SecProbe.io

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                     (Letterhead of Morrison Foerster LLP)

November 2, 2005

By Telefacsimile and Mail

Rebekah Moore
Staff Accountant
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re:    Redwood Mortgage Investors VIII
       Form 10-K for the Fiscal Year Ended December 31, 2004
       Form 10-Q for the Fiscal Quarter ended June 30, 2005
       File No. 000-27816

Dear Ms. Moore:

     On behalf of our client, Redwood Mortgage Investors VIII (the "Company") we
are  responding to the comments of the Staff (the "Staff") of the Securities and
Exchange Commission (the "Commission") set forth in your letter of September 29,
2005. The following discussion and answers to your inquiries have been presented
in numbered paragraphs to conform to the numbered paragraphs in your letter. For
the  convenience  of the Staff,  we have set forth the  Staff's  comments  fully
identified in bold and italicized type immediately prior to each response.

     Form 10-K for the year ended December 31, 2004

     Consolidated Financial Statements

     2. Summary of Significant Accounting Policies - page 36

     Allowance for Loan Losses - page 37

     1. Please tell us in detail the  methodology  you applied to determine  the
amounts of each of the specific  and general  allowances  for loan  losses,  and
describe how each  methodology  is  consistent  with the guidance in SFAS 5, and
SFAS 114/118.

     RESPONSE:

<PAGE>

Rebekah Moore
November 2, 2005
Page Two

     As stated in the Summary of Significant Accounting Policies to our filings,
in the section entitled  "Allowance for loan losses", we continually analyze our
loan portfolio for recoverability.  We monitor delinquency  reports,  total loan
amounts by borrower,  financial  status of  borrowers  and  guarantors,  and the
condition  and  market  information  related  to  collateral.  Because  our loan
portfolio  is  comprised  of a  relatively  small  number of loans  (i.e.  75 at
December  31,  2004)  located  primarily  (76.36% at December  31,  2004) in six
counties of the San Francisco Bay Area,  we can  effectively  monitor all of our
loans on a consistent basis.

     Specific Portion of Allowance for Loan Losses

     We are primarily a collateral-based lender. In accordance with SFAS 114, as
amended  by SFAS 118 (and as stated in the  Summary  of  Significant  Accounting
Policies  to our  filings in the section  entitled  "Loans,  secured by deeds of
trust"),  if events and or changes in  circumstances  cause  management  to have
serious doubts about the collectibility of a loan's contractual payments, a loan
may be categorized as impaired.  As required by SFAS 118, the term  "contractual
payments"  includes both the contractual  interest  payments and the contractual
principal payments.

     When we identify  that the  collectibility  of amounts due according to the
contractual  terms of the loan agreement are in doubt  (through our  delinquency
reports,  current  knowledge  of the  borrower's  financial  strength,  or other
factors), we evaluate the recoverability of the loan via analysis of the present
value of the  expected  future cash  flows.  To assist in  determining  expected
future cash flows,  appraisals of the collateral on the loan are re-examined and
updated when considered  necessary.  If the present value of the expected future
cash  flows  (or the  estimated  fair  value  of the  collateral  if the loan is
collateral  dependent),  is less  than the  carrying  amount of the loan we will
consider the loan impaired. In accordance with SFAS 114, as amended by SFAS 118,
such  impaired  loan's  carrying  value will be reduced to the present  value of
future expected cash flows (or if collateral dependent, the estimated fair value
of collateral).

     If upon reviewing a loan for potential impairment, the present value of the
estimated  expected  future  cash  flows  (or the  estimated  fair  value of the
collateral  if the loan is  collateral  dependent)  equals or exceeds the loan's
carrying value, the loan will typically not be considered impaired.  However, we
may still determine that full  collectibility on such loan is still in doubt and
include a specific  provision  in the  allowance  for loan losses for such loan.
This is determined after giving adequate  consideration to the fair value of the
collateral,  the borrower's or guarantor's present financial condition,  current
or expected real estate value trends,  and other general  economic  factors.  In
accordance  with  SFAS No. 5, we will  make  such a  provision  when both of the
following  conditions are met: 1)it is probable that a loan has been impaired as
of the  financial  statement  date and 2) the  amount of  potential  loss can be
reasonably estimated.

