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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

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

For the Year Ended December 31, 2025

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

For the transition period from to___________

Commission file number: 000-55601

REDWOOD MORTGAGE INVESTORS IX, LLC

(Exact name of registrant as specified in its charter)

     Delaware

     26-3541068

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification Number)


155 Bovet Road, Suite 302, San Mateo, CA		94402
(Address of principal executive offices)		(Zip Code)

(650) 365-5341

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)		Name of each exchange on which registered
none
Securities registered pursuant to Section 12(g) of the Act:		Units of Limited Liability Company Interests

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ NO

Indicate by check mark whether the registrant has submitted electronically 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.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging Growth Company	☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The registrant’s units of limited liability company interests are not publicly traded and therefore have no market value. The registrant had approximately $62.2 million limited liability company interests outstanding as of February 28, 2026.

REDWOOD MORTGAGE INVESTORS IX, LLC

(A Delaware Limited Liability Company)

Index to Form 10-K

December 31, 2025


Part I		2

Item 1 – Business		2
Item 1A – Risk Factors		10
Item 1B – Unresolved Staff Comments		20
Item 1C – Cybersecurity		21
Item 2 – Properties		21
Item 3 – Legal Proceedings		21
Item 4 – Mine Safety Disclosures		21

Part II		22

Item 5 – Market for the Registrant’s Units, Related Unitholder Matters and Issuer Purchases of Equity Securities		22
Item 6 – [Reserved.]		23
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 7A – Quantitative and Qualitative Disclosures About Market Risk		34
Item 8 – Financial Statements and Supplementary Data		34
Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		65
Item 9A – Controls and Procedures		65
Item 9B – Other Information		65
Item 9C – Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		66

Part III		66

Item 10 – Directors, Executive Officers and Corporate Governance		66
Item 11 – Executive Compensation		67
Item 12 – Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters		68
Item 13 – Certain Relationships and Related Transactions, and Director Independence		68
Item 14 – Principal Accountant Fees and Services		68

Part IV		69

Item 15 – Exhibits and Financial Statement Schedules		69
Item 16 – Form 10-K Summary	-	70

Signature		71

Forward-Looking Statements

Certain statements in this Annual Report on Form 10-K (“this report” or “this Form 10-K”) which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), including statements regarding the company’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 company and its assets; estimates as to the allowance for loan losses; forecasts of future redemptions of units, forecasts of future funding of loans; loan payoffs and the possibility of future loan sales (and the gain thereon, net of expenses) to third parties, if any; future fluctuations in the net distribution rate; and beliefs relating to how the company 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:

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

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the impact of competition and competitive pricing for mortgage loans;

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the manager’s ability to make and arrange for loans that fit our investment criteria;

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whether we will have any future loan sales to unaffiliated third parties, and if we do, any gain, net of expenses, and the volume and timing of loan sales to unaffiliated third parties, which to date have provided only immaterial gains to us;

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the concentration of credit risks to which we are exposed;

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increases in payment delinquencies and defaults on our mortgage loans;

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the timing and dollar amount of financial support, if any, from the manager and the corresponding impact on the net distribution rate to members;

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changes in government regulation and legislative actions affecting our business; and

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the impact of wildfires, floods, earthquakes and other natural disasters.

All forward-looking statements and reasons why results may differ included in this Form 10-K are made as of the date hereof, and we assume no obligation to update any such forward-looking statement or reason why actual results may differ unless required by law.

Part I

Item 1 – Business

Redwood Mortgage Investors IX, LLC (“RMI IX”, “the company”, “we”, “us” or “our”) is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily through first and second deeds of trust.

The company is externally managed by Redwood Mortgage Corp. (“RMC” or “the manager”).

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RMC is solely responsible for managing the business and affairs of RMI IX, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the company.

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RMC provides personnel and services necessary for RMI IX to conduct its business as the company has no employees of its own.

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The mortgage loans the company funds and invests in are arranged and generally are serviced by RMC.

The rights, duties and powers of the members and manager of the company are governed by the Ninth Amended and Restated Limited Liability Company Operating Agreement of RMI IX (the “Operating Agreement”), as amended, the Delaware Limited Liability Company Act and the California Revised Uniform Limited Liability Company Act.

Members representing a majority of the outstanding units may, without the concurrence of the managers, vote to: (i) dissolve the company, (ii) amend the Operating Agreement, subject to certain limitations, (iii) approve or disapprove the sale of all or substantially all of the assets of the company or (iv) remove or replace one or all of the managers. Where there is only one manager, a majority in interest of the members is required to elect a new manager to continue the company business after a manager ceases to be a manager due to its withdrawal.

The following is a summary of certain provisions of the Operating Agreement and is qualified in its entirety by the terms of the Operating Agreement. Members should refer to the Operating Agreement for complete disclosure of its provisions.

The company’s primary investment objectives are to:

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yield a favorable rate of return from the company’s business of making and/or investing in loans;

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preserve and protect the company’s capital by making and/or investing in loans secured by California real estate, preferably income-producing properties geographically situated in the San Francisco Bay Area and the coastal metropolitan regions of Southern California; and

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generate and distribute cash flow from these mortgage lending and investing activities.

Net income (or loss) is allocated among the members according to their respective capital accounts after one percent (1%) of the net income (or loss) is allocated to the manager. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting.

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

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loan origination volume and the balance of capital available to lend;

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the current and future interest rates negotiated with borrowers;

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line of credit advances, repayments and the interest rate thereon;

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loan sales to unaffiliated third parties, and any gains received thereon;

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the amount of fees and cost reimbursements to RMC;

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the timing and amount of other operating expenses, including expenses for professional services;

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the timing and amount of payments from RMC on the formation loan; and

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fee and/or cost reimbursements waived, if any, from RMC.

Federal and state income taxes are the obligation of the members, other than the annual California franchise tax and the California LLC gross receipts tax. The tax basis in the net assets differs from book basis by the amount of the allowance for credit losses.

The ongoing sources of funds for loans are the proceeds (net of redemption of members’ capital and operating expenses) from:

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loan payoffs;

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borrowers’ monthly principal and interest payments;

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line of credit advances;

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loan sales to unaffiliated third parties;

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payments from RMC on the outstanding balance of the formation loan.

Distribution policy

Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager. Cash available for distribution means cash flow from operations (excluding repayments for loan principal and other capital transaction proceeds) less amounts set aside for creation or restoration of reserves. The manager may withhold from cash otherwise distributable to the members with respect to any period the respective amounts of organization and offering expenses (“O&O expenses”) allocated to the members’ accounts for the applicable period pursuant to the company’s reimbursement to RMC and allocation to members’ accounts of O&O expenses. The amount otherwise distributable, less the respective amounts of O&O expenses allocated to members, is the net distribution. Pursuant to the terms of the Operating Agreement, cash available for distribution to the members is allocated among the members in proportion to their percentage interests (except with respect to differences in the amounts of O&O expenses allocated to the respective members during the applicable period) and in proportion to the number of days during the applicable month that they owned such percentage interests. (See Note 3 (Manager and Other Related Parties) to the financial statements for a detailed discussion on the allocation of O&O expenses to members’ accounts.)

Cash available for distributions is disbursed at the end of each calendar month. The manager’s allocable share of cash available for distribution is also distributed not more frequently than cash distributions to members.

Distribution reinvestment plan (“DRIP”), closed July 2024

The distribution reinvestment plan (“DRIP”) provision of the Operating Agreement permitted members to elect to have all or a portion of their monthly distributions reinvested in the purchase of additional units. Cash available for distributions allocable to members who had elected to participate in the DRIP was distributed and reinvested in units at each month end. In July 2024, members who had elected to participate in the DRIP were notified by a letter included with their June 2024 monthly statements that the DRIP was closed. As a result of this plan closure, members that previously did not receive quarterly income distributions because of their enrollment in the DRIP received income distribution checks for the quarter ended September 30, 2024 and continue to receive quarterly income distributions to the extent of cash available for distribution.

The gross proceeds from sales of units to our members under our DRIP pursuant to the registration statement under which they were offered and sold were approximately $10.0 million, which proceeds were used for general corporate operations.

Liquidity and unit redemption program

There are substantial restrictions on transferability of units, and there is no established public trading and/or secondary market for the units and none is expected to develop. In order to provide liquidity to members, the Operating Agreement includes a unit redemption program, whereby a member may redeem all or part of their units, subject to certain limitations. The price paid for redeemed units is based on the lesser of the purchase price paid by the redeeming member or the member’s capital account balance as of the date of each redemption payment. The company redeems units quarterly, and under the Operating Agreement, the maximum number of units which may be redeemed per quarter per individual member may not exceed the greater of (i) 100 thousand units, or (ii) 25% of the member’s total outstanding units.

Pursuant to the Operating Agreement, eligible redemption requests are to be honored in the following order of priority:

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first, to redemptions upon the death of a member, subject to a cap of $100 thousand per quarter for each deceased member’s account; and

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next, to all other eligible redemption requests on a pro rata basis.

Pursuant to the Operating Agreement, the company will not, in any calendar year, redeem more than five percent (5%) and in any calendar quarter, one and one-quarter percent (1.25%) of the weighted average number of units outstanding during the twelve (12) month period immediately prior to the date of the redemption; however, the manager may, but is not required to, waive this limitation if it deems it in the best interest of the company. In the event unit withdrawal requests exceed 5% in any calendar year, and are held by the company, units will be redeemed in the order of priority provided in the Operating Agreement. The manager may, in its sole discretion, waive any applicable holding periods or penalties in the event of the death of a member or other exigent circumstances or if the manager believes such waiver is in the best interests of the company. The manager has no present intention to exercise its discretionary power to waive or modify the enforcement of the redemption limitations contained in the Operating Agreement in the foreseeable future.

The company has not established a cash reserve from which to fund redemptions. The company’s capacity to redeem units upon request is limited by the availability of cash and the company’s cash flow. The manager also has the right, in its sole discretion, at any time, to reject any request for redemption, or to suspend or terminate the acceptance of new redemption requests without prior notice, or to terminate, suspend or amend the unit redemption program upon 30-days’ notice.

Eligible members’ capital redemption requests at December 31, 2025 approximated $25.8 million, of which

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$24.3 million were received at or prior to September 30, 2025; and

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$1.5 million were received in the quarter ended December 31, 2025 that will be eligible at March 31, 2026.

Eligible members’ capital redemption requests at December 31, 2024 approximated $24.3 million, of which

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$22.2 million were received at or prior to September 30, 2024; and

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$2.1 million were received in the quarter ended December 31, 2024 that became eligible at March 31, 2025.

See the table in “Unit redemption program” under Item 5 - Market for the Registrant’s Units, Related Unitholder Matters and Issuer Purchases of Equity Securities in Part II of this report for a detailed table showing the amount of units redeemed, which table is incorporated by this reference into this Item 1.

Lending and investment guidelines and criteria

The company generally invests in loans with fixed interest rates that:

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provide for monthly payments of (i) interest only with a balloon payment at maturity or (ii) principal and interest based on a 30-year amortization schedule with a balloon payment at maturity; and

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have maturities of five years or less.

In the event that a loan is performing, and collection is deemed probable at maturity (i.e., the loan is considered well collateralized according to then current lending guidelines), we may elect to extend the loan’s maturity. In the event a loan is not performing, the borrower is unable to repay in full the principal on the loan by the maturity date and the loan is considered well collateralized according to then current lending guidelines, we may elect to modify the loan payment terms or (particularly if the loan is not considered well collateralized) may proceed to foreclose on the loan.

Underwriting

The cash flow and the income generated by the real property securing the loan factor into the credit decisions, as does the general creditworthiness, experience and reputation of the borrower. However, for loans secured by real property, other than owner-occupied personal residences, such considerations are subordinate to a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. The fair value of real property (as to loan collateral and REO) is determined by exercise of judgment based on RMC’s management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions.

