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans matured | MortgageLoan	0	0
Modifications of Secured Loan [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	0
Workout Agreements [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	0
Troubled Debt Restructuring [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	0	1
Repayment date of loan	2017-01
Condominium Properties [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	3	4
Principal	$ 2,782,000	$ 3,131,000
Minimum [Member]
Loans Details [Line Items]
Loans Receivable, Remaining Term	5 years
Maximum [Member]
Loans Details [Line Items]
Balance relating to loan portfolio held in bank trust account, disbursement date to partnership	Jan. 12, 2018
Five Year Term or Less [Member]
Loans Details [Line Items]
Loans Receivable Number of Loans | Loan	60
Loans Receivable, Percent of Aggregate Principal	97.00%
Interest Only [Member]
Loans Details [Line Items]
Loans Receivable, Percent of Aggregate Principal	66.00%
Largest Loan [Member]
Loans Details [Line Items]
Loans Receivable, Percent	10.80%
Loans Receivable, Percent of Assets	10.00%
Loans Receivable, Yield of Loan Acquired	7.25%
Construction Loans [Member]
Loans Details [Line Items]
Loans outstanding	$ 0
Rehabilitation Loans [Member]
Loans Details [Line Items]
Loans outstanding	$ 0

XML

Loans - Secured Loan Principal Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Receivables [Abstract]
Principal, beginning of period	$ 94,851	$ 62,740
Loans funded	51,618	81,100
Loans acquired from affiliates	1,000
Principal payments received	(17,514)	(41,425)
Loans sold to affiliates		(7,219)
Foreclosures		(345)
Principal, end of period	$ 129,955	$ 94,851

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Loans - Secured Loans Characteristics (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Loan MortgageLoan County	Dec. 31, 2016 USD ($) Loan MortgageLoan County	Dec. 31, 2015 USD ($)
Secured Loan Transactions [Line Items]
Number of secured loans | Loan	72	75
Secured loans - principal (in Dollars)	$ 129,955,000	$ 94,851,000	$ 62,740,000
Average secured loan - principal (in Dollars)	$ 1,805,000	$ 1,265,000
Average principal as percent of total principal	1.40%	1.30%
Average principal as percent of partners’ capital, net of formation loan	1.30%	0.80%
Average principal as percent of total assets	1.30%	0.80%
Largest secured loan - principal (in Dollars)	$ 14,000,000	$ 14,000,000
Largest principal as percent of total principal	10.80%	14.80%
Largest principal as percent of partners’ capital, net of formation loan	10.00%	8.70%
Largest principal as percent of total assets	10.00%	8.70%
Smallest secured loan - principal (in Dollars)	$ 44,000	$ 48,000
Smallest principal as percent of total principal	0.10%	0.10%
Smallest principal as percent of partners’ capital, net of formation loan	0.10%	0.10%
Smallest principal as percent of total assets	0.10%	0.10%
Number of counties where security is located (all California) | County	20	24
Largest percentage of principal in one county	20.80%	23.10%
Number of secured loans with a filed notice of default | MortgageLoan	72	75
Secured loans in foreclosure - principal (in Dollars)	$ 7,607,000	$ 405,000
Minimum [Member]
Secured Loan Transactions [Line Items]
Secured loans - interest rate (fixed)	5.00%	5.00%
Maximum [Member]
Secured Loan Transactions [Line Items]
Secured loans - interest rate (fixed)	10.50%	10.50%
Filed Notice of Default [Member]
Secured Loan Transactions [Line Items]
Number of secured loans with a filed notice of default | MortgageLoan	2	1

