EXHIBIT 99.2
[Letterhead of Chapman and Cutler LLP]
March 30, 2004
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
Re: Sequoia Mortgage Trust 2004-3
Ladies and Gentlemen:
You have requested our opinion in connection with certain federal
income tax matters related to Sequoia Mortgage Trust 2004-3 (the "Trust Fund")
and the $919,973,000 Sequoia Mortgage Trust 2004-3 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 March 1, 2004 (the "Pooling
and Servicing Agreement"), among the Depositor, HSBC Bank USA, as Trustee, and
Wells Fargo Bank, 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. 333-112334) filed
with the Securities and Exchange Commission under the Securities Act of 1933 on
January 30, 2004 and declared effective on or about February 12, 2004, and to
the Prospectus, dated February 12, 2004 (the "Prospectus") and the Prospectus
Supplement, dated March 25, 2004 (the "Prospectus Supplement"), included in such
Registration Statement. 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 issued pursuant thereto, (iii) the Mortgage Loan Purchase and Sale
Agreement, (iv) the Purchase Agreements and the Servicing Agreements, (v) the
Acknowledgments, dated as of March 30, 2004, 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,
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
March 30, 2004
Page 2
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.
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 multiple,
tiered REMICs, each comprised of the assets and interests specified in the
Pooling and Servicing Agreement (and, in particular, excluding from the assets
of each such REMIC the Reserve Fund and the Additional Collateral) and (ii)
compliance with the provisions of the Pooling and Servicing Agreement, the
Mortgage Loan Purchase and Sale Agreement, the Purchase Agreements, the
Servicing Agreements and the Acknowledgments, for United States 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
United States federal income tax matters, are correct in all
material respects;
2. each segregated asset pool for which the Pooling and Servicing
Agreement directs the Trustee to make a REMIC election will
qualify as a REMIC within the meaning of Section 860D of the
Code;
3. the Reserve Fund is an "outside reserve fund" that is
beneficially owned by the Class X Certificate Owners; and
4. the rights of the Certificate Owners with respect to the
Reserve Fund represent, for United States 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 United States federal income tax
laws.
TO THE PARTIES LISTED
ON SCHEDULE A HERETO
March 30, 2004
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 by any other
person or for any other purpose without our express written permission.
Very truly yours,
/s/ Chapman and Cutler LLP
SCHEDULE A
Redwood Trust, Inc.
One Belvedere Place
Suite 300
Mill Valley, CA 94941
Sequoia Residential Funding, Inc.
One Belvedere Place
Suite 330
Mill Valley, CA 94941
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Banc of America Securities LLC
214 North Tryon Street
NC1-027-21-04
Charlotte, NC 28255
Countrywide Securities Corporation
4500 Park Grenada
Calabasas, CA 91302
Wells Fargo Bank,
National Association
9062 Old Annapolis Road
Columbia, MD 21045
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018