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 every Interactive Data File required to be submitted 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 such files).☒ YES ☐ NO

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.

If an emerging growth company, indicate by check mark if the registrant has elected not 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

~~September~~June 30, ~~2020~~2021 (unaudited) and December 31, ~~2019~~2020 (audited)

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
ASSETS
Cash, in banks	$	313		$	4,142		$	2,295		$	364
Loans held for sale		2,331			—
Loan payments in trust								51			116
Loans
Principal		74,970			86,203			72,548			74,080
Advances	164			167				125		164
Accrued interest		968			711			441			716
Prepaid interest		—			(121	)
Loan balances secured by deeds of trust		76,102			86,960			73,114			74,960

Allowance for loan losses		(50	)		(50	)		(50	)		(50	)
Loan balances secured by deeds of trust, net		76,052			86,910			73,064			74,910

Real estate owned (REO), net		8,922			3,252			8,511			8,805

Debt issuance costs, net		82			—			40			67

Other assets, net		53			50
Receivable from related party (Note 3)								14			—
Other assets								64			59
Total assets	$	87,753		$	94,354		$	84,039		$	84,321

LIABILITIES AND PARTNERS' CAPITAL
Accounts payable	$	223		$	15		$	203		$	184
Accrued liabilities		821			550			1,013			882
Line of credit		1,515			—			8,600			2,453
Promissory note to related party (Note 3)		850			—
Payable to related party (Note 3)		77			—			3			—
Mortgages payable		2,449			—			2,449			2,449
Total liabilities		5,935			565			12,268			5,968


Commitments and Contingencies (Note 8)

Partners’ capital
Limited partners’ capital		86,603			98,770			76,087			82,991
General partners’ deficit		(661	)		(689	)		(641	)		(655	)
Total partners’ capital		85,942			98,081			75,446			82,336

Receivable from manager (formation loan)		(4,124	)		(4,292	)		(3,675	)		(3,983	)

Partners’ capital, net of formation loan		81,818			93,789			71,771			78,353

Total liabilities and partners’ capital	$	87,753		$	94,354		$	84,039		$	84,321

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

For the Three and Six Months Ended June 30, 2021 and 2020 ($ in thousands) (unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Revenue
Interest income	$	1,997		$	2,107		$	3,639		$	3,845
Interest expense
Line of credit		(106	)		(13	)		(167	)		(13	)
Mortgages payable		(26	)		(7	)		(51	)		(7	)
Total interest expense		(132	)		(20	)		(218	)		(20	)
Net interest income		1,865			2,087			3,421			3,825

Late fees		31			7			36			13
Gain on sale, loans		—			—			—			—
Total revenue, net		1,896			2,094			3,457			3,838

Provision for (recovery of) loan losses		—			(126	)		(1	)		(126	)

Operations expense
Mortgage servicing fees		283			315			560			638
Asset management fees		75			89			152			181
Costs from Redwood Mortgage Corp.		180			177			354			491
Professional services		232			318			593			610
REO, net (Note 5)		274			21			342			(28	)
Other		28			17			31			17
Total operations expense		1,072			937			2,032			1,909

Net income	$	824		$	1,283		$	1,426		$	2,055

Net income
Limited partners (99%)	$	816		$	1,270		$	1,412		$	2,034
General partners (1%)		8			13			14			21
	$	824		$	1,283		$	1,426		$	2,055

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

~~For the Three and Nine Months ended September 30, 2020 and 2019 ($ in thousands) (unaudited)~~

Three Months Ended September 30

Nine Months Ended September 30

2020

2019

2020

2019

Revenue

Interest income

$
1,574

$
1,815

$
5,419

$
6,124

Interest expense

Line of credit

(15
)

—

(28
)

—

Mortgages payable

(26
)

—

(33
)

—

Total interest expense

(41
)

—

(61
)

—

Net interest income

1,533

1,815

5,358

6,124

Late fees

41

11

54

29

Gain on sale, loans

—

38

—

38

Total revenue, net

1,574

1,864

5,412

6,191

Recovery of loan losses

(8
)

(1,613
)

(134
)

(1,613
)

Operations expense

Mortgage servicing fees

286

330

924

1,086

Asset management fees

84

187

265

408

Costs from Redwood Mortgage Corp.

185

439

676

1,067

Professional services

275

347

885

748

REO, net (Note 5)

51

187

23

249

Other

1

(5
)

18

13

Total operations expense

882

1,485

2,791

3,571

Net income

$
700

$
1,992

$
2,755

$
4,233

Net income

Limited partners (99%)

$
693

$
1,972

$
2,727

$
4,191

General partners (1%)

7

20

28

42

$
700

$
1,992

$
2,755

$
4,233

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

										Limited			General			Total
										Partners’			Partners’			Partners’
	Limited			General			Total			Capital			Capital (Deficit)			Capital
	Partners’			Partners’			Partners’
	Capital			Capital (Deficit)			Capital
Balance, June 30, 2020	$	90,537		$	(668	)	$	89,869
Balance, March 31, 2021										$	79,402		$	(649	)	$	78,753
Net income		693			7			700			816			8			824
Distributions		(457	)		—			(457	)		(394	)		—			(394	)
Withdrawals		(4,170	)		—			(4,170	)		(3,737	)		—			(3,737	)
Balance, September 30, 2020	$	86,603		$	(661	)	$	85,942
Balance, June 30, 2021										$	76,087		$	(641	)	$	75,446

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

										Limited			General			Total
										Partners’			Partners’			Partners’
	Limited			General			Total			Capital			Capital (Deficit)			Capital
	Partners’			Partners’			Partners’
	Capital			Capital (Deficit)			Capital
Balance, June 30, 2019	$	108,998		$	(712	)	$	108,286
Balance, March 31, 2020										$	94,142		$	(681	)	$	93,461
Net income		1,972			20			1,992			1,270			13			1,283
Distributions		(569	)		—			(569	)		(442	)		—			(442	)
Withdrawals		(5,823	)		—			(5,823	)		(4,433	)		—			(4,433	)
Balance, September 30, 2019	$	104,578		$	(692	)	$	103,886
Balance, June 30, 2020										$	90,537		$	(668	)	$	89,869

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

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Nine Months Ended September 30

2020

2019

Operating Activities

Interest income received

$
4,879

$
5,735

Late fees

54

29

Operations expense

(2,514
)

(2,858
)
Total cash provided by operating activities

2,419

2,906

Investing Activities

Loans

Principal collected - secured

7,441

56,346

Loan transferred to related mortgage fund

2,297

—

Loans sold to non-affiliate, net

—

7,832

Loans funded

(3,775
)

(52,838
)
Recovery of loan losses

134

1,613

Advances made on loans

(62
)

(91
)
Total - Loans

6,035

12,862

REO - sales proceeds, net

186

—

Total cash provided by investing activities

6,221

12,862

Financing Activities

Partners' capital

Partner withdrawals

(13,494
)

(18,860
)
Partner distributions

(1,400
)

(1,765
)
Early withdrawal penalties

168

323

Cash distributions to partners, net

(14,726
)

(20,302
)
Borrowings - draws on line of credit

1,515

—

Borrowings - debt issuance costs - line of credit

(108
)

—

Borrowings - promissory note to related party

850

—

Cash from borrowings

2,257

—

Total cash used in financing activities

(12,469
)

(20,302
)
Net decrease in cash

(3,829
)

(4,534
)
Cash, beginning of period

4,142

13,607

Cash, end of period

$
313

$
9,073

	Six Months Ended June 30
	2021			2020
Operating activities
Interest income received	$	3,913		$	3,318
Interest expense		(127	)		—
Late fees and other loan income		102			13
Operations expense		(1,667	)		(1,857	)
Total cash provided by operating activities		2,221			1,474

Investing activities
Loans
Loans funded		(15,536	)		(1,500	)
Principal collected		13,282			4,572
Loan transferred from related mortgage fund		(1,371	)		—
Loans transferred to related mortgage fund		4,672			2,297
Loans sold to non-affiliate		485			—
Advances received from (made on) loans		39			(48	)
Recovery of loan losses		—			126
Total - Loans		1,571			5,447

REO - sales proceeds, net		—			186
Total cash provided by investing activities		1,571			5,633

Financing activities
Partners' capital
Partner withdrawals, net of early withdrawal penalties		(7,462	)		(9,197	)
Partner distributions		(773	)		(943	)
RMC payments - formation loan		227			—
Cash distributions to partners, net		(8,008	)		(10,140	)
Line of credit
Advances		12,447			—
Repayments		(6,300	)		—
Debt issuance costs		—			(108	)
Cash provided by (used in) line of credit		6,147			(108	)
Total cash (used in) financing activities		(1,861	)		(10,248	)
Net increase (decrease) in cash		1,931			(3,141	)
Cash, beginning of period		364			4,142
Cash, end of period	$	2,295		$	1,001

Non-cash investing activity includes $2,331,000 for the nine months ended September 30, 2020 for loans transferred to held for sale. There were no loans transferred to held for sale during the nine months ended September 30, 2019.

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

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

	Nine Months Ended September 30						Six Months Ended June 30
	2020			2019			2021			2020
Cash flows from operating activities
Net income	$	2,755		$	4,233		$	1,426		$	2,055
Adjustments to reconcile net income to net cash provided by operating activities
(Gain) on sale, loans		—			(38	)
Recovery of loan losses		(134	)		(1,613	)		—			(126	)
Amortization of debt issuance costs		27			—			27			13
REO – gain on disposal		(68	)		—			(79	)		(68	)
REO – impairment (recovery)		—			210
Change in operation assets and liabilities
REO – impairment								294			—
Change in operating assets and liabilities
Loan payments in trust								65			—
Accrued interest		(420	)		(52	)		275			(407	)
Prepaid interest		(121	)		(337	)		—			(121	)
Receivable from related party								(14	)		—
Other assets		—			23			(5	)		(174	)
Accounts payable and accrued liabilities		303			162			229			267
Payable to related parties		77			318
Payable to related party								3			35
Net cash provided by operating activities	$	2,419		$	2,906		$	2,221		$	1,474

Supplemental disclosures of cash flow information - REO
Non-cash investing activities
Real estate acquired by foreclosure	$	5,787		$	—
Mortgage assumed at foreclosure		(2,449	)		—
Mortgage interest, property taxes, and other liabilities assumed at foreclosure		(175	)		—
Real estate (REO) acquired by foreclosure							$	—		$	5,787
Mortgages payable (REO acquired by foreclosure)								—			(2,449	)
Mortgage payable interest, property taxes, and other liabilities assumed at foreclosure								—			(175	)
Settlement of loan and interest receivable net of liabilities assumed at foreclosure		(3,163	)		—			—			(3,163	)

Non-cash financing activity for the six months ended June 30, 2021 and 2020 includes early withdrawal penalties of approximately $81,000 and $127,000, respectively. Early withdrawal penalties are applied as a reduction to the formation loan.

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

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 partnership is externally managed by Redwood Mortgage Corp. (“RMC” or “the manager”). The general partners are RMC and Michael R. Burwell (Burwell), the President, Secretary and Treasurer of RMC and its principal shareholder. RMC provides the personnel and services necessary to conduct the business as RMI VIII has no employees of its own. The general partners are entitled to one percent (1%) of profits or loss of the partnership. The mortgage loans the partnership funds and/or invests in, are arranged and generally are serviced by RMC.

In the opinion of management of ~~Redwood Mortgage Corp. (RMC or the manager),~~RMC, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the consolidated financial information included therein. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the partnership’s Form 10-K for the year ended December 31, ~~2019~~2020 filed with the U.S. Securities and Exchange Commission (SEC). The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the operating results to be expected for the full year.

~~Redwood Mortgage~~The rights, duties, and powers of the limited partners and general partners of the partnership are governed by the Limited Partnership Agreement (“Partnership Agreement”). Limited partners representing a majority of the outstanding units may, without the consent of the general partners, vote to: (i) dissolve the partnership; (ii) amend the Partnership Agreement subject to certain limitations; (iii) approve or disapprove the sale of all or substantially all of the assets of the partnership; and (iv) remove or replace one or all of the general partners. 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 following is a summary of certain provisions of the Partnership Agreement and is qualified in its entirety by the terms of the Partnership Agreement itself. Limited partners should refer to the Partnership Agreement for complete disclosure of its provisions.

The manager is responsible for managing the business and affairs of RMI VIII, 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 is entitled to fees and reimbursements of qualifying costs as specified in the Partnership Agreement.

Net income (losses) are allocated among the limited partners according to their respective capital accounts after one percent (1%) of the net income (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 partnership tax shelter investments. Federal and state income taxes are the obligation of the partners, other than the annual California franchise tax and the California LLC cash receipts taxes paid by the partnership’s subsidiaries.

The partnership’s net income, cash available for distribution, and net-distribution rate fluctuates depending on:

A California Limited Partnership ~~(RMI VIII or the partnership), was formed in 1993~~

Notes 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.~~ Consolidated Financial Statements

The ongoing sources of funds for loans are the proceeds (net of withdrawals from ~~partner~~limited partners’ capital accounts ~~subject to limitations,~~ and ~~operating expenses)~~operation expense) from:

~~The mortgage loans the partnership funds and/or invests in, are arranged and generally are serviced by RMC.~~

The ongoing ability of the partnership to source funds for loans from one or more of the ongoing sources above may be adversely affected by the COVID-19 pandemic and by the social and governmental responses and severe economic disruptions caused by the pandemic (see COVID-19, below).

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. The partnership intends to hold until maturity the loans in which it invests and does not presently intend to invest in mortgage loans primarily for the purpose of reselling such loans in the ordinary course of business; however, the partnership may sell mortgage loans (or fractional interests therein) when the manager determines that it appears to be advantageous for the partnership to do so, based upon then current interest rates, the length of time that the loan has been held by the partnership, the partnership’s credit risk and concentration risk and the overall investment objectives of the partnership. Loans sold to third parties may be sold for par, at a premium or, in the case of non-performing or under performing loans, at a discount. Partnership loans may be sold to third parties or to the manager or its related mortgage funds; however, any loan sold to the manager or a related mortgage fund thereof will be sold for a purchase price equal to the greater of (i) the par value of the loan or (ii) the fair market value of the loan. The manager will not receive commissions or broker fees with respect to loan sales conducted for the partnership; however, selling loans will increase partnership capital available for investing in new loans for which the manager will earn brokerage fees and other forms of compensation.

Given the ongoing and ~~powers~~dynamic nature of the ~~limited partners~~impacts on peoples’ lives, the healthcare system and ~~general partners of~~its resources, and the ~~partnership are governed by the Limited Partnership Agreement (Partnership Agreement).~~

~~The following is a summary of certain provisions of the Partnership Agreement~~economy and ~~is qualified in its entirety by the terms of the Partnership Agreement itself. Limited partners should refer to the Partnership Agreement for complete disclosure of its provisions.~~

The partnership is externally managed by RMC, a general partner. The general partners are RMC and Michael R. Burwell (Burwell), an individual. The manager is solely responsible for managing the business and affairs of RMI VIII, 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 the business as RMI VIII has no employees of its own. The general partners are entitled to one percent (1%) of profits or loss of the partnership. In 2010, and continuing until December 31, 2019, RMC assigned its right to two-thirds of the one percent (0.66%) of RMI VIII’s income or losses to Burwell in exchange for Burwell assuming one hundred percent (100%) of the general partners’ equity deficit. This agreement expired January 1, 2020 and was not extended.

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

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.

~~In March 2020,~~markets since the World Health Organization declared the COVID-19 outbreak a ~~pandemic. Since that time,~~pandemic, it is not possible to predict or estimate the ~~coronavirus has spread throughout~~impact - for the ~~United States, including in~~remainder of 2021 and the ~~California regions and markets in which~~years beyond - of the COVID-19 outbreak on the financial condition, the liquidity or the results of operations of the partnership. While the partnership ~~lends. In response, national, state,~~has not incurred material disruptions to date, the rapid developments and ~~local governments have taken, and are expected~~fluidity of COVID-19 may cause the manager to continue to ~~take, various actions,~~adjust its business operations, lending parameters, and collection practices and processes for past-due loans. The majority of borrowers have continued to make monthly payments and/or negotiated in good faith resulting in extensions on terms consistent with the original loan terms. No loan losses were incurred in the first six months of 2021 and none were incurred in 2020.