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Loans - Secured Loans by Lien Position in the Collateral (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2017 USD ($) MortgageLoan	Dec. 31, 2016 USD ($) MortgageLoan	Dec. 31, 2015 USD ($)
Loans Details - Secured Loans by Lien Position in the Collateral [Line Items]
Loans - principal (in Dollars)		$ 129,955	$ 94,851	$ 62,740
Liens due other lenders at loan closing (in Dollars)		52,444	35,054
Total debt (in Dollars)		182,399	129,905
Appraised property value at loan closing (in Dollars)		$ 346,738	$ 245,329
Percent of total debt to appraised values (LTV) at loan closing	[1]	55.60%	54.00%
Loans - percent		100.00%	100.00%
Loans | MortgageLoan		72	75
First Trust Deeds [Member]
Loans Details - Secured Loans by Lien Position in the Collateral [Line Items]
Loans - principal (in Dollars)		$ 104,244	$ 73,712
Loans - percent		80.00%	78.00%
Loans | MortgageLoan		48	48
Second Trust Deeds [Member]
Loans Details - Secured Loans by Lien Position in the Collateral [Line Items]
Loans - principal (in Dollars)		$ 22,711	$ 18,139
Loans - percent		17.00%	19.00%
Loans | MortgageLoan		23	26
Third Trust Deeds [Member]
Loans Details - Secured Loans by Lien Position in the Collateral [Line Items]
Loans - principal (in Dollars)		$ 3,000	$ 3,000
Loans - percent		3.00%	3.00%
Loans | MortgageLoan		1	1

[1] Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing, nor does it include decreases or increases of the amount owing on senior liens to other lenders.

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Loans - Secured Loans by Property Type (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2017 USD ($) MortgageLoan	Dec. 31, 2016 USD ($) MortgageLoan	Dec. 31, 2015 USD ($)
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of loans | MortgageLoan		72	75
Loans - principal (in Dollars) | $		$ 129,955	$ 94,851	$ 62,740
Loans - percent		100.00%	100.00%
Single Family [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of loans | MortgageLoan	[1]	41	48
Loans - principal (in Dollars) | $	[1]	$ 48,117	$ 31,773
Loans - percent	[1]	37.00%	34.00%
Multi-family [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of loans | MortgageLoan		4	3
Loans - principal (in Dollars) | $		$ 4,589	$ 1,723
Loans - percent		4.00%	2.00%
Commercial [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of loans | MortgageLoan		26	22
Loans - principal (in Dollars) | $		$ 76,799	$ 59,380
Loans - percent		58.00%	61.00%
Land [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Number of loans | MortgageLoan		1	2
Loans - principal (in Dollars) | $		$ 450	$ 1,975
Loans - percent		1.00%	3.00%

[1] Single family property type as of December 31, 2017 consists of 18 loans with principal of approximately $12,681,000 that are owner occupied and 23 loans with principal of approximately $35,436,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 21 loans with principal of approximately $11,177,000 that were owner occupied and 27 loans with principal approximately of $20,596,000 that were non-owner occupied.

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Loans - Secured Loans by Property Type (Parenthetical) (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) MortgageLoan	Dec. 31, 2016 USD ($) MortgageLoan	Dec. 31, 2015 USD ($)
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	72	75
Loans - principal (in Dollars) | $	$ 129,955,000	$ 94,851,000	$ 62,740,000
Single Family Property-Owner Occupied [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	18	21
Loans - principal (in Dollars) | $	$ 12,681,000	$ 11,177,000
Single Family Property-NonOwner Occupied [Member]
Loans Details [Line Items]
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan	23	27
Loans - principal (in Dollars) | $	$ 35,436,000	$ 20,596,000