The amount of the loan combined with the outstanding debt and claims secured by a senior deed of trust on the real property generally will not exceed a specified percentage of the fair value of the property (i.e., the loan-to-value ratio, or LTV) supported by an independent written appraisal and/or broker-opinion-of-value and/or recently completed or transactions pending at the time the loan is made . The LTV at origination (i.e., the OLTV) generally will not exceed 80% for residential properties (including multi-family), 75% for commercial properties, and 50% for land. The excess of the value of the collateral securing the loan over the company’s secured loan and any senior debt and/or claims on the property is the “protective equity” such that the fair value of the real property collateral in and of itself is anticipated to be sufficient to assure repayment of the loan. These lending guidelines gives more potential protective equity – and a corresponding lower expectation of credit losses - than would be available for competing lenders who fund loans with a higher LTV.

The company thereby may be viewed as an “asset-based” lender due to the reliance on the fair value of the real property collateral (along with the lower LTV) as being sufficient, in and of itself, as a source of repayment over the contractual term of the loan, plus any additional time required to effect repayment in full. This method of underwriting loans may increase the likelihood of payment defaults by borrowers. Accordingly, the company may have a higher level of payment delinquency than that of lenders, such as banks and other financial institutions subject to federal and state banking regulations, which are typically viewed as “credit” lenders.

See Results of Operations, Secured Loans included in Part II, Item 7 and Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for a detailed presentation on the secured loan portfolio.

Competition

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

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

Intellectual Property, Royalty Agreements and Labor Contracts

Neither the company or the manager owns any patents, trademarks, licenses, franchises, or concessions. Neither the company or the manager has entered into any royalty agreements or labor contracts.

Human Capital Resources

The manager provides the personnel and services necessary to conduct business as the company has no employees of its own.

Our manager endeavors to maintain a workplace that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law. As required by law, our manager conducts training to prevent harassment and discrimination. Our manager bases its criteria for recruitment, hiring, development, training, compensation and advancement of employees on the qualifications, performance, skills and experience and all employees are compensated without regard to gender, race and ethnicity.

Regulations

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

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

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real estate settlement procedures;

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fair lending;

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truth in lending;

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federal and state loan disclosure requirements;

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

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loan-servicing and debt collection procedures and requirements;

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secured transactions and foreclosure proceedings;

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

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

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

California Real Estate Law

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

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

Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”)

This federal law passed in 2010 imposes significant regulatory restrictions on the origination of residential mortgage loans. The act established the Consumer Financial Protection Bureau (the “CFPB”) and gave it regulatory authority over most federal consumer-lending laws, including those relating to residential mortgage lending, as well as oversight over companies that provide consumer financial products or services, including us. The CFPB’s mandate is to implement and enforce federal consumer financial law and ensure that markets for consumer financial products are transparent, fair, and competitive. Historically, the CFPB has been active in investigations and enforcement actions and has issued large civil money penalties to parties the CFPB determined to have violated the laws and regulations it enforces. Under the Biden administration, the CFPB expanded the number and scope of examinations, including under the CFPB’s authority to take enforcement action against entities engaged in what it deems to be unfair, deceptive, or abusive acts or practices. It also created a registry for nonbank law violators. Under the Trump administration, the CFPB’s priorities have changed, its workforce has been drastically reduced, the scope of its activities significantly curtailed, and the agency faces an uncertain future. However, the CFPB’s role and priorities may be renewed in the future.

Many of the federal regulations governing mortgage lending were created or significantly expanded through the passage of the Dodd-Frank Act. For example, the CFPB issued the “Ability-to-Repay” rule under Regulation Z, implementing the Dodd-Frank Act’s changes to the Truth in Lending Act (“TILA”), that requires a mortgage lender to make a reasonable and good faith determination, based on verified and documented information concerning the consumer’s financial situation, that the consumer has a reasonable ability to repay a dwelling-secured mortgage loan before extending the loan. The rule includes a safe harbor or rebuttable presumption of compliance if the lender makes a “qualified mortgage” (“QM”), meaning a loan that satisfies certain rigid underwriting criteria and has terms below specified pricing thresholds. As another example, the CFPB’s loan originator compensation rule, also amending Regulation Z, imposes certain loan originator qualification and identification requirements, and imposes certain loan originator compensation recordkeeping requirements, among other things.

The Dodd-Frank Act also included provisions, implemented by CFPB regulations, prohibiting a creditor from extending credit to a consumer secured by a high-cost mortgage without first receiving certification from an independent counselor approved by a government agency. The act also added new provisions prohibiting most balloon payments for high-cost mortgages.

Real Estate Settlement Procedures Act (“RESPA”)

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

Truth in Lending Act (“TILA”)

TILA is a federal law passed in 1968 for the purpose of regulating consumer financing. For real estate lenders, TILA requires, among other things, advance disclosure of certain loan terms, calculation of the costs of the loan as demonstrated through an annual percentage rate, and the right of a consumer in a refinance transaction on their primary residence to rescind their loan within three days following signing of the loan document. TILA and RESPA (discussed above) also govern the format of the TILA-RESPA Integrated Disclosure, or “TRID”, forms provided to consumers in residential real estate mortgage transactions.

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

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

Mortgage Disclosure Improvement Act

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

Red Flags Rule

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

Privacy and Security Laws

We are subject to a variety of federal and state privacy and data security laws, which govern the collection, safeguarding, sharing and use of personal information, and require that financial institutions and other lenders have in place policies regarding information privacy and security. For example, the Gramm-Leach-Bliley Act aka Financial Services Modernization Act of 1999, requires all businesses that have access to consumers’ personal identification information to implement a plan providing for security measures to protect that information. As part of this program, we provide applicants and borrowers with a copy of our privacy policy.

Some state laws also protect the privacy of information of state residents and require adequate security for such data, and certain state laws may, in some circumstances, require us to notify affected individuals of security breaches of computer databases that contain their personal information. These laws may also require us to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data.

Data privacy and data security are areas of increasing state legislative focus. For example, the California Privacy Rights Act (the "CPRA") amended and significantly expanded the California Consumer Privacy Act (the “CCPA”), which originally provided California residents certain privacy rights in the collection and disclosure of their personal information and required businesses to make certain disclosures and take certain other acts in furtherance of those rights. The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA, which has resulted in increased privacy and information security regulatory actions. Other U.S. states have considered and/or enacted similar privacy laws. For example, Virginia, Utah, Connecticut, and Colorado have passed new consumer privacy laws, and Delaware, Indiana, Iowa, Montana, Oregon, Tennessee, and Texas have passed consumer privacy laws that have or will become effective in 2024, 2025, or 2026. In addition, the federal government may also pass data privacy or data security legislation.

The costs of compliance with privacy laws increase our operating costs and may continue to increase such costs as a result of diverging statutory obligations across jurisdictions, changes in interpretation or changes in law. Any failure on our part—or in some circumstances non-compliance by third parties engaged by us—to comply with these laws or our privacy policies may subject us to significant liabilities, including governmental enforcement actions, litigation, fines, payment of damages or restrictions on our use or transfer of data, and may have a material adverse effect on our business, financial condition, results of operations, and cash flows.

California Homeowner Bill of Rights (“HOBR”)

This series of state laws, which initially became effective January 1, 2013, with many sections renewed and modified as of January 1, 2019, is intended to ensure fair lending and borrowing practices for California homeowners by guaranteeing basic fairness and transparency during the foreclosure process. Key provisions include restrictions on dual-track foreclosures, a guaranteed single point of contact, civil penalties for lenders filing unverified documents, and protections for tenants of foreclosed properties. HOBR also provides borrowers with the authority to seek redress of material violations of its rules, such as by an injunction (prior to foreclosure sale) or recovery of damages (after foreclosure sale). In 2020, HOBR protections were extended to residential one to four unit properties occupied by tenants as their principal residence.

California AB 130 and Civil Code Section 2924.13

In June of 2025, California enacted Assembly Bill 130, resulting in the addition of Section 2924.13 of the California Civil Code ("Section 2924.13"). Section 2924.13 significantly restricts nonjudicial foreclosures on second mortgages ("subordinate mortgages") in California by, among other things, prohibiting foreclosure if the lender or any servicer, or any predecessor thereof, failed to contact the borrower for any three year period, failed to provide any one or more required notices or periodic account statements, at any time notified the borrower that the loan had been written-off or discharged or engaged in any other "unlawful practice" outlined in the statute. Prior to conducting, or threatening to conduct, a non-judicial foreclosure on a subordinate mortgage, the foreclosing party must record and provide the borrower with a certification, under penalty of perjury, that no "unlawful practices" were committed with respect to the loan or identifying each "unlawful practice" that occurred. Section 2924.13 then provides borrower with the right to enjoin the foreclosure sale and to seek equitable remedies including forgiveness of amounts due and barring the foreclosure entirely.

Lawsuits challenging the constitutionality of AB 130 and Section 2924.13 have been filed and are currently in process; however, Section 2924.13 is currently enforceable California law and will remain in effect unless and until an injunction with respect to enforcement of the statute is entered by the court or the court invalidates the statute on constitutional grounds. There is no guarantee that either of these outcomes will occur or that Section 2924.13 will not remain valid law in California for the foreseeable future.

To address Section 2924.13, we may incur incremental costs to update policies and procedures, enhance systems and borrower‑communication templates, train personnel, revise quality control and audit programs, and monitor counterparties with respect subordinate loans. We may also need to engage counsel to interpret evolving guidance with respect to subordinate loans currently held and future foreclosures and may forego funding subordinate loan opportunities in the future to avoid the additional requirements and potential repercussions of Section 2924.13. If Section 2924.13 is found to apply retroactively to subordinate loans in our portfolio, the costs of foreclosure and our ability to foreclose on such loans following a default may be adversely affected.

Key federal laws and rules we are subject to as a result of the offering of our units include the following.

Federal Securities Laws: Securities Act of 1933 (the “Securities Act”) and Securities Exchange Act of 1934 (the “Exchange Act”)

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

Sarbanes-Oxley Act of 2002

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

Term of the Company

The term of the company will terminate on December 31, 2038 unless: (i) the term is further extended by RMC with the affirmative consent of a majority interest of the members; or (ii) the company is earlier terminated pursuant to the Operating Agreement or by operation of law.

Delivery of Annual Report

RMC provides a copy of this annual report to all unit holders by mail and posts this annual report at its website (see below).

The SEC maintains on its internet site reports and other information regarding the company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K (and amendments to these reports). These filings are available free of charge on the SEC website at www.sec.gov.

Additional Information

The company does not maintain an Internet site. Additional information regarding the company’s and RMC’s business operations are available free of charge on RMC’s website at www.redwoodmortgageinvestors.com.

References to RMC’s and the SEC’s website do not constitute incorporation by reference of the information contained on those websites and should not be considered part of this document.

Item 1A – Risk Factors

The following risk factors and other information included in this Form 10-K should be carefully considered, in addition to the other information presented elsewhere in this report, in evaluating us and our business. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also adversely affect our business operations. If any of the following risks or additional risks and uncertainties actually occur, our business, operating results, and financial condition could be adversely affected.

RISKS RELATED TO OUR BUSINESS

RMC’s lending decisions are based on the real estate collateral securing the loans. A significant decline in the fair value of the collateral may impact the performance of the loans and their ultimate collectability.

For loans secured by real property other than owner-occupied personal residences, our lending decisions are based primarily on a determination that the value of the real property is sufficient, in and of itself, as a source of repayment. Other considerations such as the cash flow and the income generated by the real property securing the loan and the general creditworthiness, experience and reputation of the borrower are secondary considerations. This may result in a higher incidence of loan payment delinquencies than would be experienced by conventional lenders.

Declines in real estate values may reduce the “protective equity” (the excess of the value of the collateral securing the loan over our secured loan and any senior debt and/or claims on the property) provided by the collateral securing our outstanding loans, and were we to foreclose on loans with respect to properties that have declined in value, we may ultimately recover less than the amount of such loans.

Downturns in the economy and real estate market in the San Francisco Bay Area and the coastal metropolitan regions of Southern California, or on a regional or national scale, or changing conditions affecting the mortgage lending business could adversely affect our business.

