Common use of Geographic Area of Lending Activity Clause in Contracts

Geographic Area of Lending Activity. The Partnership will continue to generally limit lending to Deeds of Trust on properties located in California. Approximately eighty percent (80%) of the Partnership's Mortgage Investments are secured by Deeds of Trust on properties in six San Francisco Bay Area counties and the General Partners anticipate that this will continue in the future. These counties, which have an aggregate population of over 3.5 million, are Santa Cxxxx, San Mateo, San Francisco, Alameda , Contra Costa and Marin. The economy of the area where the security is located is important in protecting market values. Therefore, the General Partners will limit the largest percentage of its lending activity principally to the San Francisco Bay Area since it has a broad diversified economic base, an expanding working population and a minimum of buildable sites. The General Partners believe these factors contribute to a stable market for residential property. Although, the real estate market in Northern California, like most of the country, had fallen off during the early 1990's, the market appears to be recovering, the General Partners believe the strength of the economy of Northern California, especially in the Bay Area, will continue to protect market values. Although the General Partners anticipate that the Partnership's primary area of lending will continue to be Northern California, as the remainder of California economy continues its recovery the General Partners may elect to make Mortgage Investments secured by real property located throughout California. A wide variety of indicators suggest that economic growth in California was strong in the first half of 1996. Statistics on the California labor market, personal income, consumer spending, firm formation and housing markets all point to large gains in economic activity this year. Strength in business and real estate loan demand contributed to a large increase in lending by California banks in April and May. This increase is reflected in a 16.5% increase in home sales volume in California on the first quarter, relative to a year earlier. The largest gains were in the San Francisco Bay Area, where sales were almost twenty-five percent (25%) higher than a year earlier. Home sales in San Mateo County were sixty-four percent (64%) higher in May over the same month last year. Sales in Alameda County were up 21.7% over the year. In the San Francisco Bay Area, the median single-family home price increased about three percent (3%) over the year ending in the first quarter. Although it is too early to declare that the California housing industry has recovered completely, rapid economic growth, job growth, decrease in unemployment rates, increase retail sales suggest that the California real estate market will remain strong.