<PAGE>

Rebekah Moore
November 2, 2005
Page Three

     General Portion of Allowance for Loan Losses

     As allowed by SFAS No. 5, in determining  whether  accrual is warranted for
collectibility  of  receivables,  the two  conditions  required  for accrual (as
detailed in the preceding paragraph) may be considered in relation to individual
receivables  (as  described  above  for  specifically  identified  loans)  or in
relation to groups of similar types of receivables. After we have identified all
specific  loans for which an  allowance  for loan losses is  warranted,  we will
consider  aggregate  collectibility  of the remainder of our loan portfolio.  We
will analyze the remaining  portfolio in terms of geographic  concentrations and
collateral   types.   Note  that  our   portfolio   consists  of   predominantly
collateral-dependent  loans,  secured by  residential  and  commercial  property
located primarily in the San Francisco Bay Area.

     Through close  monitoring of historical loss statistics on the Registrant's
portfolio  (12  years  of data)  and loss  statistics  on 8 other  similar  type
partnerships  sponsored by the Registrant's  general partner or affiliates (over
25 years of data),  we have  determined  that it is probable that some amount of
loss has occurred in the loan  portfolio  even though the specific loans may not
be  identified  as of  the  financial  statement  date.  Using  historical  loss
statistics  and other  available  industry and economic  data (i.e.  foreclosure
statistics,  commercial lease absorption statistics,  property resale values and
trends,  interest  rate  changes,  unemployment  patterns,  etc.) , we can  make
reasonable  estimates of the amount of expected  losses and make a provision for
loan losses  based upon the general  partners'  best  estimate of this  expected
loss. This amount is included as a general reserve in our overall  allowance for
loan losses.

     2. Tell us how you account for loan  restructurings and how that accounting
is consistent with the guidance in SFAS 18 and SFAS 114/118.

     Our accounting for loan  restructurings  is consistent with the guidance of
SFAS 15 and  SFAS114/118  (please note,  your  question  referred to SFAS 18; we
assume you meant SFAS 15). The accounting  treatment discussed herein relates to
loan  restructurings  that qualify as troubled debt restructurings in accordance
with SFAS 15, para. 2 - 7. This  discussion does not apply to routine changes in
loan terms.

     If the loan  restructuring  involves  only a  modification  of  terms,  the
effects of the restructuring  are accounted for  prospectively  from the time of
the restructuring agreement. In accordance with SFAS 114, no loss is recorded at
the time of  restructuring  unless it is probable that all amounts due according
to the  contractual  terms of the original loan  agreement will not be collected
(i.e. the loan is considered  impaired in accordance with SFAS 114).  Impairment
of a restructured loan in a troubled debt restructuring is measured based on the
present value of expected  future cash flows  discounted at the loan's  original
contractual interest rate. As a practical matter,  impairment generally would be
measured based on the fair value of the collateral when repayment of the loan is
expected to be provided by the underlying collateral.

<PAGE>

Rebekah Moore
November 2, 2005
Page Four

     If  loan   restructuring   involves   the  receipt  of  assets  in  partial
satisfaction of the loan receivable and a modification of terms of the remaining
loan receivable, the recorded investment in the loan receivable is first reduced
by the fair value less cost to sell of the assets  received.  The remaining loan
receivable  balance is accounted  for in  accordance  with SFAS 114 as discussed
above.

     3. Provide us with all allowance for loan loss disclosures required by Item
IV of Guide 3.

     RESPONSE:

     At the staff's suggestion,  we have reviewed the disclosure requirements of
Guide 3 relating to Statistical Disclosures by Bank Holding Companies. While the
Registrant's  business is to make mortgage  loans secured by real property it is
not engaged in a general lending  business of the nature  contemplated by a bank
holding  company.  For example,  much of the disclosure  requirements of Guide 3
concern such matters as portfolio and trading analysis of taxable and tax-exempt
securities,  interest bearing deposits,  federal funds and securities  purchased
and repurchase  agreements.  None of these  activities  apply to the Registrant.
Therefore,  the bulk of Guide 3 disclosure  relating to diversification of broad
loan  portfolios  and the interest  rate  investment  and trading  sensitivities
attendant to a varied loan portfolio is simply not applicable.