RMC expects that most of our loans will continue to be secured by properties located in nine counties that comprise the San Francisco Bay Area (San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa, Marin, Napa, Solano and Sonoma) and the coastal metropolitan regions of Southern California (Los Angeles, Orange, Ventura, and San Diego counties). Our concentration of loans in the San Francisco Bay Area and the coastal metropolitan regions of Southern California exposes us to greater risk of loss if the economy in the San Francisco Bay Area or the coastal metropolitan regions of Southern California weakens than would be the case if our loans were spread throughout California or the U.S. Should a significant economic deterioration occur in the San Francisco Bay Area or the coastal metropolitan regions of Southern California, or regionally or nationally, we could experience increases in loan delinquencies and possibly loan losses and the resultant reduced net income and cash available for distributions to members.

Inflation could negatively impact our business and profitability. Prolonged periods of inflation may impact our profitability by negatively impacting our otherwise fixed costs and expenses.

To the extent RMC relies on appraisals to determine the fair market value (“FMV”) of the property securing our loans, which appraisals may be inaccurate or not reflect subsequent events affecting FMV which could increase the risk of loss.

RMC relies on appraisals prepared by unrelated third parties to determine the fair market value of real property used to secure our loans. RMC relies on such appraisals for, among other matters, determining our loan-to-value ratio (“LTV”). We cannot guarantee that such appraisals will, in any or all cases, be accurate or that the appraisals will reflect the actual amount buyers will pay for the property. If an appraisal is not accurate, our loan may not be as secure as we anticipated. In the event of foreclosure, we may not be able to recover our entire investment. Additionally, since an appraisal fixes the value of real property at a given point in time, subsequent events could adversely affect the value of the real property used to secure a loan. This would result in a risk of loss for us if the borrower defaults on the loan.

Some of our loans are junior in priority to first and second liens that may make it more difficult and costly to protect our junior security interest.

In the event of foreclosure under a second or third deed of trust, the debt secured by a senior deed(s) of trust must be satisfied before any proceeds from the sale of the property can be applied toward the debt owed to us. As a result, we may not recover some or all of our investment. To protect our junior security interest, we may be required to make substantial cash outlays for such items as loan payments to senior lien holders to prevent their foreclosure, property taxes, insurance, repairs, maintenance and other expenses associated with the property. These expenditures could have an adverse effect on our profitability.

The recent enactment of California Civil Code Section 2924.13 may also significantly affect our ability to complete nonjudicial foreclosures with respect to our existing junior or "subordinate" mortgage loans as well as our ability to take advantage of otherwise advantageous junior loan opportunities in the future. See “Regulations - California AB 130 and Civil Code Section 2924.13” in Part I of this report. If recent court cases challenging AB 130 find that the provisions of Section 2924.13 apply retroactively to subordinate loans currently in our loan portfolio we may be deemed to have violated provisions of Section 2924.13 with respect to actions (or inaction) that occurred prior to the date Section 2924.13 was enacted or proposed. In that case, our ability to foreclose on one or more of our junior loans following a default could be jeopardized and, even if foreclosure is permitted, refuting borrower defenses made available under Section 2942.13 may significantly increase the costs of foreclosure adversely affecting our ability to fully recover the loan amounts due.

If borrowers default, and/or economic circumstances increase defaults, we may have to foreclose on the loan, beginning the legal process of acquiring the collateral property. Foreclosure proceedings and/or workout agreements may slow our collection efforts and delay ultimate satisfaction of the loan.

We are engaged in the business of lending and, as such, are subject to the risk that borrowers may be unable to repay the loans in accordance with the terms of the loan agreement as we currently experience and have experienced in the past. Mortgage loans are secured by commercial and residential real property and are subject to risks of delinquency, foreclosure and loss.

Our loans are not insured by the Federal Housing Administration or guaranteed by the Veterans Administration or otherwise guaranteed or insured by a government agency. Our loans require monthly interest-only payments or monthly payments of interest and principal. This means:

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Our loans are structured to provide for a large “balloon” payment of principal due at the end of the term. These borrowers may be unable to repay such loans at maturity and may be compelled to refinance or sell the property.

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Defaults and foreclosures may increase if the economy weakens or if interest rates increase, which may make it more difficult for borrowers to refinance their loans at maturity or sell their property.

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If a borrower is unable to repay the loan and defaults, we may be forced to acquire the property at a foreclosure sale, or we may be forced to sell the property for less than the amount owed on the loan. If we cannot quickly sell or refinance such property, and the property does not produce income in excess of expenses, our profitability will be adversely affected.

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Recently enacted consumer protection laws, both Federal and in California, impose additional notice and disclosure requirements on lenders which may slow or limit a lender’s ability to exercise remedies against residential real property collateral (principally 1-4 units), including rights to sell the property in a foreclosure sale and certain rights of tenants residing in the properties. Additional federal and state legislation may be proposed in the future which, if enacted, may further limit a lender’s ability to exercise remedies against residential real property collateral following a borrower’s default in the performance of its loan obligations.

In addition, any litigation instituted by a defaulting borrower or the operation of the federal bankruptcy laws may have the effect of delaying enforcement of the lien on a defaulted loan and may in certain circumstances reduce the amount realizable from the sale of a foreclosed property. A “lien” is a charge against the property of which the holder may cause the property to be sold and use the proceeds in satisfaction of the lien. A judicial foreclosure may be subject to most of the delays and expenses of other litigation, sometimes requiring up to several years to complete. If we acquire a property from a borrower, there are many factors that are beyond our control that affect the real estate market and could affect our ability to sell properties for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Further, before we can sell a property on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. However, we can give no assurance that we will have the funds available to correct such defects or to make such improvements. Our inability to sell properties at the time and on the terms we want could reduce our profitability and cash flow, limit our ability to make distributions and could reduce the value of our units.

Our interests in our properties may not be insured or may be underinsured against certain types of losses.

We require comprehensive insurance, including fire and extended coverage, which is customarily obtained for or by a lender, on properties in which we acquire a security interest. Generally, such insurance will be obtained by and at the cost of the borrower. However, there are certain types of losses (generally of a catastrophic nature, such as civil disturbances or terrorism and acts of God such as earthquakes, wildfires, floods and land or mud slides) which are either uninsurable or not economically insurable. Should such a disaster occur to, or cause the full or partial destruction of, any property serving as collateral for a loan, we could lose both our invested capital and anticipated profits from such investment, which would adversely affect our profitability.

Bankruptcy and legal limitations on personal judgments may affect our ability to enforce the loans and increase our costs.

Any borrower has the ability to delay a foreclosure sale by us for a period ranging from several months to several years or more by filing a petition in bankruptcy. The filing of a petition in bankruptcy automatically stops or “stays” any actions to enforce the terms of the loan. The length of this delay and the costs associated with it may have an adverse impact on our profitability.

Owning real estate following foreclosure subjects us to additional risks.

If a borrower is unable to pay our loan or refinance it when it is due, it may be in our best interest to institute foreclosure proceedings against the borrower, and to own the property for a period of time. When we foreclose on a loan, we are subject to certain economic and liability risks attendant to property ownership which may affect our profitability and cash flow. The risks of ownership include the following:

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If the property is a rental property we will be required to find and keep tenants.

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We will be required to maintain and oversee and control operating expenses of the property.

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We will be subject to general and local real estate and economic market conditions which could adversely affect the value of the property.

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We will be subject to changes in laws or regulations regarding taxes, use, zoning and environmental protection and hazards.

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We will be required to maintain insurance for property risks and liability exposures.

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We will be subject to state and federal laws and local municipal codes and penalties relating to tenant retention and the maintenance and upkeep of lender-owned properties.

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We may be subject to federal and state tax laws and regulations with respect to the tax treatment of items of our income, gain, loss or deductions for real estate held for investment, rental and/or sale, which in turn may result in federal and state tax payment and filing exposure for our members.

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We will be subject to municipal ordinances, where they have been enacted, applicable to foreclosed and/or distressed properties which require the payment of additional costs and registration fees and may obligate us to secure and maintain, at our expense, real property securing our loans upon the filing of a notice of default or after we acquire ownership of real property through foreclosure.

A weak economy or real estate market could adversely affect us and members’ rate of return.

The ability to find suitable loans is more difficult when the economy is weaker and there is less activity in the real estate market. We may be unable to find a sufficient number of suitable loans, which could leave us with uninvested capital. In such event, we will make short-term, interim investments in government obligations, certificates of deposit, money market or other liquid-asset accounts, with the unallocated funds pending investment in suitable loans. Interest returns on these investments are usually lower than on mortgage loans, which would reduce our profits and return to members.

We may face potential liability for toxic or hazardous substances as a result of our lending activities or as a result of foreclosure on properties that secure loans we make.

If we take an equity interest in, management control of, or foreclose on any of the loans, we may be considered the owner of the real property securing such loans. Under current federal and state law, the owner of real property contaminated with toxic or hazardous substances (including a mortgage lender that has acquired title through foreclosure) may be liable for all costs associated with any remedial action necessary to bring the property into compliance with applicable environmental laws and regulations. This liability may arise regardless of who caused the contamination or when it was caused. In the event of any environmental contamination, there can be no assurance that we would not incur full recourse liability for the entire cost of any such removal and cleanup, even if we did not know about or participate in the contamination. Full recourse liability means that any of our property, including the contaminated property, could be sold in order to pay the costs of cleanup in excess of the value of the property at which such contamination occurred.

In addition, we could incur liability to tenants and other users of the affected property, or users of neighboring property, including liability for consequential damages, such as lost profits of a business. We would also be exposed to risk of lost revenues during any cleanup and to the risk of lower lease rates or decreased occupancy if the existence of such substances or sources on the property becomes known.

If we fail to remove the substances or sources and clean up the property, federal, state, or local environmental agencies could perform such removal and cleanup and impose and subsequently foreclose liens on the property for the cost thereof. We may find it difficult or impossible to sell the property prior to or following any such cleanup. If such substances are discovered after we sell the property, we could be liable to the purchaser thereof if our manager knew or had reason to know that such substances or sources existed.

If we are required to incur such costs or satisfy such liabilities, this could have a material adverse effect on our profitability. Additionally, if a borrower is required to incur such costs or satisfy such liabilities, this could result in the borrower’s inability to repay its loan from us.

Changes in interest rates could adversely impact our financial condition and results of operation and have affected and will continue to affect the timing of redemption payments.

Our loans typically have fixed rates and the majority of our loans are for terms of one to five years, and typically have no prepayment penalty. Consequently, as interest rates increase, there is a risk that such interest rates will exceed the average interest rate earned by

our loan portfolio. If interest rates increase, borrowers may be less inclined to prepay or refinance our loans, resulting in a decrease in our liquidity. An increase in interest rates accompanied by a tight supply of mortgage funds may make refinancing by borrowers with balloon payments difficult. Conversely, if interest rates decline, a significant increase in borrower prepayments/loan payoffs may result. If we then invest in new loans at lower rates of interest, a lower yield to members may possibly result.

Our borrowers may be negatively impacted by a pandemic or other health crises, which may result in adverse impacts to our financial condition and results of operation.

In the event of future public health crises, epidemics, pandemics or similar events, the communities where we do business may be put under varying degrees of restrictions on social gatherings and business operations. These restrictions, combined with related changes in consumer behavior and significant increases in unemployment, may result in extreme financial hardship for certain borrowers. Some of our borrowers may be unable to meet their debt obligations to us in a timely manner, or at all, and we may experience a heightened number of requests from borrowers for forbearances on loans.

If federal, state and local moratoriums on evictions for non-payment of rent are enacted in connection with any pandemic or public health crises, they may negatively impact the ability of some borrowers to make payments on loans made for multifamily housing. In addition, such action may ultimately cause a meaningful number of loans in our portfolio to need forbearance or significant modification and migrate to an adverse risk rating because of impacts of an economic recession. In light of these, and other credit issues, we cannot be sure that our allowance for credit losses will be adequate or that additional increases to the allowance for credit losses will not be needed in subsequent periods. If our allowance is not adequate, future net charge-offs may be in excess of our current expected losses, which would create the need for more provisioning and will have a negative impact on our financial condition, results of operations and capital position.

