Unassociated Document

This Registration Statement includes (i) an illustrative form of prospectus supplement for use in an offering of Mortgage-Backed or Asset-Backed Bonds which are debt instruments collateralized primarily by a pool of mortgage loans (“Version 1”), (ii) an illustrative form of prospectus supplement for use in an offering of Mortgage-Backed or Asset-Backed Bonds which are debt instruments representing interests in a REMIC collateralized primarily by a pool of mortgage loans (“Version 2”), (iii) an illustrative form of prospectus supplement for use in an offering of Mortgage Pass-Through or Asset-Backed Certificates representing interests in a REMIC consisting primarily of a pool of mortgage loans, with various forms of credit enhancement provided (“Version 3”), (iv) an illustrative form of prospectus supplement for use in an offering of Mortgage-Backed Notes representing debt instruments collateralized primarily by a pool of adjustable-rate revolving home equity lines of credit (“Version 4”), (v) an illustrative form of prospectus supplement for use in a Re-REMIC offering of Bonds representing debt instruments collateralized primarily by a separate pool of mortgage-backed securities, evidencing interests in underlying trusts or trust estates the assets of which consist primarily of conventional, adjustable rate, first lien, residential mortgage loans (“Version 5”) and (vi) a base prospectus.

Version 1

The information in this prospectus supplement is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus supplement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, [____________], 200[_]

Prospectus Supplement

(To Prospectus dated [______________], 200[_])

$[_______] (Approximate)

[LOGO] Sequoia Mortgage Trust or [LOGO] Sequoia Alternative Loan Trust

[Collateralized-] [Mortgage-] [Asset-] Backed Bonds

[LOGO] RWT Holdings, Inc. [Sponsor and Seller]

[LOGO] [Depositor]

[LOGO] [Issuing Entity]

Consider carefully the risk factors beginning on page S-[__] of this prospectus supplement and on page [__] of the prospectus.

For a list of capitalized terms used in this prospectus supplement, see the index of defined terms on page [__] of the prospectus.

The bonds are redeemable only under circumstances described in this prospectus supplement.

The bonds represent obligations of the issuing entity only and do not represent an interest in or obligation of the trustee, the depositor or any of their affiliates.

This prospectus supplement may be used to offer and sell bonds only if accompanied by the prospectus.

The Issuing Entity will issue:

· [___] class(es) of Senior Class [___] Bonds; and

· [___] class(es) of Subordinated Class [___] Bonds.

The Bonds:

· Will be collateralized by primarily year [fixed adjustable] rate, mortgage loans secured by first liens on one- to four-family residential properties;

· The classes of bonds offered by this prospectus supplement are listed, together with their initial class principal amounts and interest rates, under “Summary of Terms—The Offered Bonds” on page S-[__] of this prospectus supplement. This prospectus supplement and the accompanying prospectus relate only to the offering of bonds listed in the table on page S-[__] and not to the ownership certificate that will be issued by the issuing entity as described in this prospectus supplement;

· Pay all holders of bonds the amounts of principal and interest due thereon on the [_____] day of each month, or if such day is not a business day, the next succeeding business day, commencing on [_________], 200[__]; and

· Will have various forms of credit enhancement of the types described in this prospectus supplement, including [excess interest,] [overcollateralization,] [subordination,] [a bond insurance policy,] [and] [interest rate swap agreements]. [Forms of credit enhancement to be described as applicable.]

[The senior bonds will be unconditionally and irrevocably guaranteed as to payment of insured payments, as defined in this prospectus supplement, pursuant to the terms of the financial guaranty insurance policy to be issued:

[INSURER] [LOGO]]

On or about [______________], delivery of the bonds offered by this prospectus supplement will be made through the book-entry facilities of the Depository Trust Company, Clearstream Banking Luxembourg and the Euroclear System.

The bonds offered by this prospectus supplement will be purchased by the underwriter(s) from the issuing entity, and are being offered by the underwriter(s) from time to time for sale to the public in negotiated transactions or otherwise at varying prices determined at the time of sale. The underwriter(s) have the right to reject any order. Proceeds to the issuing entity from the sale of these bonds will be approximately [__]% of their initial total class principal amount before deducting expenses.

[UNDERWRITER(S)] [LOGO]

Bonds of each series will be characterized for federal income tax purposes as debt instruments.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus supplement or the accompanying prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

Important Notice About Information Presented in this Prospectus Supplement

and the Accompanying Prospectus

We provide information to you about the bonds offered by this prospectus supplement in two separate documents that progressively provide more detail: (1) the accompanying prospectus, which provides general information, some of which may not apply to your bonds and (2) this prospectus supplement, which describes the specific terms of your bonds.