During 2020 and to a lesser extent in 2021, as a result of the disruptions caused by the pandemic, the partnership has experienced a manageable increase in requests for loan extensions, payment delinquencies and requests for forbearance agreements from borrowers. Market conditions, regulatory restrictions on our enforcement rights with respect to loans in default, delays in foreclosure proceedings, including moratoriums in some jurisdictions, and backlogs in the ~~passage of laws~~courts has increased the timeline to resolve non-performing and ~~regulations, on a wide array of topics, in an attempt to slow the spread of COVID-19. On March 4,~~/or maturing loans.

During 2020, the Governor of California declared a State of Emergency related to the COVID-19 outbreak, followed by, among other administrative or executive orders for the purpose of ensuring that COVID-19 remains controlled“Coronavirus Aid, Relief, and ~~that the residents and visitors in California remain safe and secure. These restrictions have substantially limited the operation of non-essential businesses~~Economic Security (“CARES”) Act” and the ~~activities~~“Consolidated Appropriations Act (“CAA”) of ~~individuals.~~2020” were signed into law. The ~~COVID-19 pandemic~~CARES Act includes various measures to provide relief to companies and ~~these restrictions and operating protocols have had a significant adverse effect on~~ the ~~global, US, and California economies and have caused significant disruption to~~CAA extended some of the ~~financial and real estate markets. The restrictions and economic conditions caused by COVID-19 have~~CARES Act programs along with adding new stimulus provisions. In March 2021, the American Rescue Plan Act of 2021 was also ~~caused record unemployment nationwide as well as a significant number of layoffs and furloughs in the regions and communities in~~passed which ~~the partnership lends. Despite the improvement in the economy in recent months, economic activity remains far below its pre-pandemic level and unemployment remains elevated.~~

~~The ultimate effect of COVID-19 on the California real estate markets and broader economy is not known nor is the ultimate length of time California~~further extended several CARES Act relief programs and other ~~regions will be subject~~assistance. The manager has not taken and does not expect to take advantage of any measures under the ~~restrictions described and their accompanying effects.~~CARES Act, the CAA or the American Rescue Plan Act.

Some states and regions have begun to ease prior restrictions which may improve economic and market conditions; however, the easing of these restrictions has resulted in recent increases in COVID-19 cases and deaths, requiring reinstatement of prior restrictions and the prolonging of the COVID-19 crisis. On August 28, 2020 California issued a "Blueprint for a Safer Economy" which describes a tiered approach to relaxing and tightening restrictions on activities based on specified criteria and as permitted by the order based on county health conditions and circumstances.

As of September 30, 2020, the partnership has not experienced a significant increase or decrease in the number of borrowers delaying payments compared to June 30, 2020 or December 31, 2019. The requests for delay in payments or payment relief may not be indicative of requests in any future period. A worsening of future cash flows from borrower missed or delayed payments could result in the partnership experiencing an increase in loans being designated non-accrual and an increase in payments in arrears and possibly foreclosures. However, as the partnership generally lends at loan to value ratios below 70%, increases in payments in arrears has not increased the credit risk on the loans, and therefore based on the partnership’s assessment of the value of real estate collateralizing its loans, there has not been an increase in the allowance for loan losses during the three and nine months ended September 30, 2020.

The continued spread of COVID-19 or any other similar outbreaks in the future and the continued impact on social interaction, economies and financial markets may have significant adverse effects on (i) California real estate markets and thereby the partnership’s business, financial condition and result of operations due to the possibility of some borrowers having a reduced capacity and/or commitment to make principal and interest payments (ii) a decrease in the volume of loans funded and (iii) a decline in the values of the California real properties that serve as collateral for the loans. Declines in the value of real estate may lead to increases in the allowance for loan losses and increases in the valuation allowance for REO. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which may lower the interest rate charged by banks and other competitors of the manager for real estate secured loans and which may reduce loan originations and increase loan payoffs. Such outcomes would negatively affect interest income and, therefore, earnings, financial condition and results of operations of the partnership. Potential other issues and risks resulting from the COVID-19 pandemic include:

Given the ongoing and dynamic nature of the circumstances, it is not possible to predict or estimate the ultimate impact of the coronavirus outbreak on the financial condition or results of operations and liquidity of the partnership for the remainder of 2020. While the partnership has not incurred material disruptions thus far, the rapid developments and fluidity of COVID-19 may cause the manager to adjust its lending parameters and investment strategy. The manager is continuing to monitor this situation and will adjust its response in concert with federal, state and local health officials and governmental authorities to protect the health and safety of its employees and to respond to changes in the real estate markets that it serves.

On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” was signed into law. The manager continues to examine the impact that the CARES Act may have on the partnership’s business. Although the manager does not expect the CARES Act to have a direct impact on the partnership, it may have an indirect impact on the partnership’s borrowers and its manager. At the time of issuance of the partnership’s consolidated financial statements, the manager is unable to estimate the impact that the CARES Act will have on the partnership’s financial condition, results of operations, or liquidity for the remainder of 2020.

Wildfires have occurred in recent years in different regions of California, and related flooding and mudslides have also occurred, including in the counties where the partnership holds real estate collateral as security for its loans. The most destructive of the recent wildfires, which have burned thousands of acres and destroyed thousands of homes and structures, have originated in wildlands adjacent to urban areas. Although the recent natural disasters, including the Woodward, Glass, Complex and other fires did not directly affect the partnership, wildfires such as these could pose a threat to the real estate collateral that the partnership holds as security for its loans and adversely affect the demand for loans.

At the time of their subscription to the partnership, limited partners elected either to receive monthly, quarterly or annual cash distributions from the partnership, or to compound income in their capital account. If an investor initially elected to receive monthly, quarterly or annual distributions, such election, once made, is irrevocable. If the investor initially elected to compound income in their capital account, in lieu of cash distributions, the investor may, after three (3) years, change the election and receive monthly, quarterly or annual cash distributions. Income allocable to limited partners who elect to compound income in their capital account will be retained by the partnership for making further loans or for other proper partnership purposes and such amounts will be added to such limited partners’ capital accounts. The percentage of limited partners electing distribution of allocated net income, by weighted average to total partners’ capital was approximately ~~62% and~~ 61% at ~~September~~June 30, ~~2020~~2021 and ~~2019, respectively.~~2020.

To determine the amount of cash to be distributed in any month, the manager relies in part on its forecast of the partnership’s full-year net income, which takes into account the difference between the forecasted net income for the remainder of the year and actual results in the year to date and the requirement to maintain cash to meet the partnership’s obligations.

There are substantial restrictions on transferability of units of partnership interest, and there is no established public trading and/or secondary market for the units. 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~~4 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 a limited right of accelerated 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. The general partner is under no obligation to sell loans from the portfolio in order to honor withdrawal requests, and the program can be restricted or suspended at any time. Cash flow is considered to be available only after all current partnership expenses have been paid (including compensation to the general partners and related mortgage funds) and adequate provision has been made for the payment of all periodic cash distributions on a pro rata basis which must be paid to limited partners who elected to receive such distributions upon subscription for units. Per the Partnership Agreement, 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. Notwithstanding this 20% limitation, the general partners have the discretion to further limit the percentage of total limited partners’ capital accounts that may be withdrawn in order to comply with the safe harbor provisions of the regulations under Section 7704 of the Internal Revenue Code of 1986, as amended, to avoid the partnership being taxed as a corporation. If notices of withdrawal in excess of these limitations are received by the general partners, the priority of distributions among limited partners is determined as follows: first to those limited partners withdrawing capital accounts according to the 20 quarter or longer installment liquidation period, then to benefit plan investors withdrawing capital accounts after five years over ~~four~~4 quarterly installments, then to executors, heirs, and other administrators withdrawing capital accounts upon the death of a limited partner and finally to all other limited partners withdrawing capital accounts. Except as provided above, withdrawal requests will be considered by the general partners in the order received.

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

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.

Certain reclassifications, not affecting previously reported net income or total partners’ capital, have been made to the previously issued consolidated financial statements to conform to the current period presentation.

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 owned, at acquisition and subsequently. Actual results could differ materially from these estimates.

GAAP defines fair value as the 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 (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) 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.

The fair value of real property 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~~3 approaches to estimating value: 1) market-comparables or sales approach; 2) cost to replace; and 3) capitalized cash flows or income 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~~including the ~~current use); determining~~consideration of adjustments made for any attributes specific to 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).~~real property.

Management has the requisite familiarity with the real estate markets it lends in ~~generally~~ and of the specific 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.

~~At September 30, 2020, substantially all~~Certain of the partnership’s cash balances in banks exceed ~~the federal depository insurance limit~~federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit worthiness/investment grade credit rating. See Note 7 (Line of Credit) for compensating balance arrangements.

Performing loans are carried at amortized cost, which is generally equal to 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower. For performing loans, interest is accrued daily on the principal plus advances, if any.

Non-performing loans (i.e., loans with a payment in arears) less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Non-performing loans are placed on non-accrual status if 180 days delinquent ~~(or 90 days past maturity without making monthly interest payments)~~ or earlier if management determines 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 for accounting purposes only; 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. Late fees are recognized in the period received.

The partnership may fund a specific loan net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. Any interest reserve is amortized over the period that the amount is prepaid. 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.

In the normal course of the partnership’s operating activities, performing loans that are maturing or have matured may be renewed at then current market rates of interest and terms for new loans. ~~Such renewals are not designated as impaired.~~

From time to time, the manager negotiates and enters into loan modifications with borrowers whose loans are delinquent (i.e., non-performing). If a borrower is experiencing financial difficulties and a loan modification were to result in an economic concession to the borrower (i.e., a significant delay or reduction in cash flows compared to the original note), the modification is deemed a troubled debt restructuring (TDR).

In March 2020, various federal regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by the Coronavirus. The interagency statement was effective immediately and impacted accounting for loan modifications. The agencies confirmed with the staff of the Financial Accounting Standards Board (FASB) that short-term modifications made on a good faith basis in response to COVID- 19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

The partnership funds loans with the intent to hold the loans until maturity. From time to time the partnership may sell certain loans when the manager determines it to be in the best interest of the partnership. Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. Loans classified as held for sale are carried at the lower of cost or fair value. ~~No loss has been recorded upon reclassification~~

Pursuant to ~~held~~California regulatory requirements borrower payments are deposited into a trust account established by RMC with an independent bank and are presented on the balance sheet as “Loan payments in trust”. Funds are disbursed to the partnership as collected which can range from same day for ~~sale as the fair value is in excess of the cost. The loans held~~wire transfers and up to two weeks after deposit for ~~sale at September~~checks.

Loans and the related accrued interest and advances (i.e., the loan balance) are analyzed on a periodic basis for ultimate recoverability. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the net realizable value (i.e., fair value less the cost to sell) of the collateral, net of any senior liens, exceeds the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon.

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~~An insignificant delay or insignificant shortfall in ~~management’s periodic analysis~~the amount of ~~recoverability.~~ payments does not constitute non-performance with the contractual terms of the original loan agreement if the manager expects to collect the amounts due including interest accrued at the contractual interest rate for the period of delay. In determining the probability that the borrower will not substantially perform according to the terms of the original loan agreement, the manager considers the following:

Payments on loans designated as impaired ~~loans~~ are applied to late fees, then to the accrued interest, then to advances, and lastly to principal.

For loans that are deemed to be collateral dependent for repayment, a provision for loan losses is recorded to adjust the allowance for loan losses (principal and/or recorded interest) in 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 costs to sell ~~in arriving at net realizable value~~ and net of any senior ~~loans.~~debt and claims.

The partnership charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible. Any amounts collected after a charge off is deemed a recovery of loan losses.

At If the loan goes to foreclosure, ~~any excess of~~an updated appraisal is ordered and the recorded investment in the loan ~~(accounting basis) over~~is adjusted to the net realizable value of the ~~collateral~~REO to be acquired. The adjustment is ~~charged against~~made to the specific reserve in the allowance for loan losses by a charge or a credit to the provision for loan losses.

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 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.

Debt issuance costs are the fees and commissions incurred in the course of obtaining a line of credit for services from banks, law firms and other professionals and are amortized on a straight-line basis, which approximates the interest method, as interest expense over the term of the line of credit.

The FASB issued an Accounting Standards Update ~~(ASU)~~(“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)~~(“CECL”) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use not only historical trends and current conditions, but must also consider 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. The ASU is effective for smaller reporting companies for interim and annual reporting periods in 2023.

RMI VIII invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral. The real estate secured programs and low loan-to-value ratios have caused ~~RMC~~the partnership to expect that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial ~~position of the partnership.~~position. However, the impact, if any, upon adoption will be dependent upon the facts and circumstances relating to ~~our~~the partnership’s loans at that date.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary optional expedients for various agreements and contracts that utilize the London Interbank Offered Rate (LIBOR) as the benchmark reference rate. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. As the guidance in ASU 2020-04 is intended to assist entities during the global market-wide reference rate transition period, it is in effect from March 12, 2020 through December 31, 2022. ~~RMC~~The partnership is currently evaluating the impact of the potential discontinuance of LIBOR in relation to the partnership’s line of credit and has not yet adopted the optional relief.

~~The general partners are entitled to monthly fees for managing the partnership’s loan portfolio.~~ The Partnership Agreement provides for fees as compensation to the manager and for reimbursement of qualifying expenses, as detailed below.

The manager acting as servicing agent with respect to all loans is entitled to receive a servicing ~~fees~~fee 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.

The general partners are entitled to 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).

The manager is entitled to request reimbursement ~~by the partnership~~ for operations expense incurred on behalf of ~~the partnership,~~RMI VIII, including without limitation, RMC’s personnel and non-personnel costs incurred for qualifying business activities, including investor services, accounting, tax and

data processing, postage and out-of-pocket general and administration expenses. ~~Certain of these qualifying~~Qualifying personnel/compensation costs (e.g., postage) can be tracked by RMC as specifically attributable to the partnership. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g., by the partnership’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are ~~allocated first based on~~tracked by business activity, and then costs of qualifying activities are allocated to ~~the partnership on a~~RMI VIII pro-rata ~~basis~~ based on the percentage of RMI VIII’s limited partners’ capital to the total capital of all related mortgage funds managed by RMC. ~~The decision to request reimbursement of any~~Certain other non-personnel, qualifying ~~operating~~costs such as postage and out-of-pocket general and administrative expenses ~~is made~~can be tracked by RMC ~~at its sole discretion.~~as

specifically attributable to RMI VIII; other non-personnel, qualifying costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, occupancy, and insurance premiums) are allocated pro-rata based on the percentage of RMI’s members’ capital to total capital of the related mortgage funds managed by RMC.

~~- Brokerage commissions, loan originations -~~For fees in connection with the review, selection, evaluation and negotiation of loans (including extensions), 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 to RMC, and thus are not ~~recorded~~an expense of the partnership. Loan brokerage commissions paid by the ~~partnership~~borrowers to RMC approximated $98,000 and ~~approximated $218,000 and $695,000~~$44,000 for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively and ~~$295,000~~$263,000 and ~~$1,138,000~~$121,000 for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

- ~~Other fees –~~ RMC receives fees for processing, notary, document preparation, credit investigation, reconveyance and other mortgage related services. 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 transferred by executed assignment, in-part or in-full, between the related mortgage funds at par. During the nine months ended September 30, 2020, the partnership transferred one performingFormation loan in-full to Redwood Mortgage Investors IX, LLC, a related mortgage fund, at par value, which approximates fair value, of approximately $2,297,000. The partnership received cash for the transfer and has no continuing obligation or involvement with the assigned loan. No loans were transferred during the nine months ended September 30, 2019.