Increased competition and new entrants in the market for mortgage loan originations could adversely impact our ability to originate and acquire real estate-related loans at attractive returns.

New entrants in our target markets for mortgage loan originations could adversely impact our ability to execute our investment strategy on terms consistent with our investment objectives. In originating our loans, we may compete with REITs, regional and community banks, specialty finance companies, savings and loan associations, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, other lenders and other similar entities. An increase in competition for the available supply of loans suitable for investment by us, may cause us to reduce the interest rate that can be charged on our loans. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of real estate-related loans. An increase in competition in our market, may adversely affect our ability to take advantage of attractive lending opportunities that are consistent with our investment strategy. These and other competitive pressures may have a material adverse effect on our business, financial condition and results of operations.

We may make construction loans which may subject us to greater risks.

Construction loans are loans made to borrowers constructing entirely new structures or dwellings, whether residential, commercial or multi-family properties. We may make construction loans subject to certain limitations in the operating agreement. Investing in construction loans subjects us to greater risk than loans related to properties with operating histories. If we foreclose on property under construction, construction generally will have to be completed before the property can begin to generate an income stream or be sold. We may not have adequate cash reserves on hand with respect to junior encumbrances and/or construction loans at all times to protect our security. If we have inadequate cash reserves, we could suffer a loss of our investment. Additionally, we may be required to obtain permanent financing of the property in addition to the construction loan which could involve the payment of significant fees and additional cash obligations for us.

If we make high-cost mortgage loans, we will be required to comply with additional federal and state regulations and our non-compliance could adversely affect us.

Section 32 of Regulation Z, implementing the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), defines a “high-cost mortgage” as any consumer loan secured by the consumer’s principal dwelling unit where either (i) the annual percentage rate (“APR”), measured as of the date the rate is set, exceeds the average prime offer rate (“APOR”), a benchmark rate released weekly by the CFPB, for a comparable transaction on that date by more than 6.5% on a first mortgage, 8.5% on a subordinate-lien mortgage or 8.5% on a first-lien transaction if the dwelling is personal property and the loan is less than $50,000; or (ii) the total points and fees payable by the consumer exceed 5% for a loan of more than or equal to $27,592 (amount adjusted annually for inflation), or 8.5% or $1,380 (amount adjusted annually for inflation) (whichever is less) on a loan of less than $27,592: or (iii) the lender can charge a prepayment penalty, as defined in Regulation Z, more than 36 months after consummation (or account opening on an open-end loan), or prepayment penalties that can exceed, in total, more than 2 percent of the amount prepaid.

While it is unlikely that we would make many high-cost loans, the failure to comply with the extensive prohibitions and requirements of Regulation Z’s high-cost mortgage regulations, even if the failure was unintended, may render the loan rescindable for up to three years from the consummation, and, if rescinded, requires the borrower to receive back all interest and fees and return the principal of the loan to the loan holder. The lender could also be held liable for money damages, attorneys’ fees, and for material failures, the total amount of finance charges and fees paid by the borrower in connection with the loan.

In addition, under California law consumer loans secured by liens on primary residences in amounts less than the Fannie Mae/Freddie Mac conforming loan limit may be considered to be “high-cost loans” under certain circumstances. While it is unlikely that we would make many high-cost loans, the failure to comply with California law regarding such loans could have significant adverse effects on us. A reckless or willful failure to comply with any provision of this law, including the mandatory disclosure provisions, could result in, among other penalties, the imposition of administrative penalties of $25 thousand, loss or suspension of the offending broker’s license, as well as exposure to civil liability to the consumer/borrower (including the imposition of actual and punitive damages).

Use of borrowed money to fund loans may reduce our profitability.

We are permitted to borrow funds for the purpose of making loans, for increased liquidity, reducing cash reserve needs, or developing or refinancing property that we acquired through foreclosure or for any other proper purpose on any terms commercially available.

We borrow money (and expects to continue to borrow) to fund loan originations utilizing a line of credit with a variable interest rate. A rise in the reference interest rate would increase the cost of the borrowed money and would reduce the “spread” earned on loans to our borrowers. In certain market and/or rising interest rate environments, the spread could become negative. This may reduce our profitability, and should we default on our debt, it may result in additional losses through forced liquidation of loans. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay distributions. Any of these results would have a significant negative impact on members’ investments in the company.

Our manager’s selection of loans for sale to third parties may involve conflicts of interest between us and our manager.

We have sold and may in the future sell, on occasion, some of our loans, subject to applicable laws and regulations and our Operating Agreement. In this situation, there is a conflict of interest between us and our manager as to what loans will be sold. For example, the manager may select loans of a higher credit quality or having higher interest rates than the loans funded with the proceeds from the sale. The sale of loans may result in a reduced overall yield of our portfolio.

RISKS RELATED TO OWNERSHIP OF OUR UNITS

Units are not listed on an exchange or quoted through a quotation system and there are substantial restrictions on the transferability of units.

Members will have limited ability to sell their units. Our units are not listed on an exchange or quoted through a quotation system, and there is no secondary market, nor do we expect that any will develop in the foreseeable future. Units are not freely transferable, and they may not be acceptable by a lender as security for borrowing. Our Operating Agreement imposes substantial restrictions upon members’ ability to transfer units. Therefore, an investment in our units is not suitable for investors who require short-term liquidity from their investments.

The unit redemption program contains significant restrictions and limitations that limit members’ ability to redeem their units.

The number of units that may be redeemed per quarter – per investor – is subject to a maximum of the greater of 100 thousand units or 25% of your units outstanding. The number of units that may be redeemed in any calendar year is subject to a maximum of not more than 5% (or in any calendar quarter, 1.25%) of the weighted average number of units outstanding during the 12-month period immediately prior to the date of the redemption. The manager has the right, in its sole discretion, at any time, to reject any request for redemption, or to suspend or terminate the acceptance of new redemption requests without prior notice, or to terminate, suspend or amend the unit redemption program upon 30-day notice. We fund redemptions from available cash and do not have a working capital reserve from which to fund redemptions. For this purpose, cash is available only after company expenses have been paid (including compensation to our manager), adequate provision has been made for payment of current and future debt, and adequate provision has been made for the payment of monthly cash distributions to members who do not reinvest pursuant to our distribution reinvestment plan. As a result of the rapid increase in interest rates and a reluctance of our borrowers to prepay or refinance our loans, we are experiencing a decrease in our liquidity which has required the manager to adhere to the restrictions and limitation on unit redemptions effective since March 31, 2023.

There is no assurance members will receive cash distributions.

The Operating Agreement does not require us to meet a specific or minimum level of distributions to members. The amount of distributions to members is determined by the manager based on our financial results and cash available. The manager has broad discretion to establish reserves and maintain adequate cash balances to support ongoing operations. In the event we do not have sufficient cash available to fund distributions, we would defer, reduce, or eliminate distributions in any given period.

Members have no control over our operations, including the loans we make or sell; members must rely on the judgment of our manager in making loans.

Members have no right or power to take part in our management. All decisions with respect to our management will be made exclusively by our manager. Our success will, to a large extent, depend on the judgment of our manager as it relates to lending decisions and sales of loans to third parties, if any.

Our manager has broad discretion to implement our investment objectives and can change investment strategies without member consent.

The Operating Agreement contains investment objectives, but our manager has broad discretion to implement those objectives. A change in our investment strategy may, among other things, increase our exposure to real estate market fluctuations, default risk and interest rate risk, all of which could materially affect our results of operations and financial condition.

Our manager has various conflicts of interest.

Our manager has various conflicts of interest in connection with its management of us, including but not limited to:

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Operational, legal and financial obligations with respect to other entities that are similar to, or may conflict with, our manager’s obligations to us.

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The fees of our manager are not determined based on arm’s-length negotiations.

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The same legal counsel currently represents us and the manager.

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Our manager has the right to conduct other business and to compete with our business.

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Our manager is responsible for originating or arranging substantially all of our loans and can place loans in our portfolio or other funds that are also managed by our manager. We anticipate that the loan brokerage commissions charged to borrowers by our manager, which are paid to our manager and not us, will average approximately 2% to 5% of the principal amount of each loan, but may be higher or lower depending upon market conditions. Any increase in the loan brokerage commission charged on loans may have a direct, adverse effect on the interest rates we charge on loans by reducing the interest rate we receive and thus the overall rate of return to members. This conflict of interest exists in connection with every loan transaction and all compensation paid to our manager.

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In the event our manager defaults on the repayment of the formation loan, a conflict of interest would arise on the manager’s part in connection with the enforcement of the formation loan and continued payment of other fees and compensation to our manager, including, but not limited to, the loan servicing fees, loan administrative fees and asset management fees, while such default is continuing.

We have no board of directors and are not subject to certain corporate governance rules under the federal securities laws applicable to securities listed on a national securities exchange.

As is customary for a limited liability company, we do not have a board of directors or any independent directors. We are not subject to certain corporate governance rules under the federal securities laws or the rules of any national securities exchanges because our units are not registered for trading under the Exchange Act of 1934.

Accordingly, we do not have an audit or compensation committee. As a result, members must rely on our manager, which is not independent, to perform these functions. Thus, there is a potential conflict in that our manager, which is engaged in management, will participate in decisions concerning management compensation and audit issues that may affect management performance.

As a public company, we are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations have and will involve significant expenditures. Additionally, if our manager fails to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

As a public company, we are subject to regulations not applicable to private companies, including provisions of the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC. We are required and may in the future be required to spend significant amounts to remain in compliance. Such expenditures impact amounts available for distribution and may have a material adverse effect on our financial condition and results of operations.

In addition, our management is responsible for establishing and maintaining adequate internal control over financial reporting and is required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and rules and regulations of the SEC thereunder and to evaluate and disclose on a quarterly and annual basis changes in our internal control over financial reporting. During the course of testing, material weaknesses or deficiencies in the design or operating effectiveness of internal control over financial reporting may be identified. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. As previously disclosed, for the quarter ended December 31, 2023, we identified a material weakness in our internal control over financial reporting which consisted of the following: management had not engaged professional staff sufficient to timely obtain refreshed collateral and did not appropriately develop accounting policies and design and implement internal controls at a sufficient level of precision around our estimate of current expected future credit losses. This material weakness has been remediated as of December 31, 2025. While this material weakness did not result in any misstatement of our financial statements for any period presented, any future material weakness could result in a misstatement of account balances or disclosures that could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We cannot guarantee that additional material weaknesses will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our consolidated financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and lower the return on members’ investments. Additionally, ineffective internal controls could expose us to an increased risk of financial reporting fraud and the misappropriation of assets and subject us to regulatory investigations and civil or criminal sanctions.

We operate in a heavily regulated industry and compliance with regulations could increase our costs of doing business and lower members’ return.

The mortgage business has traditionally been heavily regulated. The costs of complying with these regulations could adversely affect our profitability, and violations of these regulations could materially adversely affect our business and financial results.

We established the $1 per unit offering price on an arbitrary basis which may not reflect the amount members will receive upon a redemption of their units.

We arbitrarily determined the $1 per unit price for reinvestment of distributions. Such price is not necessarily the amount a member may receive pursuant to the member’s limited right to redeem units, subject to certain requirements. The amount that a redeeming member will receive is the lesser of the purchase price for the redeemed units or the redeeming member’s capital account balance as of the date of each redemption payment. The fair market value of a member’s interest in the company will be irrelevant in determining amounts to be paid upon redemption.

Members will be bound by the actions taken by the majority voting power.

Subject to certain limitations, members holding a majority of units may vote to, among other things:

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dissolve and terminate the company;

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amend the Operating Agreement, subject to certain limitations;

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approve or disapprove the sale of all or substantially all of our assets; and

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remove or replace our manager or elect additional or new managers.

If a member does not vote with the majority in interest, the member nonetheless will be bound by the majority vote.

