EXHIBIT 99.3

                                                               November 30, 2001


Sequoia Mortgage Funding Corporation
591 Redwood Highway
Suite 3120
Mill Valley, CA 94941

Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830

Bear Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

               Re: Sequoia Mortgage Trust 5

Ladies and Gentlemen:

        You have requested our supplemental opinion in connection with certain
federal income tax matters related to the transfer of Subsequent Mortgage Loans
to Sequoia Mortgage Trust 5 (the "Issuer") pursuant to that certain Indenture,
dated as of October 1, 2001 (the "Indenture") between the Issuer and Bankers
Trust of California, N.A., as Bond Trustee and that certain Mortgage Loan
Purchase and Sale Agreement, dated as of October 1, 2001 (the "Mortgage Loan
Purchase Agreement"), among Redwood Trust, Inc., Sequoia Mortgage Funding
Corporation (the "Depositor") and the Issuer. The Issuer is a statutory business
trust formed by the Depositor pursuant to the Deposit Trust Agreement, dated as
of October 1, 2001 (the "Deposit Trust Agreement"), between the Depositor and
Wilmington Trust Company, as Owner Trustee. Pursuant to the Indenture, the
Issuer has issued the $510,047,100 Sequoia Mortgage Trust 5 Collateralized
Mortgage Bonds (the "Bonds"). Each capitalized term used but not defined herein
has the meaning assigned thereto in the Indenture.

        We have acted as special tax counsel to the Depositor in connection with
the above transaction. In formulating our opinions, we have reviewed final
copies, dated the date hereof, of (i) the Indenture and the Bonds, (ii) the
Deposit Trust Agreement, (iii) the Mortgage Loan Purchase Agreement, (iv) the
Management Agreement and (v) 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.





Sequoia Mortgage Funding Corporation
Greenwich Capital Markets, Inc.
Bear Stearns & Co., Inc.
November 30, 2001
Page 2


        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.

        Based on the foregoing, we are of the opinion that, assuming (i) the
making of a timely election to treat the Trust Estate as consisting of an
upper-tier REMIC and a lower-tier REMIC, each comprised of the assets and
interests specified in the Indenture and (ii) compliance with the provisions of
the Deposit Trust Agreement, the Indenture and the Mortgage Loan Purchase
Agreement, for federal income tax purposes, upon transfer of the Subsequent
Mortgage Loans to the Issuer:

        1.      the Trust  Estate  will  continue  to consist of two  segregated
                asset pools, each of which qualify as a REMIC within the meaning
                of Section 860D of the Code;

        2.      the Class A,  Class X, Class B-1,  Class B-2,  Class B-3,  Class
                B-4,  Class B-5 and Class B-6 Bonds will  continue to  represent
                "regular  interests" in the  Upper-Tier  REMIC and the Class A-R
                Bond will continue to represent the sole "residual  interest" in
                the each of the  Upper-Tier  REMIC and  Lower-Tier  REMIC,  each
                within the  meaning of Section  860G of the Code as in effect on
                the date hereof;

        3.      the Basis Risk  Reserve  Fund will  continue  to be an  "outside
                reserve  fund" that is  beneficially  owned by the Holder of the
                Class X Bond; and

        4.      the rights of the  Holders of the Class A, Class B-1,  Class B-2
                and Class B-3 Bonds with  respect to the Basis Risk Reserve Fund
                continue  to  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).





Sequoia Mortgage Funding Corporation
Greenwich Capital Markets, Inc.
Bear Stearns & Co., Inc.
November 30, 2001
Page 3

        Other than as expressly stated above, we express no opinion on any issue
relating to the Depositor, the Issuer, the Trust Estate, or to any other
securities issued by them, or under any law other than the federal income tax
laws.

        We are furnishing this opinion to you solely in connection with the
initial sale of the Bonds 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