Commissions for sales of limited partnership units paid to broker-dealers ~~(B/~~(“B/D sales ~~commissions)~~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.” Since its inception, the ~~partnership had made such~~partnership’s advances ~~of approximately~~totaled $22,567,000, of which ~~approximately $4,124,000 remain~~$3,675,000 remains outstanding onat June 30, 2021.

~~RMC will repay the formation loans~~ principally from loan brokerage commissions earned on loans, early withdrawal penalties on partner withdrawals and other fees paid by the partnership. Since RMC will use the proceeds from loan brokerage commissions on loans to repay the formation loans and, if both or either one of the initial general partners is removed as a general partner by the vote thereafter designated, and if such successor or additional general partner(s) begins using any other loan brokerage firm for the placement of loans, RMC will be immediately released from any further obligation under the formation loans (except for a proportionate share of the principal installment due at the end of that year). In addition, if both of the general partners are removed, no successor general partners are elected, the partnership is liquidated and RMC is no longer receiving any payments for services rendered, the debt on the formation loans shall be forgiven and RMC will be immediately released from any further obligations under the formation loans.

The formation loan ~~activity~~transactions for the ~~nine~~six months ended ~~September~~June 30, ~~2020 is summarized in the following table ($ in thousands).~~

~~RMC is repaying the formation loan in forecasted annual installments of principal, without interest, of $650,000, less early withdrawal penalties, and a final payment of $392,000 in 2026.~~

~~Withdrawals of limited partners’ capital for the three and nine months ended September 30, 2020 and 2019~~2021 are presented in the following table ($ in thousands).

~~Scheduled withdrawals of limited partners’ capital as of September 30, 2020 are presented in the following table ($ in thousands).~~

RMC is repaying the formation loan such that the formation loan is paid by December 31, 2026. Beginning December 31, 2020, RMC will make quarterly payments of principal, without interest, of approximately $162,500, less early withdrawal penalties until such time – in the opinion of the manager - as the market uncertainties resulting from the COVID-19 pandemic are substantially resolved and loan brokerage commissions earned by the manager on new loan originations return to pre-pandemic levels. Annual payments of $650,000 are expected to resume by December 2022.

Withdrawals of limited partners’ capital for the three and six months ended June 30, 2021 and 2020 are presented in the following table ($ in thousands).

Scheduled withdrawals of limited partners’ capital as of June 30, 2021 are presented in the following table ($ in thousands).

Scheduled withdrawals of limited partners’ capital of approximately ~~$404,000,~~$745,000, are subject to early withdrawal penalties as the limited partners elected the accelerated payout option as permitted in the Partnership Agreement.

On September 30, 2020, RMI VIII borrowed from Redwood Mortgage Investors IX (RMI IX) $850,000 secured by the net cash flow payable on two mortgage loans totaling approximately $2,331,000 each of which were designated by RMI VIII as held for sale and expected to be sold to a third party purchaser prior to November 30, 2020. Interest on the loan accrued at a rate equal to RMI IX’s pro rata share of the weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November 30, 2020. The promissory note payable to RMI IX was secured by all proceeds payable to RMI VIII upon the sale or repayments of the loans net of any amounts outstanding by RMI VIII on its line of credit secured by the loans. On October 14, 2020, RMI VIII repaid in full the promissory note amount of $850,000 and interest of $2,700. Under the terms of the note, RMI IX is also entitled to a pro rata share of premium realized (i.e., gain on sale net of costs) upon the sale of the held for sale loans if the sale transaction closes following repayment of the promissory note payable to RMI IX.

From time to time, in the normal course of business operations, the partnership may have payables to and/or receivables from related parties. At ~~September~~June 30, 2021, the partnership had a payable to related parties of $2,884 due to the manager, and a receivable from related parties of $13,826 from a related mortgage fund. At December 31, 2020 the payable to related parties ~~balance~~ consisted of accounts payable and cost reimbursements to the manager and related mortgage funds of $3,388, which was offset by a receivable of $5,101 due from the manager and related mortgage funds. The net amount due from the manager and related mortgage funds as of December 31, 2020 totaled $1,713 and is included in other assets on the consolidated balance sheet. The receivable was received from the manager and the payable was paid to the manager in March 2021.

In the ordinary course of business, performing loans may be transferred by executed assignment, in-part or in-full, between the RMC managed mortgage funds at par, which approximates fair value. In the six months ended June 30, 2021, a related mortgage fund transferred to RMI VIII 2 performing loans with aggregate principal of approximately ~~$77,190. All amounts due~~$1,371,000 in-full at par value, which approximates fair value. RMI VIII paid cash for the loans and the related mortgage fund has no continuing obligation or involvement with the loans. There were ~~fully~~0 loans transferred from related mortgage funds in the six months ended June 30, 2020.

In the six months ended June 30, 2021 RMI VIII transferred to a related mortgage fund 5 performing loans with aggregate principal of approximately $4,672,000 in-full at par value, which approximates fair value. In the six months ended June 30, 2020 RMI VIII transferred to a related mortgage fund 1 performing loan with principal of approximately $2,297,000 in-full at par value, which approximates fair value. The related mortgage fund paid ~~in November 2020.~~cash for the loans and RMI VIII has no continuing involvement with the 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 are purchased at par value, which approximates fair value. See Note 3 (General Partners and Other Related Parties) for a description of loans transferred by executed assignments between the related mortgage funds.

As of ~~September~~June 30, ~~2020, 28 (76%)~~2021, 25 loans with principal of ~~the partnership’s 37 loans~~$60,472,016 (representing ~~91%~~83% of the aggregate principal of the partnership’s loan portfolio) have a term of five years or less. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty ~~clause.~~provision.

As of ~~September~~June 30, ~~2020,~~2021, 16 ~~(43%)~~loans with principal of ~~the loans outstanding~~$16,109,242 (representing ~~74%~~22% 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 due at maturity. The remaining loans provide for monthly payments of interest only, with the principal due in full at maturity.

Secured loan transactions for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, are summarized in the following table ($ in thousands).

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the partnership renewed 61 and 125 maturing (or matured) loans with ~~aggregate~~aggregated principal of approximately ~~$16,409,000~~$2,174,000 and ~~$31,486,000,~~$23,035,000, respectively, which are not included in the activity shown in the ~~above table.~~table above. The loans were current and deemed well collateralized (i.e., the LTV for the collateral was within lending guidelines) at the time they were extended.

~~See Note 3 (General Partners and Other Related Parties)~~The partnership funds loans with the intent to hold the loans until maturity, although from time to time the partnership may sell certain loans when the manager determines it to be in the best interest of the partnership.

In January 2021, a loan with principal of approximately $485,000, was sold to an unaffiliated third party, for ~~a description~~an amount that approximated the loan balance at the time of ~~loan transfers by executed assignments to a related mortgage fund.~~sale.

Pursuant to California regulatory requirements borrower payments are deposited into a trust account established by RMC with an independent ~~bank.~~bank and are presented on the balance sheet as “Loan payments in trust”. Funds are disbursed to the partnership as collected which can range from same day for wire transfers and up to two weeks after deposit for checks. ~~Borrower~~Loan payments ~~held~~ in ~~the~~ trust ~~account that are yet to be disbursed to the partnership are not included in the consolidated financial statements. At September~~at June 30, ~~2020, $106,346 of borrower payments made by check, was on deposit in the trust account, all of which was~~2021, were disbursed to the partnership’s account by ~~October 14, 2020 when it was recorded by the partnership. At~~July 19, 2021. Loan payments in trust at December 31, ~~2019, $21,592 of borrower payments made~~2020 were disbursed to the partnership’s account by ~~check, was on deposit in the trust account.~~January 15, 2021.

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

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
Number of secured loans		37			47			33			33
Secured loans – principal	$	74,970		$	86,203		$	72,548		$	74,080
Secured loans – lowest interest rate (fixed)		5.0	%		5.0	%		7.0	%		5.0	%
Secured loans – highest interest rate (fixed)		10.8	%		10.8	%		10.8	%		10.8	%

Average secured loan – principal	$	2,026		$	1,834		$	2,198		$	2,245
Average principal as percent of total principal		2.7	%		2.1	%		3.0	%		3.0	%
Average principal as percent of partners’ capital, net of formation loan		2.5	%		2.0	%		3.1	%		2.9	%
Average principal as percent of total assets		2.3	%		1.9	%		2.6	%		2.7	%

Largest secured loan – principal	$	10,200		$	10,200		$	10,200		$	10,200
Largest principal as percent of total principal		13.6	%		11.8	%		14.1	%		13.8	%
Largest principal as percent of partners’ capital, net of formation loan		12.5	%		10.9	%		14.2	%		13.0	%
Largest principal as percent of total assets		11.6	%		10.8	%		12.1	%		12.1	%

Smallest secured loan – principal	$	47		$	51		$	43		$	46
Smallest principal as percent of total principal		0.1	%		0.1	%		0.1	%		0.1	%
Smallest principal as percent of partners’ capital, net of formation loan		0.1	%		0.1	%		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%		0.1	%		0.1	%

Number of California counties where security is located	15				15			11			14
Largest percentage of principal in one California county		41.7	%		38.2	%		37.4	%		40.0	%

Number of secured loans with a filed notice of default		—			1
Secured loans in foreclosure – principal	$	—		$	2,939

Number of secured loans with prepaid interest		—			2
Prepaid interest	$	—		$	121

As of June 30, 2021, the partnership’s largest loan, with principal of approximately $10,200,000 is secured by an industrial building in the City and County of San Francisco, bears an interest rate of 9.5% and matures on March 1, 2022. As of June 30, 2021, the partnership had 0 commitments to lend outstanding and had 0 construction or rehabilitation loans outstanding.

As of September 30, 2020, the partnership’s largest loan, with principal of approximately $10,200,000, has an interest rate of 9.50%, is secured by an industrial building in San Francisco County, and has a maturity date of December 1, 2020. As of September 30, 2020, the partnership had no outstanding construction or rehabilitation loans and had no commitments to fund construction, rehabilitation or other loans.

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

	September 30, 2020								December 31, 2019								June 30, 2021								December 31, 2020
	Loans		Principal			Percent			Loans		Principal			Percent			Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		27	$	68,029			91	%		31	$	72,621			84	%		26	$	63,114			87	%		24	$	64,286			87	%
Second trust deeds		10		6,941			9			16		13,582			16			7		9,434			13			9		9,794			13
Total principal, secured loans		37	$	74,970			100	%		47	$	86,203			100	%		33		72,548			100	%		33		74,080			100	%
Liens due other lenders at loan closing				16,136								29,817								16,300								15,759
Total debt			$	91,106							$	116,020							$	88,848							$	89,839

Appraised property value at loan closing			$	185,725							$	226,185							$	168,221							$	180,041

Percent of total debt to appraised values (LTV) at loan closing⁽³⁾				54.0	%							55.1	%
Percent of total debt to appraised values (LTV) at loan closing⁽¹⁾																				55.8	%							53.8	%

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

	September 30, 2020						December 31, 2019						June 30, 2021							December 31, 2020
	Loans	Principal		Percent			Loans	Principal		Percent			Loans		Principal		Percent			Loans		Principal		Percent
Single family⁽⁴⁾⁽²⁾	21	$	17,742		24	%	32	$	30,629		36	%		18	$	15,172		21	%		19	$	16,598		22	%
Multi-family	2		7,068	9			2		7,072	7				1		6,300		9			1		6,300		9
Commercial	12		48,275	64			12		48,117	56				14		51,076		70			12		49,682		67
Land	2		1,885	3			1		385	1				—		—		—			1		1,500		2
Total principal, secured loans	37	$	74,970		100	%	47	$	86,203		100	%		33	$	72,548		100	%		33	$	74,080		100	%

The distribution of secured loans within California by counties is presented in the following table ($ in thousands).

	September 30, 2020					December 31, 2019						June 30, 2021					December 31, 2020
	Principal		Percent			Principal			Percent			Principal		Percent			Principal		Percent
San Francisco Bay Area⁽⁵⁾⁽³⁾
San Francisco	$	31,244		41.7	%	$	32,908			38.2	%	$	27,134		37.4	%	$	29,659		40.0	%
San Mateo		17,148		22.9			17,221			20.0			11,317		15.6			16,756		22.6
Alameda													6,242		8.6			823		1.1
Santa Clara		1,600		2.1			6,281			7.3			5,306		7.3			4,600		6.2
Alameda		2,874		3.8			3,349	��		3.9
Napa		—		—			548			0.6
Contra Costa		303		0.4			308			0.3			—		—			302		0.4
Marin		179		0.2			513			0.6			1,659		2.3			917		1.2
		53,348		71.1			61,128			70.9			51,658		71.2			53,057		71.5
Other Northern California
Placer		1,500		2.0			—			—			—		0.0			1,500		2.0
Santa Cruz		511		0.7			1,376			1.6			—		0.0			485		0.7
Stanislaus		555		0.7			—			—
Amador		706		0.9			719			0.8			—		0.0			701		0.9
Mariposa		47		0.1			51			0.1			43		0.1			46		0.1
Monterey		—		—			193			0.2
		3,319		4.4			2,339			2.7			43		0.1			2,732		3.7
Total Northern California		56,667		75.5			63,467			73.6

Northern California Total													51,701		71.3			55,789		75.2
Los Angeles & Coastal
Los Angeles		10,205		13.6			14,623			17.0			10,748		14.9			10,199		13.8
Orange													2,196		3.0			642		0.9
Santa Barbara		2,074		2.8			2,085			2.4			2,063		2.8			2,070		2.8
Orange		644		0.9			648			0.8
Riverside													460		0.6			—		0.0
		12,923		17.3			17,356			20.2			15,467		21.3			12,911		17.5
Other Southern California
San Bernardino		5,380		7.2			5,380			6.2			5,380		7.4			5,380		7.3
		5,380		7.2			5,380			6.2			5,380		7.4			5,380		7.3
Total Southern California		18,303		24.5			22,736			26.4
Southern California Total													20,847		28.7			18,291		24.8
Total principal, secured loans	$	74,970		100.0	%	$	86,203			100.0	%	$	72,548		100.0	%	$	74,080		100.0	%

Secured loans scheduled to mature as of June 30, 2021 are presented in the following table ($ in thousands).

~~Secured loans scheduled to mature as of September 30, 2020 are presented in the following table ($ in thousands).~~

Scheduled maturities are presented based on the most recent in-effect agreement with the borrower, including forbearance agreements. As a result, matured loans at June 30, 2021, for the scheduled maturities table may differ from the same captions in the tables of delinquencies and payments in arrears ~~disclosed below~~ that are based on the ~~notes~~loan terms and do not consider forbearance agreements. For matured loans, the partnership may continue to accept payments while pursuing collection of principal or while negotiating an extension of the loan’s maturity date.

It is the partnership’s experience that the timing of future cash receipts from secured loans will differ from scheduled maturities. Loans may be repaid or renewed before, at or after the contractual maturity date.

~~For matured loans, the partnership may continue to accept payments while pursuing collection of principal or while negotiating an extension of the loan’s maturity date.~~

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

	September 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Loans		Principal		Loans		Principal		Loans		Principal		Loans		Principal
Current		31	$	47,554		43	$	73,893		28	$	64,112		30	$	58,941
Past Due
30-89 days		1		7,996		—		—		1		2,064		—		—
90-179 days		1		3,896		1		5,355		2		588		—		—
180 or more days		4		15,524		3		6,955		2		5,784		3		15,139
Total past due		6		27,416		4		12,310		5		8,436		3		15,139
Total principal, secured loans		37	$	74,970		47	$	86,203		33	$	72,548		33	$	74,080

At June 30, 2021 there was one forbearance agreements in effect with principal of $5,380,000, which is included in the ~~nine months ended September 30,~~table above as 180 or more days past due. At December 31, 2020 ~~the partnership entered into~~there were two forbearance ~~agreements. The first,~~agreements in effect with aggregate principal of $10,735,000, both of which are included in the table above as 180 or more days past due. In June ~~2020 for a~~2021, one loan with principal ~~balance~~ of approximately $5,355,000, which ~~is collateralized by~~had a ~~commercial building~~forbearance agreement in ~~San Mateo County. The loan matured on October 1, 2019~~place and was designated as impaired and in non-accrual status, paid off in full.

