EXHIBIT 8.1




                                  June 28, 1999



Residential Asset Funding Corporation
301 South College Street
Charlotte, North Carolina 28202

                  Re:    Registration Statement 333-64775
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Ladies and Gentlemen:

                  We have acted as special tax counsel to Residential Asset
Funding Corporation, a North Carolina corporation (the "Company") in connection
with the Prospectus filed by the Company.

                  The term "Prospectus" means the prospectus included in the
Registration Statement. The term "Registration Statement" means (i) the
Registration Statement on Form S-3 (No. 333-_____), including the exhibits
thereto and (ii) any post-effective amendment filed and declared effective prior
to the date of issuance of the asset-backed securities registered thereby (the
"Securities").

                  We have examined the question of whether the Securities will
have the tax treatment described in the Prospectus. Our analysis is based on the
provisions of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder as in effect on the date hereof and on
existing judicial and administrative interpretations thereof. These authorities
are subject to change and to differing interpretations, which could apply
retroactively. The opinion of special tax counsel is not binding on the courts
or the Internal Revenue Service (the "IRS").

                  In general, whether a transaction constitutes the issuance of
indebtedness or the sale of assets for federal income tax purposes is a question
of fact, the resolution of which is based primarily upon the economic substance
of the instruments and the transaction pursuant to which they are issued rather
than the form of the transaction or the manner in which the instruments are
labeled. The IRS and the courts have set forth various factors to be taken into





Residential Asset Funding Corporation
June 28, 1999
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account in determining whether or not a transaction constitutes the issuance of
indebtedness or the sale of assets for federal income tax purposes, which we
have reviewed as they apply to the transactions described on the Prospectus.

                  Based on the foregoing, and such legal and factual
investigations as we have deemed appropriate, we are of the opinion that for
federal income tax purposes:

                  (1) The Securities, assuming they are issued in accordance
with the Prospectus, will have the federal income tax treatment described in the
Prospectus.

                  (2) We hereby adopt and confirm the information appearing
under the caption "Material Federal Income Tax Consequences" in the Prospectus
and confirm that it represents our opinion with respect to the matters discussed
therein.

                  This opinion is furnished by us as counsel to the Registrant.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine LLP in the
Registration Statement and the related prospectus under the heading "Legal
Matters."



                                                     Very truly yours,

                                                     /s/ Dewey Ballantine LLP
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