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Loans - Secured Loans Distributed within California (Details) - USD ($) $ in Thousands		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 129,955	$ 94,851	$ 62,740
Loans - percent		100.00%	100.00%
San Francisco [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 26,206	$ 7,204
Loans - percent		20.20%	7.60%
Contra Costa [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 16,856	$ 16,863
Loans - percent		13.10%	17.70%
San Mateo [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 15,506	$ 11,267
Loans - percent		11.90%	11.90%
Alameda [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 11,730	$ 6,626
Loans - percent		9.00%	7.00%
Santa Clara [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 6,873	$ 9,938
Loans - percent		5.30%	10.50%
Solano [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 2,875	$ 1,875
Loans - percent		2.20%	2.00%
Marin [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 1,597	$ 849
Loans - percent		1.20%	0.90%
Napa [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 569	$ 956
Loans - percent		0.40%	1.00%
San Francisco Bay Area [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)	[1]	$ 82,212	$ 55,578
Loans - percent	[1]	63.30%	58.60%
Sacramento [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 3,300	$ 2,118
Loans - percent		2.40%	2.20%
El Dorado [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 2,044	$ 2,044
Loans - percent		1.60%	2.20%
Santa Cruz [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 769	$ 852
Loans - percent		0.60%	0.90%
Amador [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 754	$ 770
Loans - percent		0.60%	0.80%
Monterey [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 656	$ 4,007
Loans - percent		0.50%	4.20%
Lake [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 296	$ 298
Loans - percent		0.20%	0.30%
Mariposa [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 44	$ 48
Loans - percent		0.10%	0.10%
Calaveras [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)			$ 151
Loans - percent			0.20%
San Benito [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)			$ 94
Loans - percent			0.10%
Other Northern California [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 7,863	$ 10,382
Loans - percent		6.00%	11.00%
Northern California [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 90,075	$ 65,960
Loans - percent		69.30%	69.60%
Los Angeles [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 26,971	$ 21,876
Loans - percent		20.80%	23.00%
Orange [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 6,653	$ 3,765
Loans - percent		5.10%	4.00%
San Diego [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 164	$ 2,464
Loans - percent		0.10%	2.60%
Ventura [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)			$ 271
Loans - percent			0.30%
Los Angeles And Coastal [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 33,788	$ 28,376
Loans - percent		26.00%	29.90%
San Bernardino [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 5,900	$ 124
Loans - percent		4.50%	0.10%
Riverside [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 192	$ 289
Loans - percent		0.20%	0.30%
Kern [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)			$ 102
Loans - percent			0.10%
Other Southern California [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 6,092	$ 515
Loans - percent		4.70%	0.50%
Southern California [Member]
Loans (Details) - Secured Loans by Property Type [Line Items]
Loans - principal (in Dollars)		$ 39,880	$ 28,891
Loans - percent		30.70%	30.40%

[1] Includes Silicon Valley

XML

Loans - Secured Loans Scheduled Maturities (Details) $ in Thousands	Dec. 31, 2017 USD ($) Loan	Dec. 31, 2016 USD ($) Loan	Dec. 31, 2015 USD ($)
Receivables [Abstract]
2018, Loan | Loan	25
2019, Loan | Loan	27
2020, Loan | Loan	10
2021, Loan | Loan	7
2022, Loan | Loan	2
Thereafter, Loan | Loan	1
Total secured loan balance, Loan | Loan	72	75
2018, Principal | $	$ 54,227
2019, Principal | $	65,023
2020, Principal | $	7,035
2021, Principal | $	1,968
2022, Principal | $	933
Thereafter, Principal | $	769
Total secured loan balance, Principal | $	$ 129,955	$ 94,851	$ 62,740
2018, Percent	42.00%
2019, Percent	49.00%
2020, Percent	5.00%
2021, Percent	2.00%
2022, Percent	1.00%
Thereafter, Percent	1.00%
Total secured loan balance, Percent	100.00%

XML

Loans - Secured Loans Summarized by Payment Delinquency (Details) $ in Thousands	Dec. 31, 2017 USD ($) MortgageLoan	Dec. 31, 2016 USD ($) MortgageLoan	Dec. 31, 2015 USD ($)
Past Due
Delinquent loans, number | MortgageLoan	72	75
Loans, amount | $	$ 129,955	$ 94,851	$ 62,740
Past Due 30-89 Days [Member]
Past Due
Delinquent loans, number | MortgageLoan	2	1
Loans, amount | $	$ 3,700	$ 164
Past Due 90-179 Days [Member]
Past Due
Delinquent loans, number | MortgageLoan		1
Loans, amount | $		$ 405
Past Due 180 Days or More [Member]
Past Due
Delinquent loans, number | MortgageLoan	2
Loans, amount | $	$ 7,607
Past Due [Member]
Past Due
Delinquent loans, number | MortgageLoan	4	2
Loans, amount | $	$ 11,307	$ 569
Current [Member]
Past Due
Delinquent loans, number | MortgageLoan	68	73
Loans, amount | $	$ 118,648	$ 94,282