No loan forbearance agreements or payment modifications were made during the six months ended June 30, 2021, and none were

in effect at December 31, 2020, that would be deemed troubled debt restructurings.

Non-performing secured loans at June 30, ~~2020. The partnership entered into a forbearance agreement with the borrower~~2021, and December 31, 2020, had principal payments in ~~June 2020 whereby the borrower agreed to resume~~arrears totaling $6,373,000 (5 loans) and $15,139,000 (3 loans), respectively and interest payments in arrears totaling $307,000 and $849,000, respectively. Payments in arrears for non-performing secured loans (i.e., monthly ~~payments of~~ interest and principal payments past due 30 or more days) at June 30, 2021 and December 31, 2020, are presented in the ~~partnership agreed to forgo collection of default interest and defer the maturity date until January~~following tables.

~~The second, in September 2020, for a loan with a principal balance of $5,380,000, which is collateralized by a commercial property in San Bernardino County.~~ The loan matured on July 1, 2020 and was designated impaired at May 30, 2020, and in non-accrual status at September 1, 2020. The partnership entered into a forbearance agreement with the borrower to defer the maturity date until December 1, 2020.

~~No loan payment modifications (or TDRs) were entered into during the nine months ended September 30, 2020 and none were in effect at December 31, 2019.~~

Payments in arrears for non-performing secured loans (i.e., loans past maturity and monthly payments of principal and interest past due 30 or more days) as of September 30, 2020 and December 31, 2019 are presented in the following tables ($ in thousands).

Loans

Principal

Interest⁽⁸⁾

At September 30, 2020

Past maturity

Monthly payments

Past maturity

Monthly payments

Past maturity

Monthly payments

Total payments in arrears

Payments in arrears

30-89 days (1-3 payments)

—

1

$
—

$
—

$
—

$
39

$
39

90-179 days (4-6 payments)

1

—

3,896

—

—

—

3,896

180 or more days (more than 6 payments)⁽⁹⁾

4

—

15,524

—

726

—

16,250

Total past due⁽¹⁰⁾

5

1

$
19,420

$
—

$
726

$
39

$
20,185

	Loans				Principal				Interest⁽⁶⁾
At December 31, 2020	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Past due
30-89 days (1-3 payments)		—		—	$	—	$	—	$	—	$	—	$	—
90-179 days (4-6 payments)		—		—		—		—		—		—		—
180 or more days (more than 6 payments)⁽⁷⁾		3		—		15,139		—		849		—		15,988
Total past due		3		—	$	15,139	$	—	$	849	$	—	$	15,988

Secured loans in non-accrual status are summarized in the following table ($ in thousands).

	September 30,		December 31,
	2020		2019		June 30, 2021		December 31, 2020
Number of loans		4		3		1		3
Principal	$	15,524	$	6,955	$	5,380	$	15,139
Advances		23		25		8		24
Accrued interest		451		184
Accrued interest⁽⁸⁾						—		368
Total recorded investment	$	15,998	$	7,164	$	5,388	$	15,531
Foregone interest	$	384	$	298	$	333	$	582

Non-performing loans are placed on non-accrual status if 180 days delinquent ~~(or 90 days past maturity without making monthly interest payments)~~ or earlier if management determines 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 for accounting purposes only (i.e., foregone interest in the table above); however, previously recorded interest is not reversed.

At ~~September~~June 30, ~~2020, four~~2021, there were 3 loans, with aggregate principal of approximately ~~$15,524,000 were past maturity 180 or more days and were in non-accrual status. At September 30, 2020, one loan, with aggregate principal of approximately $3,896,000~~$992,000 and accrued interest of approximately ~~$30,034 was contractually~~$7,000 which were 90 or more days past due ~~as to principal or interest and~~ not in non-accrual status.

At December 31, ~~2019, three~~2020, there were no loans ~~with aggregate principal of approximately $6,955,000 were past maturity 180~~90 or more days ~~and were in non-accrual status. At December 31, 2019, one loan with a principal of approximately $5,355,000 and accrued interest of approximately $114,000 was 90 days~~ past ~~maturity~~due and ~~was~~ not in non-accrual status. ~~The loan was designated as in non-accrual status as of January 2020.~~

Generally, the partnership has not recorded an allowance for loan losses as all loans have protective equity such that collection is deemed probable for all recorded amounts due on the loan. From time to time, the manager may deem it in the best interest of the partnership to agree to concessions to borrowers to facilitate a sale of collateral or refinance transactions primarily for secured loans in second lien position.

Activity in the allowance ~~for loan losses of $50,000. There was no provision~~ for loan losses for the ~~three or nine~~six months ended ~~September~~June 30, ~~2020. In June~~2021 and 2020 is presented in the partnership recorded a recovery of loan losses of $126,000 from a court order dated June 2020 pursuant to the terms of a judgment dated October 2012 against a borrower/guarantor. The amounts recovered were previously charged off. The funds were receivedfollowing table ($ in ~~July 2020.~~thousands).

Loans designated impaired and any associated allowance for loan losses is presented in the following table ($ in thousands).

Loans designated impaired had an average recorded investment balance, interest income recognized, and interest income received in cash for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and the year ended December 31, ~~2019~~2020 as presented in the following table ($ in thousands).

	September 30,		December 31,
	2020		2019		June 30, 2021		December 31, 2020
Average recorded investment	$	12,078	$	8,160	$	11,010	$	14,231
Interest income recognized		631		298		44		1,271
Interest income received in cash		368		284		224		502

REO transactions and valuation adjustments for the three and ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 are summarized in the following ~~table~~tables ($ in thousands).

Three months ended

Nine months ended

REO

Valuation Allowance

REO, net

REO

Valuation Allowance

REO, net

Balance, beginning of period

$
12,161

$
(3,239
)

$
8,922

$
6,491

$
(3,239
)

$
3,252

Acquisitions from foreclosure

—

—

—

5,787

—

5,787

Dispositions

—

—

—

(117
)

—

(117
)
Balance, September 30, 2020

$
12,161

$
(3,239
)

$
8,922

$
12,161

$
(3,239
)

$
8,922

	Three months ended								Six months ended
	REO		Valuation Allowance			REO, net			REO		Valuation Allowance			REO, net
Balance, beginning of period	$	12,044	$	(3,239	)	$	8,805		$	12,044	$	(3,239	)	$	8,805
Valuation allowance adjustment		0		(294	)		(294	)		0		(294	)		(294	)
Balance, June 30, 2021	$	12,044	$	(3,533	)	$	8,511		$	12,044	$	(3,533	)	$	8,511

The fair value of the REO is adjusted on a nonrecurring basis. When it is determined that the fair value of REO is less than the original cost basis in the property based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions (Level 3 inputs) or if an offer deemed likely to result in a sale is received a 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.

The following transactions ~~closed~~occurred during the ~~nine~~six months ended ~~September~~June 30, 2020.

~~There were no REO transactions or valuation allowance adjustments during the nine months ended September 30, 2019.~~

REO at ~~September~~June 30, ~~2020~~2021 was comprised of ~~five~~5 properties with a carrying value ~~net~~ of approximately ~~$8,922,000.~~$8,511,000. REO is recorded at fair value less costs to sell at acquisition, and subsequently adjusted to the lower of the recorded cost or fair value less cost to sell based on appraisals and analysis by RMC:

The 2 Hollywood Hills single-family residences ~~on separate adjoining parcels with a shared driveway, being marketed by a broker.~~

In June 2020 ~~in conjunction with the REO acquisitions~~ by foreclosure sales ~~(Hollywood Hills), the partnership assumed two~~subject to 2 first mortgages, with aggregate principal outstanding of approximately $2,449,000, and mortgage interest, property taxes, and other liabilities totaling approximately $175,000. The ~~interest rates on the~~ mortgages payable assumed at foreclosure are deemed to be at market rates for the type and location of the securing property, the remaining term of the mortgage note, and the other terms and conditions are deemed to be customary. The mortgages assumed at the foreclosure sales were 201 and 242 days delinquent at the date of foreclosure sale, with accrued interest in arrears of approximately $33,000 and $40,000, and delinquent property taxes of $23,000 and $47,000 (advanced by the first mortgage lender), respectively. Interest in arrears and delinquent property taxes at acquisition are included in accounts payable on the consolidated balance sheet.

Since acquisition, accrued interest of approximately $110,000, and property taxes of approximately $71,000 have been recorded in accrued liabilities on the consolidated balance sheet. The borrower has contested the foreclosure sale, and as of June 30, 2021, has not relinquished possession of the residences.

Mortgages payable at ~~September~~June 30, 2021 and December 31, 2020 are summarized in the following table ($ in thousands).

Lender - summary of terms	2020
Wells Fargo Bank - secured by a first trust deed on a single family residence located in Los Angeles County, matures November 1, 2044, monthly payment $7,754.40, and interest at 4.125% until October 31, 2024; thereafter interest at LIBOR plus 2.25%, Wells Fargo submitted a payoff statement in July 2020.	$	1,453	$	1,453
East West Bank - secured by a first trust deed on a single family residence located in Los Angeles County, matures January 14, 2035, with interest at Prime plus 1% or 4.25% at June 30, 2020. Subsequent to foreclosure, East West Bank submitted a demand to be paid in full in July 2020.		996
East West Bank - secured by a first trust deed on a single family residence located in Los Angeles County, matures January 14, 2035, with interest at Prime plus 1% or 4.25%. This mortgage and all amounts owed thereon were repaid in August 2021.				996
Total mortgages payable	$	2,449	$	2,449

Since acquisition, accrued interest of approximately $34,000 , and property taxes of $17,000 have been recorded in accrued liabilities on the balance sheet. The borrower has contested the foreclosure sale, and at September 30, 2020 had not vacated the residences.

REO, net in operations expense on the consolidated income statements is comprised of the following for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 ($ in thousands).

	Three Months Ended					Nine Months Ended					Three months ended						Six months ended
	2020		2019			2020			2019		2021			2020			2021			2020
Holding costs, net of other income	$	51	$	(23	)	$	91		$	39	$	(59	)	$	(21	)	$	(127	)	$	(40	)
(Gains)/losses on sales		—		—			(68	)		—
Gain on sales												79			—			79			68
Valuation adjustments		—		210			—			210		(294	)		—			(294	)		—
REO, net	$	51	$	187		$	23		$	249	$	(274	)	$	(21	)	$	(342	)	$	28

~~Month-to-month occupancy~~Holding costs, net of other income includes month-to-month rents received of approximately ~~$13,000~~$27,000 and ~~$15,000~~$29,000 for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~approximately $42,000~~$44,000 and ~~$45,000~~$52,000 for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively ~~and sign and storage rents of approximately $11,000 and $43,000~~ for the ~~three months ended September 30, 2020~~homes in Fresno County and ~~2019, respectively,~~the unit-storage lockers and ~~approximately $34,000 and $51,000 for the nine months ended September 30, 2020 and 2019, respectively, are included~~signage in ~~holding costs, net of other income~~.San Francisco county.

Secured loans, performing and non-performing not designated as impaired (Level 3) - 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. Due to the nature of the partnership’s loans and borrowers the fair value of loan balances secured by deeds of trust is deemed to approximate the recorded amount (per the consolidated financial statements) as our loans:

Secured loans, ~~non-performing and~~ designated impaired (Level 3) - The fair value of secured loans ~~non-performing and~~ designated impaired is the lesser of the fair value of the collateral or the enforceable amount of the note. Secured loans designated impaired are collateral dependent because it is expected that the primary source of repayment will not be from the borrower but rather from the collateral. The fair value of the collateral is determined on a nonrecurring basis 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 3 inputs). When the fair value of the collateral exceeds the enforceable amount of the note, the borrower is likely to redeem the note. Accordingly, third party market participants would generally pay the fair value of the collateral, but no more than the enforceable amount of the note.

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 sales comparables (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 and adjusted 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 typically provided in appraisals, or by realtors who specialize in multi-family residential properties. 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~~ Management’s preferred method for determining the fair value of its commercial ~~real estate assets~~buildings is the sale comparison method. Sale comps are typically provided in appraisals, or by realtors who specialize in commercial properties. 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, common areas, and year built.

Management’s secondary method for valuing its commercial buildings 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.

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. When adequate sale comps are not available or reliable ~~rental~~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 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, including a determination of its highest and best use. 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.

In March 2020, RMI VIII entered into a revolving line of credit and term loan agreement and in September 2020 borrowed on the bank line of credit. Activity involving the line of credit during the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~since inception in April~~ 2020 is presented in the following ~~table.~~table ($ in thousands).

~~RMI VIII~~The partnership can borrow up to a maximum principal of $10 million subject to a borrowing base calculation pursuant to a credit and term loan agreement (the loan agreement) with a bank. Amounts under the loan agreement are secured by a first priority security interest in the notes and deeds of trust of the pledged loans in the borrowing base. The loan agreement matures in March ~~13,~~ 2022 when all amounts outstanding are then due. The partnership has the option at the maturity date to convert the then outstanding principal balance on the line of credit to a one-year term loan - for a fee of one-quarter of one percent (0.25%) – thereby extending the maturity date to March ~~13, 2023.~~

Interest on the outstanding principal is payable monthly and accrues at the per annum rate of the greater of (i) five percent (5%) or (ii) the sum of the one-month LIBOR rate plus three and one-quarter percent (3.25%). If the partnership does not maintain the required compensating balance with a minimum daily average of $1.0 million for ~~any day during~~ the calendar quarter, the interest rate automatically increases by one-quarter of one percent (0.25%) above that rate which would otherwise be applicable for the next calendar quarter retroactive to the beginning of the calendar quarter in which the compensating balance is not maintained. ~~Commencing with~~At June 30, 2021 the ~~quarter ended September 30, 2020, for~~interest rate was five percent (5%).

For each calendar quarter during which the aggregate average daily outstanding principal is less than fifty percent (50%) of the maximum principal of $10 million, there is a quarterly unused line fee equal to one-half of one percent (0.50%) per annum of the average daily difference between the average principal outstanding and fifty percent (50%) of the maximum principal of $10 million ($5,000,000). ~~The bank, at its sole discretion, elected to waive the unused line of credit fee for the quarter ended September 30, 2020.~~

The loan proceeds are to be used exclusively to fund secured loans. The loan agreement provides for customary financial and borrowing base reporting by ~~RMI VIII~~the partnership to the lending bank and specifies that ~~RMI VIII~~the partnership shall maintain (i) minimum tangible net worth of $50 million, net of amounts due from related companies; (ii) debt service coverage ratio at all times of not less than 2.00 to 1.00; and (iii) loan payment delinquency of less than ten percent ~~(10%~~(10.0%) ~~on a quarterly basis as of the~~at calendar quarter-end, calculated as the principal of loans with payments over 61-days past due as determined by the lending bank’s guidance, less loan loss allowances, divided by total principal of ~~RMI VIII~~the partnership’s loans. The loan agreement provides that in the event the loan payment delinquency rate exceeds 10.0% as of the end of any quarter, the bank will cease to make any further advances but agrees not to ~~not~~ accelerate repayment of the loan.

At June 30, 2021 and December 31, 2020, aggregate principal of pledged loans was approximately $21,690,000 and $5,371,000, respectively with a maximum allowed advance thereon of approximately $10,000,000 and $3,491,000, respectively.

Debt issuance costs of approximately $108,000 are being amortized over the two-year term of the loan agreement. Amortized debt issuance costs ~~totaled approximately~~included in interest expense approximated $13,000 for each of the three months ended June 30, 2021 and ~~approximately~~2020 and approximated $27,000 and $13,000 for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and are recorded as interest expense.~~respectively.

~~The partnership’s only commitment at September 30, 2020 is to fund the scheduled withdrawals of limited partner capital as presented in the following table ($ in thousands).~~

~~The partnership has contractual obligations to RMC per the Partnership Agreement. See~~ Note 3 (General Partners and Other Related Parties) ~~for a more~~presents detailed discussion onof the partnership’s contractual obligations to ~~RMC.~~RMC and detail of scheduled withdrawals of limited partners’ capital at June 30, 2021.