The information presented in this prospectus supplement is intended to enhance the general terms of the accompanying prospectus.

We do not claim that the information in this prospectus supplement and prospectus is accurate as of any date other than the dates stated on their respective covers.

We include cross-references in this prospectus supplement and the accompanying prospectus to captions in these materials where you can find further related discussions. The following table of contents and the table of contents included in the accompanying prospectus provide the pages on which these captions are located.

Dealers will deliver a prospectus supplement and prospectus when acting as underwriters of the bonds and with respect to their unsold allotments and subscriptions. In addition, all dealers selling the bonds will be required to deliver a prospectus supplement and prospectus for ninety days following the date of this prospectus supplement

This prospectus supplement and the accompanying prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933. Specifically, forward-looking statements, together with related qualifying language and assumptions, are found in the materials, including tables, under the headings “Risk Factors” and “Yield, Prepayment and Weighted Average Life” in this prospectus supplement and “Risk Factors” and “Yield and Prepayment Considerations” in the prospectus. Forward-looking statements are also found in other places throughout this prospectus supplement and the prospectus, and may be identified by accompanying language, including “expects,” “intends,” “anticipates,” “estimates” or analogous expressions, or by qualifying language or assumptions. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results or performance to differ materially from the forward-looking statements. These risks, uncertainties and other factors include, among others, general economic and business conditions, competition, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preference and various other matters, many of which are beyond the depositor’s control. These forward-looking statements speak only as of the date of this prospectus supplement. The depositor expressly disclaims any obligation or undertaking to distribute any updates or revisions to any forward-looking statements to reflect changes in the depositor’s expectations with regard to those statements or any change in events, conditions or circumstances on which any forward-looking statement is based.

For European Investors Only

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), the underwriter has represented and agreed that with respect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of bonds to the public in that Relevant Member State prior to the publication of a prospectus in relation to the bonds which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of bonds to the public in that Relevant Member State at any time:

(a)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

S-i

(b)

to any legal entity which has two or more of (1) an average of at least 250 employees, during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c)

in any other circumstances which do not require the publication by the issuing entity of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of bonds to the public” in relation to any bonds in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the bonds to be offered so as to enable an investor to decide to purchase or subscribe the bonds, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

S-ii

TABLE OF CONTENTS

Page No.

THE OFFERED BONDS	S-1
SUMMARY OF TERMS	S-2
Sponsor	S-2
Seller	S-2
Depositor	S-2
Issuing Entity	S-2
Bond Trustee	S-2
Owner Trustee	S-2
Issuing Entity Administrator	S-3
Master Servicer	S-3
Servicer	S-3
Originator	S-3
Custodian	S-3
Cut-Off Date	S-3
Closing Date	S-3
The Bonds	S-3
Payments of Interest	S-4
Payments of Principal	S-4
Priority of Payments	S-4
Limited Recourse	S-5
Credit Enhancement	S-5
Maturity Date	S-6
Fees and Expenses	S-6
The Mortgage Loans	S-6
[Pre-funding Feature	S-7
[Revolving Period	S-8
Mortgage Loan Representations and Warranties	S-8
Mortgage Loan Servicing	S-8
Optional Redemption of the Bonds	S-9
Acceleration of Maturity at Events of Default	S-9
Tax Status	S-9
ERISA Considerations	S-9
Legal Investment	S-9
Bond Rating	S-9
RISK FACTORS	S-11
The Current Turbulence in the Financial Markets and Economy May Adversely Affect the Performance and Market
Value of Your Securities and These Conditions May Not Improve in the Near Future	S-11
Recent Trends in the Residential Mortgage Market May Adversely Affect the Performance and Market Value of
Your Securities	S-11
[Risks Related to Mortgage Loans with Interest-Only Payments	S-12
[Special Default Risk of Second Lien Mortgage Loans	S-12
[Risks Related to Simultaneous Second Liens and Other Borrower Debt	S-12
Geographic Concentration of Mortgage Loans	S-13
Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds	S-13
Potential Inadequacy of Credit Enhancement	S-14
Unpredictability and Effect of Prepayments	S-15
Delay in Receipt of Liquidation Proceeds; Liquidation Proceeds May Be Less Than Mortgage Balance	S-16
Mortgage Loan Modification Programs and Future Legislative Action May Adversely Affect the Performance and Market Value of Your Securities	S-16
Risks Associated With New Laws Relating to Mortgage Loan Servicing	S-16
Violation of Various Federal, State and Local Laws May Result in Losses on the Mortgage Loans	S-17
Risks Associated With Potential New Laws Relating to Mortgage Loan Origination	S-17

S-iii

Page No.