XML

Loans - Secured Loans in Non-Accrual Status (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) MortgageLoan	Dec. 31, 2016 USD ($) MortgageLoan	Dec. 31, 2015 USD ($)
Loans Details Secured Loans In Non-accrual Status [Line Items]
Number of loans | MortgageLoan	72	75
Loans - principal (in Dollars)	$ 129,955	$ 94,851	$ 62,740
Accrued interest	$ 1,209	$ 641
Non-accrual Status [Member]
Loans Details Secured Loans In Non-accrual Status [Line Items]
Number of loans | MortgageLoan	3	1
Loans - principal (in Dollars)	$ 8,585	$ 234
Accrued interest	322	2
Foregone interest	64
Principal [Member] | Non-accrual Status [Member]
Loans Details Secured Loans In Non-accrual Status [Line Items]
Loans - principal (in Dollars)	7,834	230
Advances [Member] | Non-accrual Status [Member]
Loans Details Secured Loans In Non-accrual Status [Line Items]
Loans - principal (in Dollars)	$ 429	$ 2

XML

Loans - Secured Loans Designated as Impaired Loans (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2017 USD ($) Loan	Dec. 31, 2016 USD ($) Loan
Secured Loans Designated as Impaired Loans [Abstract]
Principal		$ 7,834	$ 634
Recorded investment	[1]	8,585	656
Impaired loans without allowance		$ 8,585	$ 656
Number of Loans | Loan		3	2

[1] Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.

XML

Loans - Impaired Loans - Average Balances and Interest Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Impaired Loans - Average Balances and Interest Income [Abstract]
Average recorded investment	$ 4,410	$ 720
Interest income recognized	607	27
Interest income received in cash	$ 344	$ 27

XML

Real Estate Owned (REO) - REO, Held for Sale (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reo Held For Sale [Abstract]
Balance, beginning of period	$ 19,782	$ 82,949
Acquisitions		2,265
Dispositions	(13,066)	(65,893)
Improvements/betterments	253	461
Change in net book value	45
Balance, end of period	$ 7,014	$ 19,782

XML

Real Estate Owned (REO) - Additional Information (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) a Property	Dec. 31, 2016 USD ($) Property
Real Estate Owned REO Details [Line Items]
Property purchased at estimated net realizable value | $		$ 2,265,000
Mortgages payable | $	$ 0	$ 0
Non Rental Held For Sale [Member] | Residential Single Family [Member]
Real Estate Owned REO Details [Line Items]
Number of Real Estate Properties	3
Los Angeles [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	42	70
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $	$ 595,000	$ 206,000
Los Angeles [Member] | Condominium Complex [Member] | Property 2 [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		126
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $		$ 862,000
Los Angeles [Member] | Sold [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	36	28
Los Angeles [Member] | Sold [Member] | Condominium Complex [Member] | Property 2 [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		126
Los Angeles [Member] | Rental Property Held For Sale [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	6
San Francisco County [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	8	13
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $	$ 643,000	$ 704,000
San Francisco County [Member] | Sold [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	5	5
San Francisco County [Member] | Rental Property Held For Sale [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	3
Ventura [Member] | Parking Lot [Member]
Real Estate Owned REO Details [Line Items]
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $	$ 71,000
Ventura [Member] | Sold [Member] | Parking Lot [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	3
Ventura [Member] | Acquired [Member] | Parking Lot [Member]
Real Estate Owned REO Details [Line Items]
Number of Real Estate Properties		1
Ventura [Member] | Acquired [Member] | Commercial/Retail Property [Member]
Real Estate Owned REO Details [Line Items]
Number of Real Estate Properties		1
Alameda County [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		4
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $		$ 857,000
Alameda County [Member] | Sold [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		4
Contra Costa [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		29
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $		$ 36,000
Contra Costa [Member] | Condominium Complex [Member] | First Deed of Trust [Member]
Real Estate Owned REO Details [Line Items]
Interest rate percentage on note		5.00%
Note, frequency of periodic payment		monthly
Note, maturity term		18 months
Note, maturity date		Mar. 01, 2018
Contra Costa [Member] | Sold [Member] | Condominium Complex [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property		29
Percentage of Real Estate Sale Price Based On Market Rates		77.00%
Contra Costa [Member] | Rental Property Held For Sale [Member] | Commercial Property [Member]
Real Estate Owned REO Details [Line Items]
Number of Real Estate Properties	1
Amador [Member] | Commercial Property [Member] | First Deed of Trust [Member]
Real Estate Owned REO Details [Line Items]
Interest rate percentage on note		5.00%
Note, frequency of periodic payment		monthly
Note, maturity term		5 years
Note, maturity date		Dec. 01, 2021
Amador [Member] | Sold [Member] | Commercial Property [Member]
Real Estate Owned REO Details [Line Items]
Gains (Losses) on Sales of Other Real Estate (in Dollars) | $		$ 0
Percentage of Real Estate Sale Price Based On Market Rates		70.00%
Number of Real Estate Properties		1
Stanislaus County [Member] | Affiliated Funds [Member]
Real Estate Owned REO Details [Line Items]
Acquired remaining percentage of interest in commercial land		36.00%
Property purchased at estimated net realizable value | $		$ 878,000
Stanislaus County [Member] | Non Rental Held For Sale [Member] | Residential Single Family [Member]
Real Estate Owned REO Details [Line Items]
Area of Real Estate Property (in Acres) | a	14
Fresno County California [Member] | Non Rental Held For Sale [Member] | Residential Single Family [Member]
Real Estate Owned REO Details [Line Items]
Number of Units in Real Estate Property	1
Marin County [Member] | Non Rental Held For Sale [Member] | Residential Single Family [Member]
Real Estate Owned REO Details [Line Items]
Area of Real Estate Property (in Acres) | a	13