As of June 30, 2021, the partnership is not involved in any legal proceedings other than those that would be considered part of the normal course of business. 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.~~

~~On October 19, 2020,~~In August 2021, RMI VIII ~~lent $800,000~~paid to RMI IX secured by the net cash flow payable on five mortgage loans totaling approximately $7,535,000 each of which were designated by RMI IX as held for sale and expected to be sold to a third party purchaser prior to November 30, 2020. InterestEast West Bank all amounts owed on the first mortgage loan ~~accrued at~~of approximately $1,092,000, including principal of approximately $996,000, related to the single-family residence located in Los Angeles County.

In July 2021, RMI VIII sold a ~~rate equal to RMI VIII’s pro rata share~~partially completed home subdivision of 36 lots located in Fresno County for $255,000. The net realized amount approximated the adjusted carrying value of the ~~weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November~~REO property at June 30, 2020. The promissory note receivable from RMI IX was secured by all proceeds payable to RMI IX upon the sale or repayments of the loans net of any amounts outstanding by RMI IX on its line of credit secured by the loans. On October 30, 2020, RMI IX repaid in full the promissory note amount of $800,000 and interest of $1,831 to RMI VIII. Under the terms of the note, RMI VIII is also entitled to a pro rata share of premium realized (i.e., gain on sale net of costs) upon the sale of the held for sale loans if the sale transaction closes following repayment of the promissory note receivable from RMI IX.2021.

The manager evaluated events subsequent ~~events that have occurred after September~~to June 30, ~~2020~~2021 and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the unaudited consolidated financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto, which are included in Item 1 of this report on Form 10-Q, as well as the audited financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the U.S. Securities and Exchange Commission. The results of operations for the three and ~~nine month periods~~six months ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the results to be expected for the full year.

Certain statements in this Report on Form 10-Q which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 withdrawals 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, therefore, you should not place undue reliance on forward-looking statements which reflect our view only as of the date hereof.

Factors that might cause such a difference include, but are not limited to, the following:

All forward-looking statements and reasons why results may differ included in this Form 10-Q 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 unless required by law.

Redwood Mortgage Investors VIII, a California Limited Partnership ~~(we, RMI VIII~~(“we”, “RMI VIII” or the ~~partnership)~~“partnership”), was formed in 1993 to engage 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. The partnership is externally managed. Redwood Mortgage Corp. (“RMC” or “the manager”) is the manager of the partnership. See Note 3 (General Partners and Other Related Parties) to the consolidated financial statements included in Part I, Item 1 of this report for a detailed presentation of the partnership’s activities for which related parties are compensated and for other related party transactions.

Cash generated from loan payoffs and borrower payments of principal and interest is used for operating expenses, distributions to limited partners and withdrawals. The cash flow, if any, in excess of these uses plus the cash from advances on the line of credit is reinvested in new loans.

Per the Partnership Agreement, 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. Notwithstanding this 20% limitation, the general partners have the discretion to further limit the percentage of total limited partners’ capital accounts that may be withdrawn in order to comply with the safe harbor provisions of the regulations under Section 7704 of the Internal Revenue Code of 1986, as amended, to avoid the partnership being taxed as a corporation.

See Note 1 (Organization and General) to the consolidated financial statements included in Part I, Item 1 of this report on Form 10-Q for additional detail on the organization and operations of RMI VIII which detail is incorporated by reference into this Item 2.

See Note 3 (General Partners and Other Related Parties) to the consolidated financial statements included in Part I, Item 1 of this report on form 10-Q for a detailed presentation of the partnership activities for which the general partners and related parties are compensated for and related party transactions, which detail is incorporated by reference into this Item 2.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (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 owned, at acquisition and subsequently. Actual results could differ significantly from these estimates.

~~Allowance~~Accounting policies are an integral part of our consolidated financial statements. For a summary of our critical accounting policies, see “Critical Accounting Policies” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for ~~loan losses~~the year ended December 31, 2020.

~~Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed~~There have been no material changes to our critical accounting policies since our annual report on a periodic basis for ultimate recoverability. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, ��protective equity” is the dollar amount by which the fair value of the collateral, net of any senior liens, exceeds 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.Form 10-K.

A provision for loan losses to adjust the allowance for loan losses (principal and/or recorded interest) is recorded such that the net carrying amount 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.

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

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: 1) market comparables or sales approach; 2) cost to replace; and 3) capitalized cash flows or income 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.

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 property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. 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 or losses 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.

The following discussion describes our results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. While the COVID-19 ~~outbreak did~~pandemic has not ~~have~~had a material adverse effect on our reported results for ~~the nine months ended September 30, 2020,~~our first or second quarter, we are actively monitoring the impact of COVID-19, which may negatively impact our business, financial condition, liquidity and results of operations for subsequent periods.

~~In March 2020,~~The extent of the ~~World Health Organization declared COVID-19 a pandemic. The global spread~~impact of COVID-19 has created significant volatility, uncertainty and economic disruption including in the United States and both Northern and Southern California where the partnership's lending operations are located. In response to the COVID-19 ~~outbreak, federal, state~~pandemic in 2021 and local governments as well as the business community have implemented voluntary and increasingly mandatory policies and restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. These restrictions and protocols have resulted in increases in unemployment rates, disruptions to businesses, increased volatility in the financial markets and overall economic uncertainty at the state, local and national levels. Despite the improvement in the economy in recent months, economic activity remains far below its pre-pandemic level and unemployment remains elevated.

The impact from the rapidly changing market and economic conditions due to the COVID-19 outbreak is uncertain and will impact our business and results of operations and could impact our financial condition in the future. While we have not incurred significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the impact that COVID-19 will have due to numerous evolving factors, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our borrowers, including the ability of our borrowers to make their loan payments and qualify for future loans and a decrease in the values of California real estate which serves as collateral for the partnership’s loans. Any of these events or consequences could materially adversely impact our business, financial condition, or results of operations.

~~On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” was signed into law. The manager continues to examine the impact that the CARES Act may have~~beyond on the partnership’s ~~business. Although the manager does not expect the CARES Act to have a direct impact on the partnership, it may have an indirect impact~~capital, liquidity, and other financial positions and on the partnership’s borrowers and its manager. At the time of issuance of these consolidated financial statements, the manager is unable to estimate the impact that the CARES Act will have on the partnership’s financial condition,business, results of operation ~~or liquidity for the remainder of 2020.~~

The manager has received from borrowers inquiries as to short-term loan payment relief, most in the form of requests for deferral of payments or requests for further discussion of COVID-19 related relief. The manager evaluates each loan payment relief requestand prospects, will depend on ~~an individual basis considering~~ a number of factors. Not all of the requests made will result in agreements and the manager is not considering the waiver or modification of any of our contractual rights under our loan agreements other than extensions of the maturity date of the loan. For one borrower, the maturity date was extended by five months to December 1, 2020, and one request remains pending with discussion ongoing as of November 16, 2020.evolving factors, including:

It is not possible at this time to predict or estimate the ultimate impact of COVID-19 on the financial condition or results of operations and liquidity of the partnership for the remainder of 2020. Management also

RMC continues to monitor the impact ~~that~~the COVID-19 pandemic is having and may have on California real estate ~~values (see~~values. See Note 1 (Organization and General) to the ~~LTV~~consolidated financial statements included in Part I, Item 1 of this report for additional detail on the COVID-19 pandemic, the social and governmental responses thereto and the severe economic disruptions caused by ~~lien position tables under “Secured Loan” following~~ the ~~Key Performance Indicators below).~~pandemic.

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 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 ~~Adds Back More Than Half a Million Jobs~~Posts Robust Payroll Gain in June” dated July ~~17, 2020:~~16, 2021:

Hiring remains robust in the Golden State. Employers added 73,500 net new jobs during June, the second largest gain of any state. While the monthly gain was impressive, the pace of payroll growth has cooled down slightly. While employers have expanded payrolls every month since February, the total gains have been shrinking with each consecutive month. There are several reasons why job growth has slightly moderated, but widespread labor shortages stand out as the driving factor. Put another way, if businesses could find the labor they needed, employment growth could be much stronger.

“Leisure & hospitality accounted for the lion's share of the total gain in June, adding 44,400 new jobs. Within leisure & hospitality, hiring at hotels, bars and restaurants rose by 37,000, while arts, entertainment & recreation added 7,400 jobs. According to Visit California [https://industry.visitcalifornia.com/research/travel-forecast] travel spending in the state dropped to $65.1 billion in 2020—only 45% of 2019 spending levels. This year is shaping up to be much better. Travel and tourism is quickly ramping up across the state, most notably in Southern California. Hotel occupancy rates in Los Angeles and San Diego are still below the levels seen in the summer of 2019 but are steadily climbing higher. The ~~re-opening of California’s economy provided~~ramp up in tourism appears to be providing a ~~much needed~~ boost to ~~hiring this past month, with nonfarm payrolls adding back 558,200 new jobs. June’s gain easily marks~~ the ~~largest monthly increase ever for~~entire Southern California ~~but nonfarm employment remains 1.93-million jobs below its February peak. While~~economy. During June, overall employment rose solidly in ~~nearly every major industry,~~San Diego and Anaheim, while employers in Los Angeles added 29,700 total jobs, more than ~~half of~~other metro in the ~~bounce back was centered~~state.

The Bay Area saw more modest gains during the month. San Francisco businesses increased headcounts by 11,900, while San Jose added just 2,700 jobs. Statewide, hiring in ~~California’s hard-hit leisure~~the tech industry advanced, but only slightly. Professional & ~~hospitality sector. Those gains may prove fleeting, however, as~~business services payrolls increased by 3,400 jobs, largely due to a 3,200 improvement in administrative & waste services. California's professional, scientific & technical services industry payrolls were largely unchanged, while information sector payrolls edged up by 500 jobs.

Elsewhere, health care & social assistance expanded headcounts by 7,700, while retailers added 2,500. Manufacturing payrolls advanced by 4,200, the ~~resurgence in COVID-19 has brought new restrictions on economic activity.”~~

~~“California’s unemployment rate fell 1.5 percentage points in June to 14.9%. The drop results from a 653,200 person increase in civilian~~fifth consecutive monthly gain, while transportation, warehousing & utilities employment orrose by 1,400 jobs. Although the number of ~~Californians working, compared~~ships waiting to anchor remains elevated, congestion at the Port of Los Angeles/Long Beach appears to be clearing somewhat. This is a ~~somewhat smaller 441,200 person increase~~sign that the supply chain bottlenecks affecting virtually every industry may be beginning to ease. Construction firms once again trimmed headcounts in June, as payrolls declined by 3,000, the ~~civilian labor force. Typically, economists tend~~third straight monthly drop. While residential construction remains strong, nonresidential activity looks to ~~focus on nonfarm employment, as it is derived~~be waning amid a thinning backlog of new projects.

The state's unemployment rate was unchanged at 7.7%, although May's jobless rate was revised down from 7.7% from 7.9%. This time last year, the unemployment rate was 14.1%, a larger sample and provides more detail on changes in employment. The civilian (or Household) employment measure, however, is more inclusive and provides insight into employment trends in important classifications of workers, such as independent contractors and sole proprietors. This category of workers was particularly hard hit by COVID-19 shutdowns andreminder that while progress has been ~~slower~~slow, a great deal of improvement has occurred over the past 12 months. The state's labor market appears poised for improvement in coming months. Jobless claims remain elevated relative to ~~recover. Household employment fell 17.6% from February~~their pre-COVID norms, but continue to ~~May, resulting~~trend lower, which suggests fewer layoffs are taking place. The $300 federal unemployment benefit will end in September, which will likely boost labor force participation and nonfarm payrolls, although it may take a ~~loss of 3.3 million jobs, compared~~few months for the those [SIC] effects to ~~a 14.9% February to April drop in nonfarm employment, which resulted in the loss of 2.6 million jobs.”~~

“Farm employment in California—the nation’s largest farm economy— continues to tumble. California farms cut 8,500 jobs in June, bringing the total loss since February to 118,000 jobs, or more than one of every four jobs that used to exist in California’s farm sector. The bounce back in leisure and hospitality employment, most of which was at restaurants, is clearly evidentbecome apparent in the employment data. ~~California’s largest MSAs accounted for~~

While California's economy remains firmly on the ~~bulk~~path to recovery, worsening drought conditions are increasingly a risk. The assessment of ~~June’s job gains. Los Angeles added back 147,000 jobs~~conditions in ~~June~~over 33% of California have recently been elevated to an "exceptional" classification (the most severe). Increasingly dire drought conditions are fueling an increase in wildfires, straining water resources and ~~has now regained 25.6% of~~threatening the ~~jobs lost earlier this year. Orange County added the second largest~~state's massive agricultural industry. The rising number of ~~jobs~~COVID cases is another risk, although hospitalizations are not rising anywhere near as much as infections. We are seeing some restrictions being reinstated, but not in the state, with nonfarm payrolls regaining 71,600 jobs, or 27% of what was lost in March and April. The Inland Empire added 43,800 jobs in June, Ventura County added back 10,300 jobs and Bakersfield added 9,900 jobs. San Diego was another big standout, as employers added back 51,600 jobs.”a way that would derail California's economic recovery.

“California’s tech sector has proved fairly resilient. Early on there were worries advertising revenues would nosedive and venture capital would dry up, neither have transpired. Instead the surge in working remotely has boosted demand for all sorts of tech services and social media continues to flourish. Employment in the Bay Area reflect these trends, with hiring bouncing back stronger in South Bay than San Francisco or Oakland. The San Jose MSA has regained 31.6% of the jobs lost in March and April, while San Francisco-Oakland-Hayward MSA regained 23.8%.”

Key performance indicators as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are presented in the following table ($ in thousands).

	2020			2019			2021			2020
Secured loans held for investment - principal at end of period	$	74,970		$	86,190
Secured loans held for sale - principal at end of period		2,331			—
Total secured loans - principal at end of period	$	77,301		$	86,190
Total secured loans principal – average daily balance	$	81,313		$	94,781
Secured loans principal – end of period balance							$	72,548		$	77,895
Secured loans principal – average daily balance							$	74,611		$	84,103

Interest income	$	5,419		$	6,124		$	3,639		$	3,845
Portfolio interest rate⁽¹⁾		8.9	%		8.6	%		8.9	%		8.9	%
Effective yield rate⁽²⁾		8.9	%		8.6	%		9.8	%		9.1	%

Line of credit - end of period	$	1,515		$	—		$	8,600		$	—
Line of credit - average daily balance beginning September 28, 2020⁽³⁾	$	1,515		$	—
Line of credit - average daily balance⁽³⁾							$	5,613		$	—

Mortgages payable - end of period	$	2,449		$	—		$	2,449		$	2,449
Mortgages payable - average daily balance beginning June 2020⁽⁴⁾	$	2,449		$	—
Mortgages payable - average daily balance ⁽⁴⁾							$	2,449		$	2,449

Interest expense
Line of credit	$	28		$	—		$	167		$	13
Mortgages payable	$	33		$	—		$	51		$	7

Recovery of loan losses	$	(134	)	$	(1,613	)	$	(1	)	$	(126	)

Operations expense	$	2,791		$	3,571		$	2,032		$	1,909

Net income	$	2,755		$	4,233		$	1,426		$	2,055
Percent⁽⁵⁾⁽⁶⁾		3.9	%		5.0	%		3.6	%		4.3	%

Limited partners’ capital – end of period	$	86,603		$	104,578		$	76,087		$	90,537
Limited partners’ capital – average daily balance	$	92,513		$	112,409

Limited partners’ capital – average balance							$	79,493		$	94,483
Limited partners’ capital – withdrawals⁽⁷⁾	$	13,494		$	18,860		$	7,543		$	9,324

Key performance indicators as of and for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are presented in the following table ($ in thousands).