     While we do not believe that Guide 3 should be  applicable,  in our efforts
to provide  appropriate,  relevant and  informative  information  regarding  our
mortgage  loan  portfolio  the  Registrant  has  provided  detailed   disclosure
information  in  its  Registration  Statement  and  periodic  Supplements.   The
Management Discussion & Analysis Section,  Prior Performance Summary and Tables,
the  Investment  Objectives and Criteria as well as the  Consolidated  Financial
Statements present detailed  information  concerning the  diversification of the
Registrant's loan portfolio.  Information is disclosed to prospective  investors
with  respect  to how many,  what  type,  and where  the loans  have been  made.
Extensive   disclosure   regarding  the   portfolio's   current  default  rates,
foreclosures and work out arrangements,  construction and  rehabilitation  loans
are  included.  The  Management  Discussion  and  Analysis  Section  details the
concerns with respect to interest  rates and the Bay Area economy as a whole and
how these factors could affect the real estate  lending  business.  In addition,
the Management  Discussion and Analysis Section has a separate section detailing
management's  processes and the factors management considered in determining the
amount of additions to the allowance for loan losses.

     Clearly the purpose of Guide 3 is to disclose to a prospective investor who
is  contemplating  an investment in a bank holding company or unregistered  bank
with a  varied  portfolio  including  domestic  and  foreign  loans  information
concerning  diversification,  the  relative  risk  and  sensitivity  of  various

<PAGE>

Rebekah Moore
November 2, 2005
Page Five

segments of the portfolio to interest rates as well as the overall health of the
portfolio.  We respectfully submit that these statistical disclosures are simply
as a whole not applicable to the Registrant.  However,  appropriate and relevant
disclosures applicable to the scope and nature of the Registrant have been made.

     Real Estate Held for Sale - page 37

     4. Tell us how your accounting for foreclosed assets is consistent with the
guidance in paragraph 34 of SFAS 144.

     RESPONSE:

     The  accounting for real estate held for sale follows the guidance found in
paragraph  34 of SFAS 144. As disclosed  in our filings  "real  estate  acquired
through foreclosure ... is stated at the lower of the recorded investment in the
loan, plus any senior  indebtedness on the loan, or at the property's  estimated
fair value,  less estimated costs to sell." The recorded  investment in the loan
is the carrying amount of the asset, which is originally established as its fair
value on the loan  funding  date.  This  carrying  amount is then  adjusted  for
activity  on the loan  until  the loan  matures  or the  related  collateral  is
foreclosed upon. We do not depreciate real estate held for sale.

     We  periodically  compare the carrying value of real estate to undiscounted
future cash flows,  including net expected  sales proceeds (i.e. its fair value)
to assess the  recoverability  of the recorded  amounts.  If the carrying  value
exceeds future  undiscounted  cash flows,  the asset is reduced to its estimated
fair value.

     Form 10-Q for the Fiscal Quarter Ended June 30, 2005

     Consolidated Statements of Income, page 3

     5.  Please  tell us why you have both  income  and  expense  related to the
imputed interest on the formation loan.

     RESPONSE:

     In  accordance  with APB no.  21, we impute  interest  on the  non-interest
bearing  Formation  Loan (a receivable to the  Registrant).  When  adjusting the
carrying  amount of the  Formation  Loan to its net  present  value based on the
applicable  imputed interest rate, a corresponding  offsetting asset is recorded
called "Discount on Formation Loan". This asset is amortized to expense over the
same period that the imputed interest income from the reduced  Formation Loan is
being recognized.  Thus, we have both income and expense related to the imputing
of interest on the Formation Loan.

<PAGE>

Rebekah Moore
November 2, 2005
Page Six

     Note that the entity that the  Registrant has made the Formation Loan to is
Redwood Mortgage Corp.  ("RMC"),  a general partner of the Registrant.  When RMC
recorded the loan from the Registrant on its books, it recognized the difference
between the face amount of the loan and the net present value on the loan (based
on the imputed interest rate) as a reduction of RMC's debt to the Registrant and
as a reduction to the asset RMC was  acquiring  with the borrowed  funds.  These
reductions are then  amortized  over the applicable  term of the debt and useful
life of the acquired asset.

<PAGE>

Rebekah Moore
November 2, 2005
Page Seven

     The  Registrant  likewise  adhered  to APB  No.  21 in  accounting  for the
Formation Loan to provide  consistency in accounting between RMC's treatment and
the Registrant's  treatment of this  transaction.  However,  in the Registrant's
case, the transaction was simply the lending of money from one entity to another
on a non-interest  bearing basis.  From RMC's point of view, it is the borrowing
of funds on a non-interest basis used to acquire an asset.

Very truly yours,

/s/ Justin L. Bastian
-----------------------
Justin L. Bastian

cc:   Michael R. Burwell, Redwood Mortgage Investors VIII

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