If payments are not made on the formation loan under certain circumstances, such as our manager’s removal, it may reduce members’ rate of return or affect our capital available to fund new loans.

We have previously advanced to our manager funds in an amount equal to the sales commissions for our units and premiums paid to investors in connection with unsolicited sales of our units. The formation loan is an unsecured loan that does not bear interest and will be repaid in annual or quarterly installments. If the manager is removed, no other manager is elected, the company is liquidated or our manager is no longer receiving payments for services rendered, we will forgive the debt on the formation loan and our manager will be immediately released from any further obligations under the formation loan which could result in a significant loss to the company and have an adverse effect on our profitability.

Upon our dissolution or termination, members may experience delays in receiving distributions or receive no distributions and may not be able to fully recover their investment.

Under our Operating Agreement, we will continue to operate until December 2038, unless our term is extended by the vote of a majority in interest of the members. We could be dissolved and terminated earlier by operation of law or upon the occurrence of various events described in our Operating Agreement. Upon our dissolution, our manager will seek to promptly liquidate our assets for the best price reasonably obtainable, use any proceeds to satisfy our debts and distribute any remaining proceeds to our members and manager in accordance with the terms of our Operating Agreement. Accordingly, a member’s ability to recover all or any portion of the member’s investment under such circumstances will depend on the amount of funds so realized and claims to be satisfied from those proceeds.

Delays in liquidation could arise due to market conditions and other factors beyond the control of our manager. In the event we are unable to liquidate on or prior to the end of our anticipated term and depending on the amount of liquidation proceeds the manager is able to obtain, a member may not receive distributions of remaining proceeds, in a timely manner or at all.

Insufficient working capital reserves may require borrowings or liquidating our loans which, if not possible, may adversely affect us.

We intend to maintain a working capital reserve to meet our obligations, including our carrying costs and operating expenses. Our manager believes such reserves are reasonably sufficient for our contingencies. If for any reason those reserves are insufficient, we will have to borrow the required funds, limit or suspend redemptions, or liquidate some or all of our loans. In the event our manager deems it necessary to borrow funds, such borrowings may not be on acceptable terms or even available to us which could materially adversely affect our business and financial results.

Conflicts may arise regarding the financial condition of our manager.

Our manager must maintain a sufficient net worth and cash flow in order to continue to provide services to us. This may require our manager to make decisions regarding investments and other aspects of our business to allow it to collect fees and expense reimbursements, which actions could negatively affect our net income and cash available from operations.

Conflicts may arise if we participate in loans with other programs organized by our manager.

In certain limited circumstances and subject to compliance with applicable regulations or guidelines, we may participate in loans or joint ventures with other programs organized by our manager, where we purchase a direct or indirect partial interest in a loan. Our portion of the total loan may be smaller or greater than the portion of the loan made by the other programs. Participating in loans or joint ventures with other programs organized by our manager could result in a conflict of interest between us and our manager as well as between us and such other programs, in the event that the borrower defaults on the loan and our manager protects the interests of other programs, which it has organized, in the loan and in the underlying security.

Certain officers and other key personnel of our manager will face competing demands relating to their time and this may cause our operations and our investors’ investments to suffer.

We rely on the executive officers and key personnel of our manager to provide services to us for the day-to-day operation of our business. In particular, as to Mr. Michael Burwell, President, Director, and Secretary/Treasurer of RMC, if he were to terminate his employment the manager’s capacity/capability to continue business operations and maintain loan origination volumes could be impacted adversely. As a result of our executive officers' and key personnel's interests in other programs and business activities and their obligations to other investors, a failure by these persons or the manager to devote sufficient time or resources to our business, may have an adverse effect on our business and financial results, and the value of our units may decline.

We are dependent on the information systems of our manager and systems failures could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations.

The business of mortgage lending/investing is dependent on third party communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control, such as:

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sudden electrical or telecommunications outages;

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natural disasters;

•

disease pandemics;

•

events arising from local or larger scale political or social matters, including terrorist acts; and

•

cyber-attacks.

These events, in turn, could have a material adverse effect on our operating results and negatively affect the value of our units and our ability to pay distributions.

Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our data or confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be intentional or unintentional and could involve bad actors gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include:

•

disrupted operations;

•

misstated or unreliable financial data;

•

liability for stolen assets or information;

•

increased cybersecurity protection and insurance costs;

•

litigation; and

•

damage to our investor relationships.

We have in the past experienced cyber security incidents which have not materially adversely impacted our business and/or operations. While we have taken measures to enhance protection against cyber security incidents and may engage in other actions from time to time to reduce our exposure to cyber security risks both to our internal systems and from outsourcing, these measures may not be sufficient to prevent future threats which may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in cost increases due to system changes and the development of new administrative processes.

A mortgage lending transaction involves various diligence and other procedures that we and other service providers must undertake, and if we or the third party service providers do not accurately or completely execute the necessary checks and procedures for a lending transaction or fail to detect fraudulent activity, we may experience increased costs, loss, regulatory investigations or other adverse consequences.

The business of mortgage lending/investing regularly involves a significant number of complicated, technically demanding transactions and undertakings. For example, while we perform basic diligence on borrowers, we rely primarily on title and escrow service providers to ensure we have a valid lien on collateral securing our mortgage loans. We could experience increased costs, loss, regulatory investigations, or other adverse consequences if we do not accurately or completely execute a process or transaction, whether due to human error or otherwise; if we are unable to detect and prevent fraudulent activity; or if an employee or third-party service provider fails to comply with applicable policies and procedures, inappropriately circumvents controls, or engages in other misconduct. In the recent past, we detected a fraudulent mortgage lending transaction involving misrepresentation of the borrower’s identity. While we were able to recover the full amount of the loss through insurance, there cannot be any assurance that insurance will cover any loss in any future incident.

RISKS RELATED TO TAXES AND ERISA

Members’ ability to offset income with our losses may be limited.

We take the position that we are engaged in the active conduct of the trade or business of mortgage lending, as a result of which all or a portion of the income earned by members with respect to their investment in our units will be treated as ordinary income. Under the applicable Treasury regulations, each member is required to report separately on their income tax return all or a portion of the member’s distributive share of our income as nonpassive income. Each member’s distributive share of our losses, if any, will be reported as passive losses. Passive losses may be used to offset passive income. To the extent that passive losses do not offset passive income, they may be carried forward to offset passive income in future years. It is possible, however, that the Internal Revenue Service (the “IRS”) could assert that our income is properly treated as portfolio income for purposes of those limitations. Such treatment is subject to the interpretation of complex Treasury regulations, and is dependent upon a number of factors, such as whether we are engaged in a trade or business, the extent to which we incur liabilities in connection with our activities, and the proper matching of the allocable expenses incurred in the production of income. There can be no assurance that an IRS challenge to our characterization of our income will not succeed. It also is possible that members may be subject to other limitations on the deductibility of our expenses and losses.

Members’ tax liability may exceed the cash they receive.

Members’ tax liabilities associated with an investment in the units for a given year may exceed the amount of cash we distribute during such year. Members will be taxed on their allocable share of our taxable income whether or not they actually receive cash distributions from us. Members’ taxable income could exceed cash distributions they receive, for example, if a member elects to reinvest into additional units the cash distributions the member would otherwise have received. Taxable income in excess of cash distributions also could result if we were to generate so-called “phantom income” (taxable income without an associated receipt of cash). Phantom income could be recognized from a number of sources, including, without limitation, any established loan loss reserves. Under very limited circumstances, members could receive a special distribution to enable them to pay taxes on specified types of income.

We expect to generate unrelated business taxable income.

Tax-exempt investors (such as an employee pension benefit plan or an IRA) may be subject to tax to the extent that income from the units is treated as unrelated business taxable income, or UBTI. Funds we borrow cause a portion of income to be treated as UBTI. Investors that are tax-exempt entities are urged to consult their own tax advisors regarding the suitability of an investment in units. In particular, an investment in units may not be suitable for charitable remainder trusts.

Members may be subject to state and local tax laws.

The state in which a member resides may impose an income tax upon the member’s share of our taxable income. Furthermore, states such as California, in which we own property, generally impose income tax upon a member’s share of the company’s taxable income considered allocable to such states, whether or not a member resides in that state. As a result, a nonresident member may be required to file a tax return in California. Members are urged to consult with their own tax advisers with respect to state and local tax consequences of an investment in our units.

Changes in tax laws could have an adverse effect on members’ investment.

Changes in federal, state or local tax law could have an adverse effect on the rate of return on members’ investment in our units or on the market value of our assets. Members are urged to consult with their own tax advisor with respect to the impact of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our units.

Risks of investment by ERISA plan investors and other tax-exempt investors.

A Benefit Plan Investor as defined by and subject to the requirements of ERISA should consider, among other things, (i) whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA; and (ii) whether their investment is prudent, since it is not expected that there will be a market created in which a member can sell or otherwise dispose of the units. In addition if a member is a Benefit Plan Investor that is a tax-qualified pension or 401(k) plan, an IRA or a similar plan, the member should consider (i) whether a distribution of units in kind from the plan or IRA would be accepted as a rollover by a trustee or custodian of a successor plan or IRA, and if not accepted, whether the automatic 20% income tax withholding would create the need to effectuate the rollover using assets other than the units; and (ii) whether a required distribution from a tax-qualified pension or 401(k) plan or IRA commencing on the April 1 following the calendar year in which the beneficiary attains age 70 1⁄2 (or if later with respect to a tax-qualified plan distribution, the date the beneficiary retires) could cause the beneficiary to become subject to income tax that the beneficiary would need to satisfy out of assets other than the units if such beneficiary were not able to transfer the units for cash.

Finally, Benefit Plan Investors, including tax-qualified pension and 401(k) plans and IRAs, should consider (i) whether the investment will impair the liquidity of their plan, IRA or other entity; and (ii) whether interests in us or the underlying assets owned by us constitute “plan assets” for purposes of Section 406 of ERISA or Section 4975 of the Internal Revenue Code (the “Code”) which could cause certain transactions with us to constitute non-exempt prohibited transactions. ERISA requires that the assets of a plan be valued at their fair market value as of the close of the plan year, and it may not be possible to adequately value the units from year to year, since there will not be a market for those units and the appreciation of any property may not be shown in the value of the units until we sell or otherwise dispose of our investments. If a member is an employee benefit plan subject to federal, state or local law that is substantially similar to ERISA, it should consider whether an investment in the units satisfies the requirements of such similar law.

Item 1B – Unresolved Staff Comments

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

Item 1C – Cybersecurity

Our manager has processes in place for assessing, identifying, and managing material risks from potential unauthorized occurrences on or through its electronic information systems that could adversely affect the confidentiality, integrity, or availability of its information systems or the information residing on those systems. These include a variety of mechanisms, controls, protocols, technologies, methods, systems/network architecture, and other processes that are designed to prevent, detect, and/or mitigate unauthorized access, data loss, theft, and/or misuse, or other security incidents or vulnerabilities affecting the data. The data include confidential, proprietary, and business and personal information that RMC collects, processes, stores, and transmits as part of our business, including on behalf of third parties. Our manager also use systems and processes designed to reduce the impact of a security incident at a third-party vendor or customer. Additionally, our manager uses processes to oversee and identify material risks from cybersecurity threats associated with its use of third-party technology and systems, including: technology and systems we use for encryption and authentication; employee email; content delivery to customers; back-office support; and other functions.

As part of our manager’s risk management process, it conducts application security assessments, vulnerability management, penetration testing, security audits, and ongoing risk assessments. RMC maintains a variety of incident response plans that are to be utilized when incidents are detected. RMC requires employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity training and compliance programs annually.

Our security vendor is responsible for implementing and maintaining centralized cybersecurity and data protection practices at RMC in close coordination with RMC’s senior leadership and other teams across RMC. The vendor has a number of experienced information security team members responsible for various parts of our business, all of whom are supported by a team of trained cybersecurity professionals and at times may engage assessors, consultants, auditors, or other third parties to assist with assessing, identifying, and managing cybersecurity risks.