	2020			2019			2021			2020
Secured loans held for investment - principal at end of period	$	74,970		$	86,190
Secured loans held for sale - principal at end of period		2,331			—
Total secured loans - principal at end of period	$	77,301		$	86,190
Total secured loans principal – average daily balance	$	75,793		$	84,446
Secured loans principal – end of period balance							$	72,548		$	77,895
Secured loans principal – average daily balance							$	74,977		$	82,125

Interest income	$	1,574		$	1,815		$	1,997		$	2,107
Portfolio interest rate⁽¹⁾		8.8	%		8.7	%		8.9	%		8.9	%
Effective yield rate⁽²⁾		8.3	%		8.6	%		10.7	%		10.3	%

Line of credit - end of period	$	1,515		$	—		$	8,600		$	—
Line of credit - average daily balance beginning September 28, 2020⁽³⁾	$	1,515		$	—
Line of credit - average daily balance⁽³⁾							$	7,411		$	—

Mortgages payable - end of period	$	2,449		$	—		$	2,449		$	2,449
Mortgages payable - average daily balance beginning June 2020⁽⁴⁾	$	2,449		$	—
Mortgages payable - average daily balance ⁽⁴⁾							$	2,449		$	2,449

Interest expense
Line of credit	$	15		$	—		$	106		$	13
Mortgages payable	$	26		$	—		$	26		$	7

Recovery of loan losses	$	(8	)	$	(1,613	)	$	—		$	(126	)

Operations expense	$	882		$	1,485		$	1,072		$	937

Net income	$	700		$	1,992		$	824		$	1,283
Percent⁽⁵⁾⁽⁶⁾		3.1	%		7.4	%		4.2	%		5.5	%

Limited partners’ capital – end of period	$	86,603		$	104,578		$	76,087		$	90,537
Limited partners’ capital – average daily balance	$	88,570		$	106,788

Limited partners’ capital – average balance							$	77,745		$	92,340
Limited partners’ capital – withdrawals⁽⁷⁾	$	4,170		$	5,823		$	3,737		$	4,433

The ~~September~~June 30, ~~2020 total~~2021 secured loans principal of approximately ~~$77.3~~$72.5 million, was a reduction of ~~10.3%~~6.9% ($~~8.9~~5.4 million) compared to ~~the September~~June 30, ~~2019 total~~2020 secured loans principal of approximately ~~$86.2~~$77.9 million. The loan portfolio and capital available to lend is declining due to partner withdrawals exceeding the net income retained in limited partners’ capital accounts.

AsAt June 30, 2021, limited partners’ capital-end of ~~September~~period of approximately $76.1 million was a reduction of 15.9% ($14.4 million) compared to the June 30, 2020 limited partners’ capital-end of period of approximately $86.6 million was a reduction of 17.2% ($18 million) compared to the September 30, 2019 limited partners’ capital-end of period of $104.6 million due to distributions and withdrawals offset by net income.$90.5 million. See Note 3 (General Partners and Other Related Parties) to the consolidated financial statements included in Part I, Item 1 of this report on Form 10-Q for detailed presentations on withdrawals of limited partners’ capital.

In future periods, reductions in limited partners’ capital (and thereby in capital available to lend) may be offset in part by advances on the line of credit. The REO acquired by foreclosure sale, net of mortgages payable assumed, reduces the capital available to lend until the REO is sold. See Note 5 (Real Estate Owned (REO) and Mortgages Payable) to the consolidated financial statements included in Part I, Item 1 of this report on Form 10-Q for a presentation of the balances and the activity for REO.

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~~property value to outstanding debt) as indicated by our overall conservative weighted-average loan-to-value ratio (LTV) at time of origination which at ~~September~~June 30, ~~2020~~2021 was ~~54.0%~~55.8%. Thus, based on the appraisal-based valuations at the time of loan inception, borrowers have, in the aggregate, equity of ~~46.0%~~44.2% in the property, and we as lenders have loaned in the aggregate ~~54.0%~~55.8% (including other senior liens on the property) against the properties we hold as collateral for the repayment of our loans.

~~Total secured~~Secured loans, principal by LTV and lien position ~~as of September~~at June 30, ~~2020~~2021 are presented in the following table ($ in thousands). The ~~LTV’s~~LTVs shown in this table are updated for any appraisals ordered and received by the manager after origination of the loan.

	Total secured loans, principal															Secured loans, principal
LTV(1)	First trust deeds		Percent⁽¹⁾			Second trust deeds		Percent⁽¹⁾			Total loans		Percent⁽¹⁾			First trust deeds		Percent			Second trust deeds		Percent			Total principal		Percent
<40%	$	21,386		27.7	%	$	1,600		2.1	%	$	22,986		29.8	%	$	12,838		17.7	%	$	—		0.0	%	$	12,838		17.7	%
40-49%		1,408		1.8			357		0.5			1,765		2.3			1,056		1.4			5,345		7.4			6,401		8.8
50-59%		16,661		21.6			850		1.1			17,511		22.7			14,875		20.5			846		1.2			15,721		21.7
60-69%		17,067		22.1			3,652		4.7			20,719		26.8			24,458		33.7			3,065		4.2			27,523		37.9
Subtotal <70%		56,522		73.2			6,459		8.4			62,981		81.6			53,227		73.3			9,256		12.8			62,483		86.1

70-79%		13,838		17.9			482		0.5			14,320		18.4			9,844		13.6			178		0.2			10,022		13.8
Subtotal <80%		70,360		91.1			6,941		8.9			77,301		100.0			63,071		86.9			9,434		13.0			72,505		99.9

>80%		—		0.0			—		0.0			—		0.0
≥80%																	43		0.1			—		0.0			43		0.1

Total	$	70,360		91.1	%	$	6,941		8.9	%	$	77,301		100.0	%	$	63,114		87.0	%	$	9,434		13.0	%	$	72,548		100.0	%

Non-performing secured loans, principal by LTV and lien position ~~as of September~~at June 30, ~~2020~~2021 are presented in the following table ($ in thousands). The ~~LTV’s~~LTVs shown in this table are updated for any appraisals ordered and received by the manager after origination of the loan.

Non-performing secured loans, principal

LTV

First trust
deeds

Percent⁽¹⁾

Second trust
deeds

Percent⁽¹⁾

Total

Percent⁽¹⁾

<40%

$
4,789

6.2
%

$
—

0.0
%

$
4,789

6.2
%
40-49%

—

0.0

—

0.0

—

0.0

50-59%

5,380

7.0

—

0.0

5,380

7.0

60-69%

11,892

15.4

—

0.0

11,892

15.4

Subtotal <70%

22,061

28.6

—

0.0

22,061

28.6

70-79%

5,355

6.9

—

0.0

5,355

6.9

Subtotal <80%

27,416

35.5

—

0.0

27,416

35.5

>80%

—

0.0

—

0.0

—

0.0

Total

$
27,416

35.5
%

$
—

0.0
%

$
27,416

35.5
%

Non-performing secured loans past maturity, principal by LTV and lien position as of September 30, 2020 are presented in the following table ($ in thousands). The LTV’s shown in this table are updated for any appraisals ordered and received by the manager after origination of the loan.

	Non-performing loans, principal past maturity															Non-performing secured loans, principal
LTV(2)	First trust deeds		Percent⁽¹⁾			Second trust deeds		Percent⁽¹⁾			Total		Percent⁽¹⁾			First trust deeds		Percent⁽³⁾			Second trust deeds		Percent⁽³⁾			Total Principal		Percent⁽³⁾
<40%	$	4,789		6.2	%	$	—		0.0	%	$	4,789		6.2	%	$	992		1.4	%	$	—		0.0	%	$	992		1.4	%
40-49%		—		0.0			—		0.0			—		0.0			—		0.0			—		0.0			—		0.0
50-59%		5,380		7.0			—		0.0			5,380		7.0			2,064		2.8			—		0.0			2,064		2.8
60-69%		3,896		5.0			—		0.0			3,896		5.0			5,380		7.4			—		0.0			5,380		7.4
Subtotal <70%		14,065		18.2			—		0.0			14,065		18.2			8,436		11.6			—		0.0			8,436		11.6

70-79%		5,355		6.9			—		0.0			5,355		6.9			-		0.0			—		0.0			—		0.0
Subtotal <80%		19,420		25.1			—		0.0			19,420		25.1			8,436		11.6			—		0.0			8,436		11.6

>80%		—		0.0			—		0.0			—		0.0
≥80%																	—		0.0			—		0.0			—		0.0

Total	$	19,420		25.1	%	$	—		0.0	%	$	19,420		25.1	%	$	8,436		11.6	%	$	—		0.0	%	$	8,436		11.6	%

Payments in arrears for non-performing secured loans (i.e., principal and interest payments past due 30 or more days) at ~~September~~June 30, ~~2020,~~2021, totaled approximately ~~$20.2~~$6.7 million of which ~~$19.4~~$6.4 million was principal, and approximately ~~$765,000~~$307,000 was accrued interest. ~~The~~Almost the entire principal in arrears ~~of approximately $19.4 million~~ was ~~relating to~~ loans past maturity, all of which were in first lien position.

See Note 4 (Loans) to the consolidated financial statements included in Part I, Item 1 of this report for ~~detailed presentations on~~detail of the secured loan portfolio, including loan characteristics, scheduled maturities, delinquency and payments in arrears, loans in non-accrual status and the allowance for ~~loan losses and the recovery of~~ loan losses, which presentations are incorporated by reference into this Item 2.

Net income available to limited partners as a percent of limited partners’ capital – average daily balance (annualized) was ~~3.9%~~ 3.6% and ~~5.0%~~ 4.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Net income for the nine months ended September 30, 2020 was $2.76 million, a decrease of $1.47 million (35%) from $4.23 million for the same period in 2019. In September 2019, RMI VIII settled and collected a recovery of a loan loss from a prior year of approximately $1.6 million, before RMC costs.

~~Net interest income~~ decreased approximately $766,000 (12.5%) during the nine months ended September 30, 2020 from the same period in 2019. Interest income declined approximately $705,000 (11.5%) in line with the decrease in the average daily balance of total secured loans of $13.5 million (14.2%) that was offset by a modest 0.3% increase in the effective yield rate to 8.9%. Interest expense for the nine months ended September 30, 2020 was approximately $61,000 on the borrowings on the line of credit and mortgages payable. There were no borrowings or mortgages payable in 2019.

In the nine months ended September 30, 2020 and 2019, revenue from late fees approximated $54,000 and $29,000, respectively. In the nine months ended September 30, 2020, there were no loan sales; in the same period in 2019 the gain on sale of loans approximated $38,000.

~~Operations expense declined approximately $780,000 (22%~~$629,000 (30.6%) for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to the same period in ~~2019 resulting from:~~2020, primarily due to the reduction in net interest income of approximately $404,000 (10.6%) and increased operations expense of approximately $123,000 (6.4%).

~~See “Analysis~~Analysis and discussion of income from operations 2021 v. 2020 ~~v. 2019 (nine~~(six months ended)~~” below for additional detail.~~

~~Analysis and discussion in income from operations 2020 v. 2019 (nine months ended)~~

Significant changes to ~~revenue and expense~~net income for the ~~nine month period~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019~~2020 are summarized in the following table ($ in thousands).

Provision for

Net Interest

(Recovery of)

Operations

Net

Income

Loan Losses

Expense

Income

For the nine months ended

September 30, 2020

$
5,358

$
(134
)

$
2,791

$
2,755

September 30, 2019

6,124

(1,613
)

3,571

4,233

Change

$
(766
)

$
1,479

$
(780
)

$
(1,478
)

Change

Decrease limited partners' capital - average daily balance

—

—

(114
)

114

Decrease total secured loans principal - average daily balance

(858
)

—

(162
)

(696
)
Effective yield rate

153

—

—

153

Amortization of debt issuance costs

(27
)

—

—

(27
)
Interest on line of credit

(1
)

—

—

(1
)
Interest on mortgages payable assumed at foreclosure

(33
)

—

—

(33
)
REO sales, net

—

—

(48
)

48

REO valuation adjustments

—

—

(210
)

210

Collected recoveries year-over-year

—

1,479

—

(1,479
)
Information technology for limited partners' capital accounts invoiced directly

—

—

(73
)

73

Tax compliance costs for limited partners' capital accounts invoiced directly

—

—

52

(52
)
Reimbursements to RMC, costs for recovery of loan losses

—

—

(129
)

129

Other

—

—

(96
)

83

Change

$
(766
)

$
1,479

$
(780
)

$
(1,478
)

~~The table above displays only significant changes to net income for the period and does not cross foot as insignificant components (e.g. other income) are not included.~~

~~Net interest income decreased approximately $766,000 for the nine months ended September 30, 2020 compared to the same period in 2019.~~

Interest income decreased approximately $705,000 (11.5%) for the nine months ended September 30, 2020 compared to the same period in 2019. The total secured loans principal – average daily balance decreased $13.5 million (14.2%) to approximately $81.3 million for the nine months ended September 30, 2020 ($94.8 million at September 30, 2019) and is consistent with the reduction in limited partners’ capital – end of period balance to approximately $86.6 million from $104.6 million, an $18.0 million (17.2%) decrease from $104.6 million. The 0.3 percentage point increase in the effective yield rate is due primarily to the resolution of two loans which had previously been designated non-accrual resulting in the recognition of approximately $490,000 in prior period foregone interest during the nine months ended September 30, 2020.

Interest expense for the nine months ended September 30, 2020 of $61,000 resulted from interest of approximately $33,000 on two mortgages payable totaling approximately $2.45 million assumed at foreclosure in June 2020, interest of approximately $1,000 on the initial advance of $1.515 million on the line of credit drawn on September 28, 2020, and approximately $27,000 of amortization of debt issuance costs associated with the line of credit, since inception of the agreement in April 2020. There were no borrowings or mortgages payable in 2019.

~~At December 31, 2019, RMI VIII had a recorded allowance for loan losses of $50,000. There was no provision for loan losses for the nine months ended September 30, 2020 and 2019.~~

In 2020, the partnership collected and recorded a recovery of previously recognized loan losses of $134,000 from a court order dated June 2020 pursuant to the terms of a judgment dated October 2012 against a borrower/guarantor. In 2019, RMI VIII recorded and collected a recovery of previously recognized loan losses of $1.6 million pursuant to the terms of a workout agreement dated October 21, 2011, between RMI VIII and a borrower in default on certain loans secured by various California properties.

~~Significant changes to operations expense for the nine month period ended September 30, 2020 compared to the same period in 2019 are summarized in the following table ($ in thousands).~~

Mortgage

Asset

Costs

Servicing

Management

From

Professional

Fees

Fees

RMC

Services

REO, net

Other

Total

For the nine months ended

September 30, 2020

$
924

265

676

885

23

18

$
2,791

September 30, 2019

1,086

408

1,067

748

249

13

3,571

Change

$
(162
)

(143
)

(391
)

137

(226
)

5

$
(780
)

Change

Decrease limited partners' capital - average daily balance

—

(58
)

(56
)

—

—

—

(114
)
Decrease total secured loans principal - average daily balance

(162
)

—

—

—

—

—

(162
)
REO sales, net

—

—

(32
)

—

(16
)

—

(48
)
REO valuation adjustments

—

—

—

—

(210
)

—

(210
)
Information technology for limited partners' capital accounts invoiced directly

—

—

(95
)

22

—

—

(73
)
Tax compliance costs for limited partners' capital accounts invoiced directly

—

—

—

52

—

—

52

Reimbursements to RMC, costs for recovery of loan losses

—

(85
)

(44
)

—

—

—

(129
)
Other

—

—

(164
)

63

—

5

(96
)
Change

$
(162
)

(143
)

(391
)

137

(226
)

5

$
(780
)

The decrease in mortgage servicing fees for the nine month period ended September 30, 2020 as compared to the same period in 2019, was due to the decrease in the total secured loans principal – average daily balance to approximately $81.3 million from approximately $94.8 million. Fees are charged by RMC at the annual rate of 1.5%.

