EXHIBIT 99.2
[Letterhead of GnazzoThill, A Professional Corporation]
October 30, 2002
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
Re: Sequoia Mortgage Trust 11
Ladies and Gentlemen:
You have requested our opinion in connection with certain federal income
tax matters related to Sequoia Mortgage Trust 11 (the "Trust Fund") and the
$720,425,887 Sequoia Mortgage Trust 11 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 Pooling and
Servicing Agreement, dated as of October 1, 2002 (the "Pooling and Servicing
Agreement"), among the Depositor, HSBC Bank USA, as Trustee, and Wells Fargo
Bank Minnesota, National Association, as Master Servicer and Securities
Administrator. The Certificates are being issued pursuant to the Pooling and
Servicing 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 October 22, 2002 (the "Prospectus
Supplement"). Each capitalized term used but not defined herein has the meaning
assigned thereto in the Pooling and Servicing 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 Pooling and Servicing Agreement and the forms of Certificates distributed as
exhibits thereto, (iii) the Mortgage Loan Purchase and Sale Agreement, (iv) the
Purchase Agreements and the Servicing Agreements, (v) the Acknowledgments, dated
as of October 30, 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. 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.
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
October 30, 2002
Page 2
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 Pooling and Servicing Agreement (and, in particular, excluding
from the assets of each of the Upper Tier REMIC and Lower Tier REMIC the Basis
Risk Reserve Fund, the Capitalized Interest Account, the Pre-Funding Account and
the Additional Collateral) and (ii) compliance with the provisions of the
Pooling and Servicing Agreement, the Purchase Agreements, the Mortgage Loan
Purchase and Sale Agreement, the Servicing Agreements 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 A, Class X-1A, Class X-1B, 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 and Class X-B
Certificate Owners; and
5. the rights of the Class A and Class B-1 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
October 30, 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
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, NY 10179
Merrill Lynch & Co.
4 World Financial Center, 10/F
New York, NY 10080
Wells Fargo Bank Minnesota,
National Association
6th and Marquette
Minneapolis, MN 55479
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018