Cybersecurity risks and associated mitigations are evaluated by RMC’s senior leadership bimonthly. Additionally reviewed in these bimonthly meetings are hardware and software used throughout the business operation, from firewall devices to endpoints and peripherals, as well as internally hosted software and applications to SaaS and vendor sites.

As of the date of this filing, we have not identified any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, there can be no assurance that we, or our third-party business partners or service providers, will not experience a cybersecurity threat or incident in the future that could materially adversely affect our business strategy, results of operations, or financial condition. For further discussion of cybersecurity risks we face, see the risk factors discussed under “Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our data or confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results” in Risk Factors in Item 1A of this Form 10-K.

Item 2 – Properties

As of December 31, 2025, the company does not own (and has not owned since its inception) any real property.

The company’s mailing address is at RMC’s leased office space at 155 Bovet Road, Suite 302, San Mateo, CA 94402.

Item 3 – Legal Proceedings

See Note 6 (Commitments and Contingencies, Other Than Loan Commitments) to the financial statements included in Part II, Item 8 of this report for information regarding legal proceedings and government proceedings, which presentation is incorporated by reference into this Item 3.

Item 4 – Mine Safety Disclosures

Not Applicable.

Part II

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

Investors have limited ability to sell their units, as units are not listed on an exchange or quoted through a quotation system, and there is no secondary market. The Operating Agreement imposes substantial restrictions upon transfer of units. Units may not be accepted by a lender as security for borrowing. Therefore, an investment in our units is not suitable for investors who expect to require short-term liquidity from their investments. See “Liquidity and unit redemption program” in Part I of this report. As of February 28, 2026, there were 1,150 unit-holders, who held approximately $62.2 million units.

Recent sales of unregistered securities

All sales of our units within the past three years were registered under the Securities Act.

DRIP/ SEC registrations, closed July 2024

On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP in those states in which regulatory approval has been obtained. The Registration Statement on Form S-3 became effective on May 9, 2019. The gross proceeds from sales of units to our members under our DRIP pursuant to the May 9, 2019 Form S-3 Registration Statement (after May 9, 2019) were approximately $9.6 million, which proceeds were used for general corporate operations.

In July 2024, members who had elected to participate in the DRIP were notified by a letter included with their June 2024 monthly statements that the DRIP was closed. As a result of this plan closure, members that previously did not receive quarterly income distributions because of their enrollment in the DRIP received income distribution checks for the quarter ended September 30, 2024 and continue to receive quarterly income distributions to the extent of cash available for distribution.

Redemption of units

The Operating Agreement provides for a unit redemption program, whereby a member may redeem all or part of their units, subject to certain limitations. For more information about the unit redemption program, see Item 1- Business – “Liquidity and unit redemption program” of this report.

Units redeemed in 2025 and 2024 by quarter are presented in the following table ($ in thousands). All redemptions are made on the last business day of the quarter and valued at $1 per unit.


For the quarterly period ended	2025		2024
March 31	$	840	$	882
June 30		834		865
September 30		821		859
December 31		812		852
Total	$	3,307	$	3,458

Total withdrawals since formation	$	37,174	$	33,867

Eligible members’ capital redemption requests at December 31, 2025 approximated $25.8 million, of which

•

$24.3 million were received at or prior to September 30, 2025 and

•

$1.5 million were received in the quarter ended December 31, 2025 and will be eligible at March 31, 2026.

Eligible members’ capital redemption requests at December 31, 2024 approximated $24.3 million, of which

•

$22.2 million were received in 2024 at or prior to September 30, 2024 and

•

$2.1 million were received in the quarter ended December 31, 2024 and became eligible at March 31, 2025.

Distributions

Distributions to members totaled approximately $2.5 million and $3.1 million in 2025 and 2024, respectively. See “Distribution policy” under Item 1- Business in Part I of this report, which discussion is incorporated by reference herein.

Fair market value / unit value

In compliance with FINRA Rule 2310 concerning direct-participation-program value per unit estimates, RMC obtained information regarding fair market valuations of the net assets and unit value as of December 31, 2025, for RMI IX. The valuations were performed with the assistance of an independent valuation firm that provides asset valuations to retirement plan sponsors, plan administrators, banking and trust companies, and ERISA plans. The fair values of the individual properties were taken from appraisals which referenced the most current available market information such as listing agreements, offers, and pending and closed sales. Industry standard valuation approaches, including the Income Approach (as described below), were utilized in deriving the fair values, as appropriate. There is no assurance that this estimated fair value of the membership units is or will remain accurate, and it does not determine the amount that a member is entitled to receive upon redemption of units. The redemption amount is determined by the applicable provisions of the Operating Agreement.

Based on the analysis summarized in Exhibit 99.1 (Fair Value per Unit), the fair value of a unit of RMI IX was determined to be $1.00.

The fair value of loan balances (i.e., principal plus interest) secured by deeds of trust, per the Market Approach (as described below), is deemed to approximate the recorded amount (per the financial statements) as the loans:

•

are of shorter terms at origination than commercial real estate loans by institutional lenders and conventional single-family home mortgage lenders;

•

are written without a prepayment penalty; and

•

are not yet sellable into an established secondary market as companies or individuals originating loans similar to those originated by RMC on behalf of the company typically intend to hold the loans until maturity.

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

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

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

Commissions for unit sales to new members paid to broker-dealers/formation loan

The company ceased offering units to new members on April 30, 2019. Prior to April 2019, commissions for unit sales to new members paid to broker-dealers (“B/D sales commissions”) and premiums paid to certain investors upon the purchase of units were paid by RMC and were not paid directly by us out of unit-sales proceeds. Instead, the company advanced to RMC amounts sufficient to pay the B/D sales commissions and premiums to be paid to investors. Such advances in total were not to exceed seven percent (7%) of offering proceeds. The receivable arising from the advances is unsecured and non-interest bearing and is referred to as the “formation loan.”

As of December 31, 2025, such advances totaled approximately $5.6 million, of which $2.6 million was then outstanding. Please refer to the information under “—Formation loan” and “—Organization and offering expenses” in Note 3 (Manager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a discussion of the formation loan and organization and offering expenses, which discussions are incorporated herein by this reference.

The formation loan is repayable by RMC in annual installments of approximately $208 thousand which may be paid by RMC either in full on December 31 of each calendar year during the term of the company or in four equal quarterly installments. Any amount of the formation loan remaining unpaid on the last day of the company term, if any, is payable in full on that date.

Item 6 – [Reserved.]

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

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

Manager and Other Related Parties

Note 1 (Organization and General) and Note 3 (Manager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report present details as to the company activities for which related parties are compensated and related transactions, including the formation loan to RMC, which presentation is incorporated by this reference into this Item 7.

Critical Accounting Estimates

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 credit losses, including determining the fair value of the collateral, and the valuation of real estate owned (RMI IX has not acquired real estate owned (“REO”) since it commenced operations in 2009). Actual results could differ significantly from these estimates.

Allowance for credit losses

Accounting Standards Codification 326, Financial Instruments – Credit Losses (ASC 326) requires a lifetime, current expected credit loss (CECL) measurement objective for the recognition of credit losses at the time a loan is originated or acquired. The allowance for credit losses is adjusted each period for changes in expected lifetime credit losses for loans and accrued interest.

The determination of the amount of the allowance for credit losses considers historical loss experience, current fair value of collateral and the resultant LTV, current real estate and financial markets, as well as reasonable and supportable forecasts about future economic scenarios. The forward-looking estimates consider the likelihood that any combination of events would adversely impact economic conditions and real estate markets in California such that the substantial protective equity (measured net of senior debt and claims) would no longer be sufficient to collect the recorded amounts of principal, advances and accrued interest due on the loan.

- Fair value estimates - real property collateral for loans

The fair value of real property (as to loan collateral and REO, if any) is determined by exercise of judgment based on RMC’s management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions. Three methods are utilized: 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 and income approach may yield different values depending on certain basic assumptions, including comparables sales, market capitalization rates and certain components of net operating income as well as the consideration of adjustments made for any attributes specific to the real estate.

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, and 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.

Results of Operations

The following discussion describes our results of operations for 2025 and 2024.

Key performance indicators

Key performance indicators are presented in the following table ($ in thousands).


	2025			2024
Members’ capital, gross – end of period balance	$	61,788		$	65,995
Members’ capital, gross – average daily balance	$	64,650		$	68,831

Member redemptions(1)	$	3,307		$	3,458

Secured loans principal – end of period balance	$	58,163		$	53,475
Secured loans principal – average daily balance	$	48,243		$	67,014

First trust deeds		30			27
Principal – first trust deeds	$	49,788		$	46,945
Weighted average OLTV – first trust deeds(2)		55.5	%		59.3	%

Second trust deeds		6			9
Principal – second trust deeds	$	8,375		$	6,530
Weighted average OLTV – second trust deeds(2)		57.0	%		55.9	%

Interest income	$	5,042		$	6,818
Portfolio interest rate(3)		10.1	%		9.4	%
Effective yield rate(4)		10.5	%		10.2	%

Line of credit – end of period balance	$	—		$	4,000
Line of credit – average daily balance(5)	$	244		$	6,937

Interest expense	$	51		$	675
Interest rate – line of credit(5)		0.5	%		8.6	%

Provision for credit losses	$	335		$	90

Total operations expense(9)	$	2,918		$	2,719

Net income(9)	$	1,825		$	3,388
Percent of average members’ capital(6)(7)		2.8	%		4.9	%

Member distributions	$	2,485		$	3,122
Percent of average members’ capital(6)(8)		3.8	%		4.5	%

(1)

Eligible redemption requests at December 31, 2025 of approximately $25.8 million are carried forward to subsequent quarters until paid. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a detailed discussion of redemptions of members' capital.

(2)

The LTVs use the fair value at origination of the loans (OLTV). See table below for LTVs based on updated collateral fair market values and loan balances.

(3)

Stated note interest rate, weighted daily average (annualized).

(4)

Percent of secured loans – average daily balance (annualized). In 2025 and 2024, the company collected post-maturity and default interest of $205 thousand and $552 thousand, respectively, with respect to multiple loans, which amounts were above the interest rates on the related notes.

(5)

Interest rate of Line of Credit, weighted daily average (annualized). See Note 5 (Line of Credit) to the financial statements included in Part II, Item 8 of this report for a presentation of the activity and discussion of the terms and conditions of the loan agreement.

(6)

Percent of members’ capital, gross – average daily balance (annualized).

(7)

Percent based on the net income available to members (excluding 1% allocated to manager).

(8)

Members Distributions is net of O&O expenses allocated to members’ accounts during the year.

(9)

In 2024, RMC – at its sole discretion – collected less than the maximum allowable reimbursement of qualifying costs attributable to RMI IX (Costs from RMC on the Statements of Income), which increased the net income, cash available for distribution, and the net-distribution rate. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a detailed discussion of fees and cost reimbursements to which the manager is entitled.

Redemptions of members’ capital

Eligible members’ capital redemption requests at December 31, 2025 approximated $25.8 million, of which

•

$24.3 million were received at or prior to September 30, 2025; and

•

$1.5 million were received in the quarter ended December 31, 2025 and will be eligible at March 31, 2026.

Eligible members’ capital redemption requests at December 31, 2024 approximated $24.3 million, of which

•

$22.2 million were received at or prior to September 30, 2024; and

•

$2.1 million were received in the quarter ended December 31, 2024 and became eligible at March 31, 2025.

Secured loans

The secured loans principal – average daily balance in 2025 decreased by approximately $18.8 million compared to 2024. This decrease is primarily due to a reduced availability of loans qualifying under the company’s lending criteria.

Secured loans, principal, advances and interest unpaid, by LTV and lien position.

LTVs presented in the following tables (and the supplemental information following them) have been updated for changes in fair values of the collateral as indicated by appraisals, broker opinion of value, or other external market evidence received by the manager after the origination of the loan, if any, and for the loan balance (the sum of principal, advances and interest unpaid) at December 31, 2025.