XML

Real Estate Owned (REO) - REO, Held for Sale, by Property Type (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Real Estate Acquired Through Foreclosure Or Similar Procedures [Line Items]
REO, held for sale, net book value	$ 7,014	$ 19,782	$ 82,949
Rental Properties Held as Investment [Member]
Real Estate Acquired Through Foreclosure Or Similar Procedures [Line Items]
REO, held for sale, net book value	3,606	16,174
Non-Rental Held as Investment [Member]
Real Estate Acquired Through Foreclosure Or Similar Procedures [Line Items]
REO, held for sale, net book value	3,408	3,608
REO Held as Investment [Member]
Real Estate Acquired Through Foreclosure Or Similar Procedures [Line Items]
REO, held for sale, net book value	$ 7,014	$ 19,782

XML

Real Estate Owned (REO) - Earnings/(Loss) from Rental Operations of the Real Estate Owned (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Professional services	$ 1,052	$ 1,344
Total operations expense	5,431	5,166
Interest on mortgages		1,581
Rental operations, net of mortgage interest	(576)	121
REO Held for Sale [Member]
Rental income	315	4,831
Administration and payroll	91	675
Homeowner association fees	115	384
Professional services	25	113
Utilities and maintenance	472	1,001
Advertising and promotions	1	35
Property taxes	110	748
Other	74	155
Total operations expense	888	3,111
Net operating income	(573)	1,720
Receiver fees	3	18
Rental operations, net	(576)	1,702
Interest on mortgages		1,581
Rental operations, net of mortgage interest	$ (576)	$ 121

XML

Fair Value - Assets and Liabilities Measured at Fair Value on a Non-recurring basis (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans with specific allowance, net for which an adjustment was recorded in the year	$ 0	$ 0
REO acquired through foreclosure during the year	0	0
REO for which a valuation reserve has been recorded in the year	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans with specific allowance, net for which an adjustment was recorded in the year	0	0
REO acquired through foreclosure during the year	0	416
REO for which a valuation reserve has been recorded in the year	1,778	4,445
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans with specific allowance, net for which an adjustment was recorded in the year	0	0
REO acquired through foreclosure during the year	0	0
REO for which a valuation reserve has been recorded in the year	0	0
Estimate of Fair Value Measurement [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans with specific allowance, net for which an adjustment was recorded in the year	0	0
REO acquired through foreclosure during the year	0	416
REO for which a valuation reserve has been recorded in the year	$ 1,778	$ 4,445

XML

Fair Value - Assets and Liabilities Measured at Fair Value on a Non-recurring basis (Parenthetical) (Details) - Fair Value, Measurements, Nonrecurring [Member] - First Mortgage [Member] - USD ($)	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Principal and interest payable on mortgage		$ 926,000
Repayment date of mortgage	2016-06

XML

Commitment and Contingencies, Other Than Loan Commitments - Scheduled Capital Account Withdrawal Requests (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Partners Capital Account Withdrawals [Abstract]
2018	$ 24,247
2019	14,994
2020	8,156
2021	4,779
2022	1,890
Thereafter	68
Total	$ 54,134