EXHIBIT 99.2
[Letterhead of GnazzoThill, A Professional Corporation]
September 26, 2002
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
Re: Sequoia Mortgage Trust 10
Ladies and Gentlemen:
You have requested our opinion in connection with certain federal income
tax matters related to Sequoia Mortgage Trust 10 (the "Trust Fund") and the
$1,041,600,100 Sequoia Mortgage Trust 10 Mortgage Pass-Through Certificates
issued with respect thereto (the "Certificates"). The Trust Fund was established
by Sequoia Residential Funding, Inc. (the "Depositor") pursuant to the Trust
Agreement, dated as of September 1, 2002 (the "Trust Agreement"), among the
Depositor and Wells Fargo Bank Minnesota, National Association, as Trustee. The
Certificates are being issued pursuant to the Trust Agreement. Reference is
hereby made to the Depositor's Universal Shelf Registration Statement on Form
S-3 (Registration Statement No. 333-90772), including a prospectus (the
"Prospectus"), filed with the Securities and Exchange Commission under the
Securities Act of 1933 on June 26, 2002, along with the Prospectus Supplement,
dated September 24, 2002 (the "Prospectus Supplement"). Each capitalized term
used but not defined herein has the meaning assigned thereto in the Trust
Agreement.
We have acted as special tax counsel to the Depositor in connection with
the above transaction and have assisted in the preparation of the federal income
tax summaries set forth in the Prospectus and the Prospectus Supplement used in
connection with the issuance of the Certificates. In formulating our opinions,
we have reviewed copies of (i) the Prospectus and Prospectus Supplement, (ii)
the Trust Agreement and the forms of Certificates distributed as exhibits
thereto, (iii) the Mortgage Loan Purchase and Sale Agreement and the Additional
Collateral Servicing Agreement, (iv) the Purchase Agreement, (v) the
Acknowledgments, dated as of September 26, 2002, assigning rights under the
Purchase Agreements and the Servicing Agreements, and (vi) such resolutions,
certificates, records, and other documents provided by the Depositor as we have
deemed necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals or finals, the conformity to original documents of
all documents submitted to us as certified, conformed or other copies, and the
authenticity of the originals of such copies. In rendering our opinions, we have
assumed that the transactions described in or contemplated by the foregoing
documents have been and will be consummated in accordance with the terms of such
operative documents, and that such documents accurately reflect the material
facts of such transactions.
Our opinion is also based on the Internal Revenue Code of 1986, as
amended, administrative rulings, judicial decisions, Treasury regulations and
other applicable authorities. The statutory provisions, regulations, and
interpretations on which our opinion is based are subject to change, possibly
retroactively.
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
September 26, 2002
Page 2
In addition, there can be no complete assurance that the Internal Revenue
Service will not take positions contrary to the conclusions stated in our
opinion.
Based on the foregoing, we are of the opinion that, assuming (i) the
making of a timely election to treat the Trust Fund as consisting of an Upper
Tier REMIC and a Lower Tier REMIC, each comprised of the assets and interests
specified in the Trust Agreement (and, in particular, excluding from the assets
of each of the Upper Tier REMIC and Lower Tier REMIC the Basis Risk Reserve Fund
and the Additional Collateral) and (ii) compliance with the provisions of the
Trust Agreement, the Purchase Agreement, the Mortgage Loan Purchase and Sale
Agreement, the Additional Collateral Servicing Agreement and the
Acknowledgments, for federal income tax purposes:
1. the statements in the Prospectus under the heading "Federal Income
Tax Consequences", as supplemented or modified by the statements in
the Prospectus Supplement under the heading "Federal Income Tax
Consequences," to the extent that they constitute matters of law or
legal conclusions with respect to Federal income tax matters, are
correct in all material respects;
2. the Trust Fund will consist of two segregated asset pools, the Lower
Tier REMIC and the Upper Tier REMIC, each of which will qualify as a
REMIC within the meaning of Section 860D of the Code;
3. the Class 1A, Class 2A-1, Class 2A-2, Class X-1A, Class X-1B, Class
X-2, Class X-B, Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates will represent "regular interests" in
the Upper Tier REMIC, the Class A-R Certificate will represent the
sole "residual interest" in the Upper Tier REMIC and the Class LTR
Certificate will represent the sole "residual interest" in the Lower
Tier REMIC, each within the meaning of Section 860G of the Code as
in effect on the date hereof;
4. the Basis Risk Reserve Fund is an "outside reserve fund" that is
beneficially owned by the Class X-1A, Class X-1B, Class X-2 and
Class X-B Certificate Owners; and
5. the rights of the Class 1A, Class 2A-1, Class 2A-2, Class B-1, Class
B-2 and Class B-3 Certificate Owners with respect to the Basis Risk
Reserve Fund represent, for federal income tax purposes, contractual
rights that are separate from their regular interests within the
meaning of Treasury Regulations Section 1.860G-2(i).
Other than as expressly stated above, we express no opinion on any issue
relating to the Depositor, the Trust Fund, or to any other securities issued by
them, or under any law other than the federal income tax laws.
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
September 26, 2002
Page 3
We are furnishing this opinion to you solely in connection with the
initial sale of the Certificates and it is not to be relied upon, used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
Very truly yours,
/s/ GnazzoThill, A Professional Corporation
SCHEDULE A
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Sequoia Residential Funding, Inc.
591 Redwood Highway
Suite 3160
Mill Valley, CA 94941
Merrill Lynch & Co.
4 World Financial Center, 10/F
New York, NY 10080
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Wells Fargo Bank Minnesota,
National Association
6th and Marquette
Minneapolis, MN 55479