Secured loans, principal by LTV and lien position at December 31, 2025 are presented in the following table ($ in thousands).


	Secured loans, principal
LTV(1)	First trust deeds		Percent(2)			Second trust deeds		Percent(2)			Total principal		Percent(2)
<40%	$	7,117		12.2	%	$	1,100		1.9	%	$	8,217		14.1	%
40-49%		1,955		3.4			—		0.0			1,955		3.4
50-59%		15,067		25.8			4,800		8.3			19,867		34.1
60-69%		13,234		22.8			1,250		2.1			14,484		24.9
Subtotal <70%		37,373		64.2			7,150		12.3			44,523		76.5

70-79%		10,469		18.0			-		0.0			10,469		18.0
Subtotal <80%		47,842		82.2			7,150		12.3			54,992		94.5

≥80%(3)		1,946		3.4			1,225		2.1			3,171		5.5

Total	$	49,788		85.6	%	$	8,375		14.4	%	$	58,163		100.0	%

(1)

LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at December 31, 2025.

(2)

Percent of secured loans principal, end of period balance.

(3)

See the table below for specific details of the loans that have an LTV over 80%.

Secured loans (loan balance), with payments in arrears, by LTV and lien position at December 31, 2025 are presented in the following tables ($ in thousands).


	Secured loans with payments in arrears, principal
LTV(4)	First trust deeds		Percent(5)			Second trust deeds		Percent(5)			Total principal		Percent(5)
<40%	$	319		0.5	%	$	—		0.0	%	$	319		0.5	%
40-49%		—		0.0			—		0.0			—		0.0
50-59%		—		0.0			—		0.0			—		0.0
60-69%		8,570		14.7			1,250		2.1			9,820		16.8
Subtotal <70%		8,889		15.2			1,250		2.1			10,139		17.3

70-79%		8,165		14.1			—		0.0			8,165		14.1
Subtotal <80%		17,054		29.3			1,250		2.1			18,304		31.4

≥80%		1,946		3.4			1,225		2.1			3,171		5.5

Total	$	19,000		32.7	%	$	2,475		4.2	%	$	21,475		36.9	%

(4)

LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at December 31, 2025.

(5)

Percent of secured loans principal at December 31, 2025.

The $21.5 million of secured loans (loan balance) with payments in arrears, including loans past maturity, is comprised of the following eleven loans:

•

In San Bruno, San Mateo County (LTV 120%, principal $955 thousand), a commercial building operated as an owner/user restaurant (first lien deed of trust) – The borrower is delinquent on monthly payments (180 days or more), has forced place insurance and is delinquent on property taxes. In January 2026, the collateral was acquired by foreclosure sale (and possession of the property was taken).

•

In San Francisco (LTV 98%, principal $990 thousand), a three-unit mixed use building (first lien deed of trust) – The loan matured in December 2025, and the borrower is 180 days or more delinquent on monthly payments.

•

In Los Angeles (LTV 83%, principal $625 thousand), a multi-family building (second lien deed of trust) – The loan matured in August 2025 and the borrower continues making monthly payments.

•

In Los Angeles (LTV 81%, principal $600 thousand), a multi-family building (second lien deed of trust) – The loan matured in April 2025 and the borrower continues making monthly payments.

•

In Palo Alto, Santa Clara County (LTV 77%, principal $4.7 million), an office building with approved plans for a senior living housing facility (first lien deed of trust) – The loan matured in October 2023. A forbearance agreement dated October 31, 2025, provided for a payment of $973 thousand (received in October 2025) that was applied approximately $191 thousand to principal, approximately $671 thousand to accrued interest (the full amount owing including for October 2025), and the remainder to advances and late fees, and for the final payment in full by the borrower by January 15, 2026, on which the borrower defaulted. On March 31, 2026, the borrower and the company entered into an agreement (the “2026 agreement”), pursuant to which the borrower agreed to a payment plan consisting of ten (10) weekly payments of $20 thousand (commencing March 31, 2026 to June 2, 2026) and payment in full of the note balance on or before June 17, 2026.

•

In Pleasanton, Alameda County (LTV 72%, principal $2.8 million), a single-family residence (first lien deed of trust) and another single-family home in San Jose (second lien deed of trust). The borrower was delinquent 30-89 days on monthly payments. In March 2026, the San Jose property sold and the company received $1.8 million which was applied to late fees, interest and then to principal, resulting in unpaid principal of $1.2 million (LTV 52%).

•

In Napa (LTV 71%, principal $633 thousand), a single-family residence (first lien deed of trust) – The loan matured in December 2024, and the borrower is 180 days or more delinquent on monthly payments.

•

In Los Angeles (LTV 69%, principal $1.3 million), an office building (2nd lien deed of trust) – The loan matured in December 2025, and the borrower continues making monthly payments.

•

In Livermore, Alameda County (LTV 64%, principal $1.2 million), a commercial condominium (first lien deed of trust) – The loan matured in October 2025.

•

In San Diego (LTV 60%, principal $7.4 million), an industrial building (first lien deed of trust) –The borrower is 30-89 days delinquent on monthly payments. The loan matured in March 2026.

•

In Oakley, Contra Costa County (LTV 40%, principal $318 thousand), a single-family home (first lien deed of trust) – The borrower is 90-179 days delinquent on monthly payments. The loan was paid off in February 2026.

At December 31, 2025, payments in arrears (i.e., principal and interest payments past due 30 or more days) for the above eleven secured loans totaled approximately $10.4 million of which approximately $10.0 million was principal and approximately $357 thousand was accrued interest. As noted above, a loan with principal of $4.7 million had a forbearance agreement dated October 31, 2025, that provided for final payment in full by the borrower by January 15, 2026 on which the borrower defaulted. Subsequent to December 31, 2025, pursuant to the 2026 agreement, the borrower agreed to a payment plan consisting of ten (10) weekly payments of $20 thousand (commencing March 31, 2026 to June 2, 2026) and payment in full of the note balance on or before June 17, 2026.

Secured loans (loan balance) for matured loans, by LTV and lien position at December 31, 2025 are presented in the following table ($ in thousands).


	Secured loans past maturity, principal
LTV(6)	First trust deeds		Percent(7)			Second trust deeds		Percent(7)			Total principal		Percent(7)
<40%	$	—		0.0	%	$	—		0.0	%	$	—		0.0	%
40-49%		—		0.0			—		0.0			—		0.0
50-59%		—		0.0			—		0.0			—		0.0
60-69%		1,170		2.0			1,250		2.1			2,420		4.1
Subtotal <70%		1,170		2.0			1,250		2.1			2,420		4.1

70-79%		5,366		9.2			—		0.0			5,366		9.2
Subtotal <80%		6,536		11.2			1,250		2.1			7,786		13.3

≥80%		990		1.7			1,225		2.1			2,215		3.8

Total	$	7,526		12.9	%	$	2,475		4.2	%	$	10,001		17.1	%

(6)

LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at December 31, 2025.

(7)

Percent of secured loans principal, end of period balance.

The $10.0 million of secured loans (loan balance) with past maturity comprised of the following seven loans:

•

In Los Angeles (LTV 83%, principal $625 thousand), a multi-family building (second lien deed of trust) – The loan matured in August 2025 and the borrower continues making monthly payments.

•

In Los Angeles (LTV 81%, principal $600 thousand), a multi-family building (second lien deed of trust) – The loan matured in April 2025 and the borrower continues making monthly payments.

•

In Palo Alto, Santa Clara County (LTV 77%, principal $4.7 million), an office building with approved plans for a senior living housing facility (first lien deed of trust) – The loan matured in October 2023. A forbearance agreement dated October 31, 2025, provided for a payment of $973 thousand (received in October 2025) that was applied approximately $191 thousand to principal, approximately $671 thousand to accrued interest (the full amount owing including for October 2025), and the remainder to advances and late fees, and for the final payment in full by the borrower by January 15, 2026, on which the borrower defaulted. Subsequent to December 31, 2025, pursuant to the 2026 agreement the borrower agreed to a payment plan consisting of ten (10) weekly payments of $20 thousand (commencing March 31 to June 2, 2026) and payment in full of the note balance on or before June 17, 2026.

•

In Los Angeles (LTV 69%, principal $1.3 million), an office building (2nd lien deed of trust) – The loan matured in December 2025, and the borrower continues making monthly payments.

•

In Livermore, Alameda County (LTV 64%, principal $1.2 million), a commercial condominium (first lien deed of trust) – The loan matured in October 2025.

See Note 4 (Loans) to the financial statements included in Part II, Item 8 of this report for detailed presentations as to the secured loan portfolio, including loan characteristics, scheduled maturities, delinquency and payments in arrears, loans in non-accrual status and the allowance for credit losses.

Performance overview/net income 2025 v. 2024

Net income available to members as a percent of members’ capital, gross – average daily balance was 2.8% and 4.9% for the year ended December 31, 2025 and 2024, respectively. Net income decreased by approximately $1.6 million in 2025 as compared to 2024 due to a decrease in net interest income of approximately $1.2 million, an increase in provision for credit losses of approximately $245 thousand and an increase in operations expenses of approximately $199 thousand, partially offset by an increase in late fees of approximately $49 thousand. The portfolio interest rate on secured loans has increased by 0.7 percentage points to 10.1% since December 31, 2024; the effective yield rate increased by 0.3 percentage points to 10.5%.

Analysis and discussion of income from operations 2025 v. 2024

Significant changes to net income are summarized in the following table ($ in thousands).


	Net interest income			Provision for credit losses		Operations expense			Net income
Year ended
December 31, 2025	$	4,991			335		2,918		$	1,825
December 31, 2024		6,143			90		2,719			3,388
Change	$	(1,152	)		245		199		$	(1,563	)

Change
Decrease in secured loans principal - average daily balance	$	(1,846	)		—		(46	)	$	(1,800	)
Effective yield rate		71			—		—			71
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC		—			—		47			(47	)
Interest on line of credit		586			—		—			586
Allowance for credit losses, specific reserve		—			245		—			(245	)
Late fees		—			—		—			49
Gain on sale, loans		—			—		—			(16	)
Decrease in allocable expenses from RMC		—			—		(14	)		14
RMC fees/costs reimbursements collected		—			—		163			(163	)
Interest on notes receivable from related parties		6			—		—			6
Interest on unsecured borrowings		32			—		—			32
Tax compliance services		—			—		8			(8	)
Legal services		—			—		(226	)		226
Timing of services rendered		—			—		(9	)		9
Independent contractors		—			—		(3	)		3
Audit services		—			—		225			(225	)
Other		(1	)		—		54			(55	)
Change	$	(1,152	)		245		199		$	(1,563	)

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

Net interest income

Net interest income decreased approximately $1.2 million (18.8%) in 2025 compared to 2024. Interest income decreased approximately $1.8 thousand (26.0%) resulting from a decrease in the average daily balance of secured loans principal of approximately $18.8 million (28.0%). In 2025 and 2024 the company collected post-maturity and default interest of $205 thousand and $552 thousand, respectively, with respect to multiple loans, which amounts were above the interest rates on the related notes.

Interest expense on the line of credit decreased approximately $587 thousand (96.9%) in 2025 compared to 2024 due to a decrease in the line of credit – average daily balance of approximately $6.7 million (96.5%). Interest expense on intercompany promissory notes and intercompany unsecured borrowings decreased approximately $38 thousand (100%). See Key performance indicators table included above in Part II, Item 7 of this report for details on the average interest rate on the line of credit.

Provision/allowance for credit losses

The increase in the provision for credit losses to $335 thousand in 2025 reflects the decrease in the expected net proceeds to the company – for two collateral-dependent loans – upon foreclosure and subsequent sale of the underlying collateral, due to a decline in the fair value of the collateral and/or an increase in the amount of the senior debt and claims (e.g., delinquent property taxes). See the presentation on secured loans, principal, advances and interest unpaid, by LTV and lien position in this Item 8 for a detailed presentation of current loan status.