Asset management fees declined by $143,000 to $265,000 for the nine month period ended September 30, 2020, as compared to $408,000 for the same period in 2019, of which $58,000 was due to the reduction of limited partners’ capital and $85,000 was due to a one time charge for asset management fees due on the loan loss recovery. Total limited partners’ capital at September 30, 2020 and 2019, was approximately $86.6 million and $104.6 million, respectively. Asset management fees are charged up to 1/32 of 1% of the “net asset value” (3/8 of 1% annually).

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 out-of-pocket general and administration expenses. The decrease in costs from RMC was due to the reduction in limited partners’ capital, a decrease in the cost of REO management, and a decrease in allocable payroll and consulting expenses incurred by RMC.

The reduction for the nine months ended September 30, 2020 as compared to the same period in 2019 is also due to a one time charge of $144,000 in the nine months ended 2019 relating to a loan loss recovery from a workout agreement which was received in the third quarter of 2019. The 2019 charge was offset, in part, by the final cost reimbursements to the manager of $100,000 in the first quarter of 2020 relating to the recovery. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g., by the partnership’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are allocated first based on activity, and then to the partnership on a pro-rata basis based on percentage of capital to the total capital of all related mortgage funds managed by RMC.

Prior to September 2019, allocable costs included fees paid to an independent service bureau for information technology related to record keeping and reporting for accounts of individual investors. In September 2019 – and implemented at September 30, 2019 retroactive to January 2019 – these fees were invoiced separately and directly to RMI VIII. For the nine months ended September 30, 2019, fees paid for such information technology totaled approximately $95,000, and were included in Costs from RMC.

~~Professional services consist primarily of information technology, legal, audit and tax compliance, and consulting expenses.~~

~~The increase in professional services of approximately $137,000 for the nine months ended September 30, 2020 over the same period in 2019 was due primarily to:~~

The September 30, 2020, REO balance, end of period, was approximately $8.9 million, an increase of 126.3% ($5.0 million) compared to the September 30, 2019 balance of approximately $3.9 million. During the nine months ended September 30, 2020, one condominium unit in a REO property located in San Francisco County was sold with a gain of approximately $68,000. In June 2020, two single family residences on separate adjoining parcels with a shared driveway in Los Angeles County (Hollywood Hills) were acquired by two separate foreclosure sales, totaling approximately $5.8 million. At acquisition, mortgages payable, principal assumed totaled approximately $2.4 million and other liabilities assumed totaled $170,000.

~~In the nine months ended September 30, 2019 an REO valuation reserve was increased by $210,000. There were no changes to the REO valuation reserves during the same period in 2020.~~

Month-to-month occupancy rents received of approximately $42,000 and $45,000 for the nine months ended September 30, 2020 and 2019, respectively, and sign and storage rents of approximately $34,000 and $51,000 for the nine months ended September 30, 2020 and 2019, respectively, are included in REO, net.

See Note 5 (Real Estate Owned (REO)) to the consolidated financial statements included in Part I, Item 1 of this report for detailed presentations of REO sales transactions, and additional information regarding REO activity during the period.

~~Analysis and discussion in income from operations 2020 v. 2019 (three months ended)~~

~~Significant changes to revenue and expense for the three month period ended September 30, 2020 compared to the same period in 2019 are summarized in the following table ($ in thousands).~~

																Provision for
				Provision for									Net interest			(recovery of)			Operations			Net
	Net Interest			(Recovery of)			Operations			Net			income			loan losses			expense			income
	Income			Loan Losses			Expense			Income
For the three months ended
September 30, 2020	$	1,533			(8	)		882		$	700
September 30, 2019		1,815			(1,613	)		1,485			1,992
Six months ended
June 30, 2021													$	3,421		$	(1	)	$	2,032		$	1,426
June 30, 2020														3,825			(126	)		1,909			2,055
Change	$	(282	)		1,605			(603	)	$	(1,292	)	$	(404	)	$	125		$	123		$	(629	)

Change
Decrease limited partners' capital - average daily balance		—			—			(41	)		41
Decrease total secured loans principal - average daily balance		(186	)		—			(44	)		(142	)
Decrease secured loans principal - average daily balance														(441	)		—			(78	)		(363	)
Effective yield rate		(55	)		—			—			(55	)		235			—			—			235
Amortization of debt issuance costs		(14	)		—			—			(14	)		(13	)		—			—			(13	)
Interest on line of credit		(1	)		—			—			(1	)		(141	)		—			—			(141	)
Interest on mortgages payable assumed at foreclosure		(26	)		—			—			(26	)		(44	)		—			—			(44	)
Decrease limited partners' capital - average balance														—			—			(57	)		57
Decrease in allocable expenses from the manager														—			—			(10	)		10
Reimbursements to RMC, costs for recovery of loan losses														—			—			(100	)		100
Expanded legal and audit services														—			—			66			(66	)
Tax compliance cost efficiency														—			—			(69	)		69
Timing of services rendered														—			—			(5	)		5
REO sales, net		—			—			69			(69	)		—			—			(11	)		11
REO acquisitions														—			—			87			(87	)
REO valuation adjustments		—			—			(210	)		210			—			—			294			(294	)
Collected recoveries year-over-year		—			1,605			—			(1,605	)		—			126			—			(126	)
Information technology for limited partners' capital accounts invoiced directly		—			—			(76	)		76
Tax compliance costs for limited partners' capital accounts invoiced directly		—			—			—			—
Reimbursements to RMC, costs for recovery of loan losses		—			—			(229	)		229
Other		—			—			(72	)		64			—			(1	)		6			18
Change	$	(282	)		1,605			(603	)	$	(1,292	)	$	(404	)	$	125		$	123		$	(629	)

The table above displays only significant changes to net income for the period and does not cross foot as insignificant components (e.g. other income) are not included.

Net interest income decreased approximately ~~$282,000~~$404,000 for the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019.~~2020.

Interest income ~~decreased~~declined approximately ~~$241,000 (13.3%~~$206,000 (5.4%) for the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019.~~2020. The ~~total~~ secured loans principal – average daily balance decreased ~~$8.65~~$9.5 million ~~(10.2%~~(11.3%) to approximately ~~$75.8~~$74.6 million, and the effective yield rate ~~decreased~~increased by ~~0.3~~0.7 percentage points to ~~8.3%~~9.8% for the ~~three~~six months ended ~~September~~June 30, 2021 as compared to the same period in 2020.

Interest expense increased approximately $198,000 (990.0%) for the ~~three~~six months ended ~~September~~June 30, 2021 as compared to the same period in 2020 ~~totaled approximately $41,000 on borrowings on~~as the line of credit was utilized and mortgage interest expense accrued for the ~~mortgages payable. There were no borrowings or mortgages payable~~full period in ~~2019.~~2021.

~~At December 31, 2019, RMI VIII had~~Generally, the partnership has not recorded a ~~recorded~~ provision/allowance for loan losses ~~of $50,000.~~as the secured loans have protective equity such that collection is deemed probable for all recorded amounts due on the loan. There ~~was~~were no additions or charge-offs to the provision for loan losses ~~for~~during the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. In the six months ended June 30, 2021 an insignificant recovery was recognized on a loan.

In ~~2019, RMI VIII~~June 2020, the partnership recorded ~~and collected~~ a recovery of ~~previously recognized~~ loan losses of ~~$1.6 million~~$126,000 from a court order dated June 2020 pursuant to the terms of a ~~workout agreement~~judgment dated October ~~21, 2011, between RMI VIII and~~2012 against a ~~borrower in default on certain loans secured by various California properties.~~borrower/guarantor. The amounts recovered were previously charged off.

Significant changes to operations expense for the ~~three month period~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019~~2020 are summarized in the following table ($ in thousands).

	Mortgage			Asset			Costs															Mortgage			Asset			Costs
	Servicing			Management			From			Professional												servicing			management			from			Professional			REO,
	Fees			Fees			RMC			Services			REO, net			Other			Total			fees			fees			RMC			services			net			Other		Total
For the three months ended
September 30, 2020	$	286			84			185			275			51			1		$	882
September 30, 2019		330			187			439			347			187			(5	)		1,485
Six months ended
June 30, 2021																						$	560			152			354			593			342			31	$	2,032
June 30, 2020																							638			181			491			610			(28	)		17		1,909
Change	$	(44	)		(103	)		(254	)		(72	)		(136	)		6		$	(603	)	$	(78	)		(29	)		(137	)		(17	)		370			14	$	123

Change
Decrease limited partners' capital - average daily balance		—			(18	)		(23	)		—			—			—			(41	)
Decrease total secured loans principal - average daily balance		(44	)		—			—			—			—			—			(44	)
Decrease secured loans principal - average daily balance																							(78	)		—			—			—			—			—		(78	)
Decrease limited partners' capital - average balance																							—			(29	)		(28	)		—			—			—		(57	)
Decrease in allocable expenses from the manager																							—			—			(10	)		—			—			��		(10	)
Reimbursements to RMC, costs for recovery of loan losses																							—			—			(100	)		—			—			—		(100	)
Expanded legal and audit services																							—			—			—			66			—			—		66
Tax compliance cost efficiency																							—			—			—			(69	)		—			—		(69	)
Timing of services rendered																							—			—			—			(5	)		—			—		(5	)
REO sales, net																							—			—			—			—			(11	)		—		(11	)
REO acquisitions																							—			—			—			—			87			—		87
REO valuation adjustments		—			—			—			—			(210	)		—			(210	)		—			—			—			—			294			—		294
REO sales, net		—			—			(5	)		—			74			—			69
Information technology for limited partners' capital accounts invoiced directly		—			—			—			(76	)		—			—			(76	)
Reimbursements to RMC, costs for recovery of loan losses		—			(85	)		(144	)		—			—			—			(229	)
Other		—			—			(82	)		4			—			6			(72	)		—			—			1			(9	)		—			14		6
Change	$	(44	)	$	(103	)	$	(254	)	$	(72	)	$	(136	)	$	6		$	(603	)	$	(78	)		(29	)		(137	)		(17	)		370			14	$	123

The decrease in mortgage servicing fees for the ~~three month period~~six months ended ~~September~~June 30, ~~2020~~2021, as compared to the same period in ~~2019,~~2020, was primarily due to the decrease in the ~~total~~ secured loans principal – average daily balance to approximately ~~$75.8~~$74.6 million from approximately ~~$84.4~~$84.1 million. Fees are charged by RMC at the annual rate of 1.5%.

~~Asset~~The decrease in asset management fees ~~declined by $103,000 to $84,000~~ for the ~~three month period~~six months ended ~~September~~June 30, ~~2020,~~2021, as compared to ~~$187,000 for~~ the same period in ~~2019, of which $18,000~~2020, was primarily due to the ~~reduction of~~decrease in limited partners’ capital ~~and $85,000 was due~~– average balance to ~~a one time charge for asset management fees due on the loan loss recovery. Total limited partners’ capital at September 30, 2020 and 2019, was~~ approximately ~~$86.6~~$79.5 million ~~and $104.6 million, respectively.~~from $94.5 million. Asset management fees are charged up to 1/32 of 1% of the “net asset value” (3/8 of 1% annually).

The decrease in costs from RMC ~~was due to the reduction in total capital under management, a decrease in the cost~~ of ~~REO management, and a decrease in allocable payroll and consulting expenses incurred by RMC.~~

~~The reduction~~approximately $137,000 for the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to the same period in ~~2019 is also~~2020 was due to ~~a one time charge~~the reduction of $144,000 in the three months ended 2019 relating to a loan loss recovery from a workout agreement which was received in the third quarter of 2019. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) are allocated on a pro-rata basis (e.g., by the partnership’s ~~percentage~~limited partners’ capital as a percent of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are allocated first based on activity, and then to the partnership on a pro-rata basis based on percentage of capital to the total capital of ~~all~~the related ~~mortgage~~mortgaged funds managed by ~~RMC.~~

~~Prior to September 2019,~~RMC, a decrease in allocable ~~costs included fees paid to an independent service bureau for information technology~~payroll and professional services, and a final reimbursement of $100,000 in 2020 related to ~~record keeping and reporting for accounts~~a 2019 recovery of ~~individual investors. In September 2019 – and implemented at September 30, 2019 retroactive to January 2019 – these fees were invoiced separately and directly to RMI VIII.~~loan losses.

Professional services consist primarily of information technology, legal, audit and tax compliance, and consulting expenses.

The decrease in professional services of approximately ~~$72,000~~$17,000 for the ~~three~~six months ended ~~September~~June 30, ~~2020 over~~2021 as compared to the same period in ~~2019~~2020 was due primarily ~~to:~~to a reduction of tax compliance costs as a result of process efficiency implemented in 2021, which was offset by expanded legal and audit services associated with COVID-19, securing the line of credit, loan transactions and valuation of loan collateral.

~~The September 30, 2020, REO balance, end of period, was approximately $8.9~~$8.5 million ~~an increase of 126.3% ($5.0 million)~~ compared to the ~~September~~June 30, ~~2019~~2020 balance of approximately ~~$3.9~~$8.8 million. ~~The increase~~

In June 2021, the valuation allowance on REO properties was increased by $294,000 based on pending sales data on transactions expected in the ~~September~~second half of 2021.

During the six months ended June 30, 2020, one condominium unit in an REO ~~balance, end~~property located in San Francisco County was sold with a gain of ~~period, was due to~~approximately $68,000 and two single family residences on separate adjoining parcels with a shared driveway in Los Angeles County (Hollywood Hills)~~, which~~ were acquired by two separate foreclosure sales, totaling approximately $5.8 ~~million in June 2020.~~

~~In the three months ended September 30, 2019 an REO valuation reserve was increased by $210,000.~~million. There were no ~~changes~~REO sales or acquisitions in the six months ended June 30, 2021.

A gain on sale of REO was recognized in June 2021, related to a seller carryback on an REO property sold in 2016. The borrower paid in full in June 2021, and the ~~REO valuation reserves during the same period in 2020.~~ previously deferred gain of $79,000 was recognized upon payment.

~~Month-to-month occupancy~~Holding costs, net of other income includes month-to-month rents received of approximately ~~$13,000~~$44,000 and ~~$15,000~~$52,000 for the ~~three~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively ~~and sign and storage rents of approximately $11,000 and $43,000~~ for the ~~three months ended September 30, 2020~~homes in Fresno County and ~~2019, respectively, are included~~the unit-storage lockers and signage in ~~REO, net~~.San Francisco county.

See Note 5 (Real Estate Owned (REO)) and Mortgages Payable) to the consolidated financial statements included in Part I, Item 1 of this report for detailed presentations of REO sales transactions, and additional information regarding REO activity during the period.

Analysis and discussion of income from operations 2021 v. 2020 (three months ended)

Significant changes to net income for the three month period ended June 30, 2021 compared to the same period in 2020 are summarized in the following table ($ in thousands).

				Provision for
	Net interest			(recovery of)			Operations			Net
	income			loan losses			expense			income
Three months ended
June 30, 2021	$	1,865			—			1,072		$	824
June 30, 2020		2,087			(126	)		937			1,283
Change	$	(222	)		126			135		$	(459	)

Change
Decrease secured loans principal - average daily balance		(184	)		—			(32	)		(152	)
Effective yield rate		74			—			—			74
Amortization of debt issuance costs		—			—			—			—
Interest on line of credit		(93	)		—			—			(93	)
Interest on mortgages payable assumed at foreclosure		(19	)		—			—			(19	)
Decrease limited partners' capital - average balance		—			—			(26	)		26
Decrease in allocable expenses from the manager		—			—			14			(14	)
Reimbursements to RMC, costs for recovery of loan losses		—			—			—			—
Expanded legal and audit services		—			—			(13	)		13
Tax compliance cost efficiency		—			—			(69	)		69
Timing of services rendered		—			—			—			—
REO sales, net		—			—			(79	)		79
REO acquisitions		—			—			38			(38	)
REO valuation adjustments		—			—			294			(294	)
Collected recoveries year-over-year		—			126			—			(126	)
Other		—			—			8			16
Change	$	(222	)		126			135		$	(459	)

The table above displays only significant changes to net income for the period and does not cross foot as insignificant components (e.g. other income) are not included.

