EXHIBIT 99.2
[GNAZZOTHILL, A PROFESSIONAL CORPORATION LETTERHEAD]
December 19, 2002
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
Re: Sequoia Mortgage Trust 12
Ladies and Gentlemen:
You have requested our opinion in connection with certain federal
income tax matters related to Sequoia Mortgage Trust 12 (the "Trust Fund") and
the $1,120,993,195 Sequoia Mortgage Trust 12 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 December 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. 333-100520),
including a prospectus (the "Prospectus"), filed with the Securities and
Exchange Commission under the Securities Act of 1933 on October 11, 2002 and
declared effective on or about October 21, 2002, along with the Prospectus
Supplement, dated December 16, 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 December 19, 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.
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
December 19, 2002
Page 2
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.
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 Reserve
Fund, the Additional Collateral and the Cap Agreement) 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-1, Class X-2, 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 LT-R
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 Reserve Fund is an "outside reserve fund" that is
beneficially owned by the Class X-1 and Class X-2 Certificate
Owners; and
5. the rights of the Certificate Owners with respect to the
Reserve Fund and the Cap Agreement 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
December 19, 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
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
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