Operations expense 2025 v. 2024

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


	Mortgage servicing fees			Asset management fees		Costs from RMC, net			Professional services			Other		Total
Year ended
December 31, 2025	$	123			472		592			1,666			65	$	2,918
December 31, 2024		169			471		396			1,655			28		2,719
Change	$	(46	)		1		196			11			37	$	199

Change
Decrease in secured loans principal - average daily balance	$	(46	)		—		—			—			—	$	(46	)
Decrease in members’ capital - average daily balance		—			1		—			—			—		1
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC		—			—		47			—			—		47
Decrease in allocable expenses from RMC		—			—		(14	)		—			—		(14	)
RMC fees/costs reimbursements collected		—			—		163			—			—		163
Tax compliance services		—			—		—			8			—		8
Legal services		—			—		—			(226	)		—		(226	)
Timing of services rendered		—			—		—			(9	)		—		(9	)
Independent contractors		—			—		—			(3	)		—		(3	)
Audit services		—			—		—			225			—		225
Other		—			—		—			16			37		53
Change	$	(46	)		1		196			11			37	$	199

Mortgage servicing fees

The decrease in mortgage servicing fees of approximately $46 thousand in 2025 compared to 2024 was due to a decrease in the average daily balance – secured loans of approximately $18.8 million at the annual mortgage servicing fee to RMC of 0.25%. The decrease in the average daily balance – secured loans was due to a reduction in members’ capital.

Asset Management Fees

The asset management fees were about the same in 2025 and 2024. The asset management fee is computed using the prior year end member’s capital base which is the then fair value of the company’s loans plus working capital reserves less outstanding debt.

Costs from RMC, net

RMC is entitled to request reimbursement for operations expense incurred on behalf of RMI IX, 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.

The amount of qualifying costs attributable to RMI IX incurred by RMC was approximately $592 thousand and $545 thousand in 2025 and 2024, respectively. The reimbursement of costs from RMC waived was approximately $149 thousand in 2024. In October 2024 , RMC began collecting the full amount of the qualifying costs attributable to RMI IX to which it was entitled.

Professional services

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

The increase in professional services of approximately $11 thousand in 2025 compared to 2024 was due to an increase in audit fees, partially offset by a decrease in legal fees due to reduced legal services and a decrease due to timing differences of services rendered. Costs for these professional services have been increasing – and are expected to continue to increase – as the demands (and complexity) of regulatory, accounting and tax compliance increase and the rate at which firms charge for their services increases.

Cash flows and liquidity

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



	2025			2024
Members’ capital
Distributions to members, net of DRIP	$	(2,503	)	$	(2,713	)
Redemptions, net		(3,307	)		(3,472	)
O&O expenses repaid by RMC		19			31
Cash – members’ capital, net		(5,791	)		(6,154	)

Borrowings
Line of credit borrowings (payments), net		(4,000	)		1,847
Interest paid		(75	)		(621	)
Debt issuance costs paid		—			(66	)
Promissory note received from related party		—			940
Promissory note repaid to related party		—			(940	)
Promissory note received from third party		—			1,500
Promissory note repaid to third party		—			(1,500	)
Unsecured borrowings received from related mortgage funds		—			2,500
Unsecured borrowings repaid to related mortgage funds		—			(2,500	)
Cash – borrowings, net		(4,075	)		1,160
Cash – members’ capital and borrowings, net		(9,866	)		(4,994	)

Loan principal/advances/interest
Loans funded & advances, net		(40,332	)		(42,440	)
Principal collected		35,620			46,747
Loans sold to non-affiliate		1,076			4,068
Interest received, net		5,023			6,657
Late fees		79			27
Promissory note repaid by related mortgage fund		—			2,800
Cash – loans, net		1,466			17,859

Formation loan collected		104			208

Operations expense		(3,200	)		(2,727	)

Net change in cash	$	(11,496	)	$	10,346
Cash, end of year	$	562		$	12,058

Distributions to members

To determine the amount of cash to be distributed in any month, the company relies in part on its forecast of 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 sufficient to support ongoing operations and meet obligations timely. As of December 31, 2025, the difference between earnings allocated to members’ capital accounts and net income available to members was approximately $380 thousand resulting in a decrease in members’ capital, and is expected to be offset by future earnings in excess of net distributions in 2026 resulting from the collection of foregone interest, late fees and post-maturity interest.

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

•

loan origination volume and the balance of capital available to lend;

•

the current and future interest rates negotiated with borrowers;

•

line of credit advances, repayments and the interest rate thereon;

•

loan sales to unaffiliated third parties, and any gains received thereon;

•

the amount of fees and cost reimbursements to RMC;

•

the timing and amount of other operating expenses, including expenses for professional services;

•

the timing and amount of payments from RMC on the formation loan; and

•

fee and/or cost reimbursements waived, if any, from RMC.

There is no requirement in the Operating Agreement for a required level of distributions to members. The amount of distributions to members is determined by the manager based on financial results and cash available for distribution taking into consideration the need to maintain adequate cash balances to support ongoing operations. The manager has broad discretion in determining the dollar amount of cash balances required.

In July 2024, members who had elected to participate in the DRIP were notified by a letter included with their June 2024 monthly statements that the DRIP was closed. As a result of this closure, members that previously did not receive quarterly income distributions because of their enrollment in the DRIP received income distribution checks for the quarter ended September 30, 2024 and continue to receive quarterly income distributions to the extent of cash available for distribution.

Liquidity, borrowings and capital resources

The ongoing sources of funds are the proceeds from:

•

loan payoffs;

•

borrowers’ monthly principal and interest payments;

•

line of credit advances (to fund secured loans only);

•

loan sales to unaffiliated third parties; and

•

payments from RMC on the outstanding balance of the formation loan.

The company’s cash balances are maintained at levels sufficient to support on-going operations and satisfy obligations, without reducing loan fundings or suspending distributions or redemptions, although these options are available if future circumstances warrant. If at any time the company has fully deployed the capital available to lend, the manager would continue to utilize loan assignments to related mortgage funds and loan sales to unaffiliated third parties to maintain liquidity of the company. The manager believes these sources of funds will provide sufficient funds to adequately meet financial obligations for the next twelve months.

In addition, the company has a $10 million revolving line of credit (subject to a borrowing base) and term loan facility which expires on March 13, 2028. Advances on the line of credit are to be used exclusively to fund secured loans. The credit agreement for the facility contains various covenants, including a credit payment delinquency rate (measured quarterly), which, if exceeded, would not allow the company to make further borrowings under the facility until the company regains compliance. See Note 5 (Line of Credit) to the financial statements included in Part II, Item 8 of this report for a detailed presentation of the activity and discussion on additional terms and provisions of the credit agreement (and subsequent modifications), which presentation is incorporated by this reference into this Item II. There can be no assurance that the company will have adequate funds from which loans may be funded.

Contractual obligations and commitments

At December 31, 2025, the company had no construction or rehabilitation loans outstanding, no loan commitments pending, and no off-balance sheet arrangements as such arrangements are not permitted by the Operating Agreement. Note 3 (Manager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report presents detailed discussion of the company’s contractual obligations to RMC.

Item 7A – Quantitative and Qualitative Disclosures About Market Risk

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

Item 8 – Financial Statements and Supplementary Data

The following financial statements of Redwood Mortgage Investors IX, LLC at and for the years ended December 31, 2025 and 2024 are included in Item 8:


Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; San Francisco, CA; PCAOB ID #243)		35
Balance Sheets		37
Statements of Income		38
Statements of Changes in Members’ and Manager's Capital		39
Statements of Cash Flows		40
Notes to Financial Statements		42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Members and Board of Directors

Redwood Mortgage Investors IX, LLC

San Mateo, California

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Redwood Mortgage Investors IX, LLC (a Delaware Limited Liability Company) (the “Company”) as of December 31, 2025 and 2024, the related statements of income, changes in members’ and manager’s capital, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Board of Directors and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses (“ACL”)

As described in the Company’s financial statements, the Company had a gross loan portfolio of $58.9 million and related ACL of $0.5 million as of December 31, 2025. The ACL estimates the lifetime expected credit losses for each loan utilizing a credit loss model. The determination of whether an ACL is necessary considers historical loss experience, current fair value of collateral, current real estate and financial market conditions, and reasonable and supportable forecasts about future economic scenarios. The evaluation of the fair value of the collateral involves significant estimates that require a high degree of management judgment. Management utilizes significant judgment to appropriately determine the fair value of collateral obtained from third-party appraisals.

We identified the appropriateness of comparable sales, market capitalization rates, and certain components of net operating income ("NOI") used in appraisals or management analyses to determine the fair value of collateral underlying certain loans to be a critical audit matter. Auditing these assumptions involved especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

•

Utilizing personnel with specialized skill and knowledge in real estate valuation to assist in assessing the relevance and reliability of comparable sales, market capitalization rates, or certain components of NOI used in appraisals or management analyses to determine the fair value of collateral underlying certain loans. This involved evaluating the recency and comparability of market transactions used in the appraisals or management analyses, and comparing market capitalization rates or certain components of NOI to third-party sources.

/s/ BDO USA, P.C.

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

San Francisco, California

April 14, 2026

REDWOOD MORTGAGE INVESTORS IX, LLC

Balance Sheets

December 31, 2025 and 2024

($ in thousands)


	December 31,			December 31,
ASSETS	2025			2024
Cash, in banks	$	562		$	12,058
Loan payments in trust		28			29
Loan held for sale		—			1,065
Loans
Principal		58,163			53,475
Advances		81			54
Accrued interest		615			611
Prepaid interest		—			(11	)
Loan balances secured by deeds of trust		58,859			54,129
Allowance for credit losses		(545	)		(210	)
Loan balances secured by deeds of trust, net		58,314			53,919
Debt issuance costs, net		8			41
Other receivable		228			3
Total assets	$	59,140		$	67,115

LIABILITIES AND MEMBERS’ CAPITAL

Liabilities
Accounts payable and accrued liabilities	$	25		$	109
Payable to related mortgage fund (Note 3)		2			—
Payable to manager (Note 3)		62			93
Line of credit		—			4,000
Total liabilities		89			4,202

Commitments and contingencies (Note 6)

Members’ and manager’s capital, net		61,641			65,607
Receivable from manager (formation loan) (Note 3)		(2,590	)		(2,694	)
Members’ and manager’s capital, net of formation loan		59,051			62,913
Total liabilities and members’ capital	$	59,140		$	67,115

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

REDWOOD MORTGAGE INVESTORS IX, LLC

Statements of Income

For the Years Ended December 31, 2025 and 2024

($ in thousands)


	2025			2024
Revenue
Interest income	$	5,042		$	6,818
Interest expense		(51	)		(675	)
Net interest income		4,991			6,143
Late fees		79			30
Gain on sale, loans		8			24
Total revenue, net		5,078			6,197

Provision for credit losses		335			90

Operations expense
Mortgage servicing fees to Redwood Mortgage Corp. (RMC)		123			169
Asset management fees to RMC		472			471
Costs from RMC, net (Note 3)		592			396
Professional services		1,666			1,655
Other		65			28
Total operations expense		2,918			2,719
Net income	$	1,825		$	3,388

Net income
Members (99%)	$	1,807		$	3,354
Manager (1%)		18			34
	$	1,825		$	3,388

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

REDWOOD MORTGAGE INVESTORS IX, LLC

Statements of Changes in Members’ and Manager's Capital

For the Years Ended December 31, 2025 and 2024

($ in thousands)


	Members’ Capital			Manager’s Capital			Unallocated Organization and Offering Expenses			Members’ and Manager’s Capital, net
Balance at December 31, 2024	$	65,995		$	83		$	(471	)	$	65,607
Net income		1,807			18			—			1,825
Distributions		(2,485	)		(18	)		—			(2,503	)
Redemptions		(3,307	)		—			—			(3,307	)
Organization and offering expenses allocated		(222	)		—			222			—
Organization and offering expenses repaid by RMC		—			—			19

Redwood Mortgage Investors IX 10-K