Geographic Area of Lending Activity. The Partnership will continue to generally limit lending to Deeds of Trust on properties located in California. Approximately eighty percent (80%) The General Partners anticipate that approximately 75% of the Partnership's Mortgage Investments will be secured by Deeds of Trust on properties in six San Francisco Bay Area counties. These counties, which have an aggregate population of over 3.5 million, are San Francisco, San Mateo, Santa Clara, Marin, Alameda and Contra Costa. Currently, 72.00% of the Partnership's Mortgage Investments are secured by Deeds of Trust on properties in these six San Francisco Bay Area counties and the General Partners anticipate that this will continue in the future. These counties, which have an aggregate population of over 3.5 million, are Santa Cxxxx, San Mateo, San Francisco, Alameda , Contra Costa and Marin. The economy of the area where the security is located is important in protecting market values. Therefore, the General Partners will limit the largest percentage geographic area of its lending activity principally to the San Francisco Bay Area since it and surrounding Counties, which has a broad diversified economic base, an expanding working population and a minimum of buildable sites. The General Partners believe these factors contribute to a more stable market for residential propertyreal estate. Although, the real estate market in Northern California, like most of the country, had fallen off has decreased in value during the early 1990's1990s, it has improved somewhat in the market appears to be recovering, the last 3 years. The General Partners believe the strength of the economy of Northern California, especially in the Bay Area, will continue to protect market valuesvalues over the longer term. Although Over the last 30 months the number of seriously delinquent mortgages, that is, mortgages more than 90 days past due, reported by many of the largest California lenders has decreased. This decrease indicates, as predicted by the General Partners, that the California economy, especially Northern California, is beginning to improve. The Federal Reserve Bank of San Francisco has recently reported an increased demand for business credit. Over the last thirty months large banks in California have reported an increase in demand for business loans from middle market borrowers for inventory financing and investment purposes. Smaller banks are also reporting an increase in demand for business loans. Commercial and consumer loan growth rates in California exceeded last years. This increase in consumer and business loans reflect's increased business activity, an improving economy and increased confidence among employers. This increase confidence and business activity has also been reflected in the real estate market. Real estate loans outstanding exceeded their year-earlier levels, marking this the third positive year-over-year increase. ATTACHMENT I to SUPPLEMENT NO. 1 DATED APRIL 15, 1997 UPDATED PRIOR PERFORMANCE TABLES The prior performance tables as referenced in the Prior Performance Summary of the Prospectus present information on programs previously sponsored by the General Partners. The purpose of the tables is to provide information on the performance of these partnerships to assist prospective investors in evaluating the experience of the General Partners anticipate that as sponsors of such partnerships. While none of the information represents activities of an entity whose investment objectives and criteria are identical to the Partnership, in the opinion of the General Partners all of the partnerships included in the tables had investment objectives which were similar to those of the Partnership. Factors considered in making such determination included the type of investments, expected benefits from investment and structure of the programs. Each of such prior programs had the following objectives: (i) annual distributions of cash or credits to a Partner's capital account for additional Mortgage Investments; and (ii) preservation of the Partnership's primary area capital. Redwood Mortgage Investors VI, Redwood Mortgage Investors VII, and the Partnership differ from the prior programs in that they will amortize organizational costs over a five (5) year period instead of lending a ten (10) year period and will continue invest in a greater percentage of first deeds of trust. In additions, the Partnership's Loan Servicing Fees may be slightly higher and interest earned on the Mortgage Investments made by the partnership will differ due to be Northern Californiaeconomic considerations and other factors at the present time. Accordingly, as such prior programs differed in certain respects from the remainder Partnership, and inclusion of California economy continues its recovery these tables does not imply that investors of the Partnership will experience results comparable to those experienced in the partnerships referred to in the tables. The updated tables consist of: Table I Experience in Raising and Investing Funds. Table II Compensation to General Partners may elect to make and Affiliates. TableIII Operating Results of Prior Limited Partnerships. Table V Payment of Mortgage Investments secured by real property located throughout CaliforniaMortgage Investments. A wide variety of indicators suggest that economic growth in California was strong Persons who purchase Interests in the first half Partnership will not thereby acquire any ownership interest in any of 1996the partnerships to which these tables relate. Statistics on The inclusion of the California labor market, personal income, consumer spending, firm formation and housing markets all point following tables in the Prospectus does not imply that the Partnership will make investments comparable to large gains in economic activity this year. Strength in business and real estate loan demand contributed to a large increase in lending by California banks in April and May. This increase is those reflected in a 16.5% increase the tables with respect to cash flow, income tax consequences available to investors, or other factors, nor does it imply that they will experience returns, if any, comparable to those experienced by investors in home sales volume in California on the first quarter, relative partnerships referred to a year earlierbelow. The largest gains General Partners have sponsored two (2) other public programs registered with the Securities and Exchange Commission. Therefore, the following tables also include information about prior non-public programs whose investment objectives are similar to those of the Partnership. These partnerships were offered without registration under the Securities Act of 1933 in reliance upon the intrastate offering exemption from the registration requirements thereunder and/or the exemption for transactions not involving a public offering. Additional information regarding the Description of Open Loans of Prior Limited Partnerships is provided in Table VI in Part II of this Registration Statement. The Partnership will furnish without charge to each person to whom this Prospectus is delivered, upon request, a copy of Table VI. Definitions and Glossary of Terms The following terms used in the San Francisco Bay Area, where sales were almost twenty-five percent (25%) higher than a year earlier. Home sales in San Mateo County were sixty-four percent (64%) higher in May over Tables have the same month last year. Sales in Alameda County were up 21.7% over the year. In the San Francisco Bay Area, the median single-family home price increased about three percent (3%) over the year ending in the first quarter. Although it is too early to declare that the California housing industry has recovered completely, rapid economic growth, job growth, decrease in unemployment rates, increase retail sales suggest that the California real estate market will remain strong.following meanings:

Geographic Area of Lending Activity. The Partnership will continue to generally limit lending to Deeds of Trust on properties located in California. Approximately eighty percent (80%) of the Partnership's Mortgage Investments are secured by Deeds of Trust on properties in six San Francisco Bay Area counties and the General Partners anticipate that this will continue in the future. These counties, which have an aggregate population of over 3.5 million, are Santa CxxxxXxxxx, San Mateo, San Francisco, Alameda , Contra Costa and Marin. The economy of the area where the security is located is important in protecting market values. Therefore, the General Partners will limit the largest percentage of its lending activity principally to the San Francisco Bay Area since it has a broad diversified economic base, an expanding working population and a minimum of buildable sites. The General Partners believe these factors contribute to a stable market for residential property. Although, the real estate market in Northern California, like most of the country, had fallen off during the early 1990's, the market appears to be recovering, the General Partners believe the strength of the economy of Northern California, especially in the Bay Area, will continue to protect market values. Although the General Partners anticipate that the Partnership's primary area of lending will continue to be Northern California, as the remainder of California economy continues its recovery the General Partners may elect to make Mortgage Investments secured by real property located throughout California. A wide variety of indicators suggest that economic growth in California was strong in the first half of 1996. Statistics on the California labor market, personal income, consumer spending, firm formation and housing markets all point to large gains in economic activity this year. Strength in business and real estate loan demand contributed to a large increase in lending by California banks in April and May. This increase is reflected in a 16.5% increase in home sales volume in California on the first quarter, relative to a year earlier. The largest gains were in the San Francisco Bay Area, where sales were almost twenty-five percent (25%) higher than a year earlier. Home sales in San Mateo County were sixty-four percent (64%) higher in May over the same month last year. Sales in Alameda County were up 21.7% over the year. In the San Francisco Bay Area, the median single-family home price increased about three percent (3%) over the year ending in the first quarter. Although it is too early to declare that the California housing industry has recovered completely, rapid economic growth, job growth, decrease in unemployment rates, increase retail sales suggest that the California real estate market will remain strong.