Net interest income decreased approximately $222,000 (10.6%) for the three months ended June 30, 2021 compared to the same period in 2020.

Interest income declined approximately $110,000 (5.2%) for the three months ended June 30, 2021 compared to the same period in 2020. The secured loans principal – average daily balance decreased $7.1 million (8.7%) to approximately $75.0 million, and the effective yield rate increased by 0.4 percentage points to 10.7% for the three months ended June 30, 2021 as compared to the same period in 2020.

Interest expense increased approximately $112,000 (560.0%) for the three months ended June 30, 2021 as compared to the same period in 2020 as the line of credit was utilized and interest on mortgage interest expense accrued for the full period in 2021.

Generally, the partnership has not recorded a provision/allowance for loan losses as the secured loans have protective equity such that collection is deemed probable for all recorded amounts due on the loan. There were no additions or charge-offs to the provision for loan losses during the three months ended June 30, 2021 or 2020.

In June 2020, the partnership recorded a recovery of loan losses of $126,000 from a court order dated June 2020 pursuant to the terms of a judgment dated October 2012 against a borrower/guarantor. The amounts recovered were previously charged off.

Significant changes to operations expense for the three months ended June 30, 2021 compared to the same period in 2020 are summarized in the following table ($ in thousands).

	Mortgage			Asset			Costs
	servicing			management			from			Professional
	fees			fees			RMC			services			REO, net			Other		Total
Three months ended
June 30, 2021	$	283			75			180			232			274			28	$	1,072
June 30, 2020		315			89			177			318			21			17		937
Change	$	(32	)		(14	)		3			(86	)		253			11	$	135

Change
Decrease secured loans principal - average daily balance		(32	)		—			—			—			—			—		(32	)
Decrease limited partners' capital - average balance		—			(14	)		(12	)		—			—			—		(26	)
Increase in allocable expenses from the manager		—			—			14			—			—			—		14
Expanded legal and audit services		—			—			—			(13	)		—			—		(13	)
Tax compliance cost efficiency		—			—			—			(69	)		—			—		(69	)
REO sales, net		—			—			—			—			(79	)		—		(79	)
REO acquisitions		—			—			—			—			38			—		38
REO valuation adjustments		—			—			—			—			294			—		294
Other		—			—			1			(4	)		—			11		8
Change	$	(32	)	$	(14	)	$	3		$	(86	)	$	253		$	11	$	135

The decrease in mortgage servicing fees for the three months ended June 30, 2021 as compared to the same period in 2020, was primarily due to the decrease in the secured loans principal – average daily balance to approximately $75.0 million from approximately $82.1 million. Fees are charged by RMC at the annual rate of 1.5%.

The decrease in asset management fees for the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the decrease in limited partners’ capital – average balance to approximately $77.7 million from $92.3 million. Asset management fees are charged up to 1/32 of 1% of the “net asset value” (3/8 of 1% annually).

The increase in costs from RMC of approximately $3,000 for the three months ended June 30, 2021 as compared to the same period in 2020 was due to an increase in payroll and other allocable expenses from the manager, offset by a reduction of the partnership’s limited partners’ capital as a percent of the total capital of the related mortgaged funds managed by RMC.

Professional services consist primarily of information technology, legal, audit and tax compliance, and consulting expenses.

The decrease in professional services of approximately $86,000 for the three months ended June 30, 2021 over the same period in 2020 was due primarily to a reduction of tax compliance costs as a result of process efficiency implemented in 2021.

The June 30, 2021, REO balance was approximately $8.5 million compared to the June 30, 2020 balance of approximately $8.8 million.

In June 2021, the valuation allowance on REO properties was increased by $294,000 based on pending sales data on transactions expected in the second half of 2021.

During the three months ended June 30, 2020 two single family residences on separate adjoining parcels with a shared driveway in Los Angeles County (Hollywood Hills), were acquired by two separate foreclosure sales, totaling approximately $5.8 million. There were no REO acquisitions in the three months ended June 30, 2021.

There were no REO sales in the three months ended June 30, 2021 or 2020. A gain on sale of REO was recognized in June 2021, related to a seller carryback on an REO property sold in 2016. The borrower paid in full in June 2021, and the previously deferred gain of $79,000 was recognized upon payment.

Holding costs, net of other income includes month-to-month rents received of approximately $27,000 and $29,000 for the three months ended June 30, 2021 and 2020, respectively for the homes in Fresno County and the unit-storage lockers and signage in San Francisco county.

See Note 5 (Real Estate Owned (REO) and Mortgages Payable) to the consolidated financial statements included in Part I, Item 1 of this report for detailed presentations of REO activity during the period.

Cash flows by business activity for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are presented in the following table ($ in thousands).

							Six Months Ended June 30
	2020			2019			2021			2020
Limited partners' capital
Withdrawals	$	(13,494	)	$	(18,860	)
Withdrawals, net of early withdrawal fees							$	(7,462	)	$	(9,197	)
Distributions		(1,400	)		(1,765	)		(773	)		(943	)
Early withdrawal penalties		168			323
Formation loan								227			—
Cash used in limited partners' capital		(14,726	)		(20,302	)		(8,008	)		(10,140	)

Borrowings
Line of credit advances, net		1,515			—			6,147			—
Interest paid								(127	)		—
Debt issuance costs paid - line of credit		(108	)		—			—			(108	)
Promissory note to related party		850			—
Cash from borrowings		2,257			—
Cash from (used in) borrowings								6,020			(108	)

Loan earnings and payments
Interest income		4,879			5,735
Interest received, net								3,913			3,318
Late fees		54			29			102			13
Recovery of loan losses		134			1,613			—			126
Loans funded, net								(15,536	)		(1,500	)
Principal collected		7,441			56,346			13,282			4,572
Loan transferred to related mortgage fund		2,297			—
Loan transferred from related mortgage fund								(1,371	)		—
Loans transferred to related mortgage fund								4,672			2,297
Loans sold to non-affiliate, net		—			7,832			485			—
Loans funded, net		(3,775	)		(52,838	)
Advances made on loans		(62	)		(91	)
Advances received from (made on) loans								39			(48	)
Total cash from loan production		10,968			18,626			5,586			8,778

REO
Sale proceeds, net		186			—			—			186
Holding costs		(91	)		(39	)		(84	)		(40	)
Cash from (used in) REO operations and sales		95			(39	)
Cash (used in) from REO operations and sales								(84	)		146

Operations expense, excluding REO holding costs		(2,423	)		(2,819	)		(1,583	)		(1,817	)

Net decrease in cash	$	(3,829	)	$	(4,534	)
Net increase (decrease) in cash							$	1,931		$	(3,141	)
Cash, end of period	$	313		$	9,073		$	2,295		$	1,001

Withdrawals of limited partners’ capital for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are presented in the following table ($ in thousands).

	Three Months Ended				Nine Months Ended				Three months ended				Six months ended
Withdrawals	2020		2019		2020		2019		2021		2020		2021		2020
Without penalty	$	3,767	$	4,863	$	11,813	$	15,624	$	3,309	$	3,899	$	6,737	$	8,046
With penalty		403		960		1,681		3,236		428		534		806		1,278
Total	$	4,170	$	5,823	$	13,494	$	18,860	$	3,737	$	4,433	$	7,543	$	9,324

Scheduled, at September 30	$	33,865	$	43,769	$	33,865	$	43,769
Scheduled, at June 30,									$	27,029	$	35,922	$	27,029	$	35,922

Scheduled withdrawals of limited partners’ capital at ~~September~~June 30, ~~2020~~2021 are presented in the following table ($ in thousands).


2020	$	3,875
2021		12,379	$	6,597
2022		8,584		9,404
2023		5,659		6,267
2024		2,773		3,378
2025				1,179
Thereafter		595		204
Total	$	33,865	$	27,029

In March 2020, RMI VIII entered into a revolving line of credit and term loan agreement. ~~As of September~~For the six months ended June 30, ~~2020, approximately $1,515,000 had been advanced on~~2021, the line of ~~credit.~~

credit had an average daily balance of approximately $5.6 million. At June 30, 2021, the balance was $8.6 million. See Note 7 (Line of Credit) to the consolidated financial statements included in Part I, Item 1 of this report for a detailed presentation of the activity and discussion on the terms and provisions of the loan agreement, which presentation is incorporated by this reference into this Item 2.

In June 2020, the partnership ~~assumed~~acquired REO by foreclosure sale subject to two mortgages payable of approximately ~~$2,449,000 in conjunction with the acquisition of REO by foreclosure sale.~~

$2,449,000. See Note 5 (Real Estate Owned (REO)) and Mortgages Payable) to the consolidated financial statements included in Part I, Item 1 of this report for a detailed presentation on mortgage notes payable, which presentation is incorporated by this reference into this Item 2.

In addition to the borrowings described above, the partnership’s only commitment at September 30, 2020 is to fund the scheduled withdrawals of limited partner capital subject to cash available pursuant to the terms of the Partnership Agreement.

At ~~September~~June 30, ~~2020,~~2021, the partnership had no construction or rehabilitation loans outstanding, ~~and had~~ no loan commitments ~~pending.~~

~~At September 30, 2020, the partnership had~~pending, and no off-balance sheet arrangements as such arrangements are not permitted by the Partnership Agreement.

Note 3 (General Partners and Other Related Parties) to the consolidated financial statements included in Part I, Item 1 of this report presents detailed discussion of the partnership’s contractual obligations to the general partners.

~~ITEM~~Item 3. Quantitative and Qualitative Disclosures About Market Risk ~~(Not~~

Not included asbecause the partnership is a smaller reporting ~~company)~~company.

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~~limited 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 for us to conduct our business, as we have no employees of our own.

California limited partnerships generally do not have a board of directors, nor, therefore, do we have an audit committee of the board of directors. Thus, there is no 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:

RMC, as the manager, carried out an evaluation, with the participation of ~~RMCs~~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 report. Based upon that evaluation, RMC's principal executive officer/principal financial officer concluded, as of the end of such period, that the manager's disclosure controls and procedures were effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

There have not been any changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the manager’s or partnership’s internal control over financial reporting.

As of June 30, 2021, the partnership was not involved in any legal proceedings other than those that would be considered part of the normal course of business. In the normal course of business, the partnership may become involved in various types of legal proceedings such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc. to enforce provisions of the deeds of trust, collect the debt owed under promissory notes or protect or recoup its investment from real property secured by the deeds of trust and resolve disputes between borrowers, lenders, lien holders and mechanics. None of these actions would typically be of any material importance. ~~As of September 30, 2020, the partnership was not involved in any legal proceedings other than those that would be considered part of the normal course of business.~~

There were no sales of securities by the partnership which were not registered under the Securities Act of 1933.

Liquidations are made once a quarter, on the last business day of the quarter. Liquidations for the three months ended ~~September~~June 30, ~~2020~~2021 were approximately ~~$4,170,000.~~$3,737,000. The unit liquidation program is ongoing and available to partners beginning one year after the purchase of the units. The maximum number of units that may be liquidated in any year and the maximum amount of liquidation available in any period to partners are subject to certain limitations described in the Partnership Agreement.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


177 Bovet Road, Suite 520, San Mateo, CA	94402
(Address of principal executive offices)	(Zip Code)

Title of each class	Trading symbol(s)	Name of each exchange on which registered
~~None~~NaN

	Three months ended			Nine months ended
Principal, beginning of period	$	77,895		$	86,203
Loans funded		2,275			3,775
Loan transferred to related mortgage fund		—			(2,297	)
Collected - secured		(2,869	)		(7,441	)
Loans transferred to held for sale⁽²⁾		(2,331	)		(2,331	)
Foreclosures⁽¹⁾		—			(2,939	)
Principal, September 30, 2020	$	74,970		$	74,970

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

	Three Months Ended September 30						Nine Months Ended September 30
	2020			2019			2020			2019
Revenue
Interest income	$	1,574		$	1,815		$	5,419		$	6,124

Interest expense
Line of credit		(15	)		—			(28	)		—
Mortgages payable		(26	)		—			(33	)		—
Total interest expense		(41	)		—			(61	)		—

Net interest income		1,533			1,815			5,358			6,124

Late fees		41			11			54			29
Gain on sale, loans		—			38			—			38
Total revenue, net		1,574			1,864			5,412			6,191

Recovery of loan losses		(8	)		(1,613	)		(134	)		(1,613	)

Operations expense
Mortgage servicing fees		286			330			924			1,086
Asset management fees		84			187			265			408
Costs from Redwood Mortgage Corp.		185			439			676			1,067
Professional services		275			347			885			748
REO, net (Note 5)		51			187			23			249
Other		1			(5	)		18			13
Total operations expense		882			1,485			2,791			3,571

Net income	$	700		$	1,992		$	2,755		$	4,233

Net income
Limited partners (99%)	$	693		$	1,972		$	2,727		$	4,191
General partners (1%)		7			20			28			42
	$	700		$	1,992		$	2,755		$	4,233

	2020
Balance, January 1	$	4,292
Early withdrawal penalties		(168	)
Repayments		—
Balance, September 30	$	4,124

Scheduled maturities, as of September 30, 2020	Loans		Principal		Percent
2020⁽⁶⁾		4	$	21,273		28	%
2021⁽⁷⁾		20		34,643		46
2022		6		5,461		7
2023		2		3,802		5
2024		2		1,106		2
Total scheduled maturities		34		66,285		88
Matured as of September 30, 2020		3		8,685		12
Total principal, secured loans		37	$	74,970		100	%

	Loans				Principal				Interest(4)
At June 30, 2021	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Past due
30-89 days (1-3 payments)		—		1	$	—	$	1	$	—	$	16	$	17
90-179 days (4-6 payments)		2		—		588		—		—		—		588
180 or more days (more than 6 payments)⁽⁵⁾		2		—		5,784		—		291		—		6,075
Total past due		4		1	$	6,372	$	1	$	291	$	16	$	6,680

	Loans				Principal				Interest⁽⁸⁾
At September 30, 2020	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Payments in arrears
30-89 days (1-3 payments)		—		1	$	—	$	—	$	—	$	39	$	39
90-179 days (4-6 payments)		1		—		3,896		—		—		—		3,896
180 or more days (more than 6 payments)⁽⁹⁾		4		—		15,524		—		726		—		16,250
Total past due⁽¹⁰⁾		5		1	$	19,420	$	—	$	726	$	39	$	20,185

	Loans				Principal				Interest⁽¹¹⁾
At December 31, 2019	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Payments in arrears
30-89 days (1-2 payments)		—		—	$	—	$	—	$	—	$	—	$	—
90-179 days (3-5 payments)		1		—		5,355		—		76		—		5,431
180 or more days (6 or more payments)		3		—		6,955		—		394		—		7,349
Total payments in arrears		4		—	$	12,310	$	—	$	470	$	—	$	12,780

	Three months ended		Since inception
Balance, beginning of period	$	—	$	—
Draws		1,515		1,515
Repayments		—		—
Balance September 30, 2020	$	1,515	$	1,515
Line of credit - average daily balance beginning September 28, 2020	$	1,515	$	1,515

Exhibit No.No.		Description of Exhibits

10.1		Business Loan Agreement; Promissory Note dated March 13, 2020; Pledge and Security Agreement

10.2		Promissory Note; Pledge and Security Agreement dated September 30, 2020

10.3		Promissory Note; Pledge and Security Agreement dated October 14, 2020

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~~101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document

~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

			REDWOOD MORTGAGE INVESTORS VIII, a California Limited Partnership
			(Registrant)

Date: ~~November~~August 16, ~~2020~~2021	By:		Redwood Mortgage Corp., General Partner

		By:		/s/ Michael R. Burwell
		Name:		Michael R. Burwell
		Title:		President, Secretary and Treasurer
				(On behalf of the registrant, and in the capacity of principal financial officer), Director

Date: ~~November~~August 16, ~~2020~~2021	By:		Michael R. Burwell, General Partner

		By:		/s/ Michael R. Burwell
		Name:		Michael R. Burwell
		Title:		General Partner