Predatory Lending Laws/High Cost Loans	S-17
Bankruptcy or Insolvency Proceedings Could Delay or Reduce Payments on the Bonds	S-18
[Issuing Entity Could Become a Taxable Entity	S-18
DESCRIPTION OF THE MORTGAGE POOL	S-18
General	S-18
[Seller’s Selection Procedures]	S-19
[The Fixed Rate Mortgage Loans	S-19
[Adjustable Mortgage Rates	S-20
[The Indices	S-20
[Primary Mortgage Insurance	S-20
Certain Characteristics of the Mortgage Loans	S-21
[Delinquency and Loss Information for the Pool Assets	S-21
[Conveyance of Subsequent Mortgage Loans	S-21
[Acquisition by the Issuing Entity of Additional Mortgage Loans	S-23
STATIC POOL INFORMATION	S-24
ADDITIONAL INFORMATION	S-25
THE ISSUING ENTITY	S-25
General	S-25
The Owner Trustee	S-26
The Ownership Certificate	S-26
DESCRIPTION OF THE BONDS	S-26
General	S-26
Book-Entry Bonds	S-27
Payments on Mortgage Loans; Accounts	S-28
Payments	S-28
Interest	S-29
Principal	S-29
Priority of Payments and Allocation of Shortfalls	S-31
Stated Maturity	S-32
Structuring Assumptions	S-32
Optional Purchase of Defaulted Loans	S-33
Weighted Average Lives of the Bonds	S-33
Decrement Tables	S-33
PERCENT OF INITIAL CLASS PRINCIPAL AMOUNTS OUTSTANDING	S-34
Redemption at the Option of the Residual Holder	S-34
Acceleration of Maturity at Events of Default under the Indenture	S-34
Controlling Class Under the Indenture	S-35
Credit Enhancement	S-35
Subordination	S-35
The Bond Insurance Policy	S-36
The Insurer	S-36
The Issuing Entity Administrator	S-36
The Bond Trustee	S-37
The Issuing Entity	S-37
The Custodian	S-37
FEES AND EXPENSES OF THE ISSUING ENTITY	S-37
MATERIAL LEGAL PROCEEDINGS	S-39
THE SPONSOR	S-39
THE DEPOSITOR	S-39
AFFILIATIONS AND RELATED TRANSACTIONS	S-40
THE ORIGINATOR(S)	S-40
THE MASTER SERVICER AND THE SERVICER	S-40
Master Servicer	S-40

S-iv

Page No.

Servicer	S-40
Delinquency and Foreclosure Experience.	S-41
ADMINISTRATION OF THE ISSUING ENTITY	S-43
Servicing and Administrative Responsibilities	S-43
Issuing Entity Accounts	S-45
Example of Payments	S-47
THE AGREEMENTS	S-47
General	S-47
Assignment of the Mortgage Loans	S-48
Mortgage Loan Servicing	S-49
Administration	S-52
Reports to Bondholders	S-52
Voting Rights	S-53
Termination of the Issuing Entity	S-53
YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE	S-53
General	S-53
Overcollateralization	S-57
Subordination of the Subordinate Bonds	S-57
Weighted Average Life	S-57
USE OF PROCEEDS	S-60
MATERIAL FEDERAL INCOME TAX CONSEQUENCES	S-60
Tax Classification of the Issuing Entity and of the Bonds	S-60
Tax Consequences to Holders of the Bonds	S-60
ERISA MATTERS	S-61
General	S-61
Purchases of the Offered Bonds	S-61
METHOD OF DISTRIBUTION	S-62
LEGAL MATTERS	S-62
RATINGS	S-62
INDEX OF DEFINED TERMS	I-1
ANNEX A – CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS	A-1
ANNEX B – GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES	B-1

S-v

THE OFFERED BONDS

The bonds consist of the classes of bonds listed in the table below, together with the Class [___], Class [__], and Class [__]. Only the classes of bonds listed in the tables below are offered by this prospectus supplement.

Initial Certificate Ratings

Class

Initial Class Principal Amount(1)

Initial Interest Rate(2)

Interest Rate Formula

Principal Type

Interest Type

Moody’s

S&P

____________________________

(1) These balances are approximate and are subject to an increase or decrease of up to 5%, as described in this prospectus supplement.

(2) Reflects the interest rate as of the closing date.

(3)	An annual rate equal to the weighted average of the net mortgage rates of the mortgage loans during the applicable period, as described in this Prospectus Supplement.

(4) The designation “N/R” means that the specified rating agency will not rate the bonds of that class.

The offered bonds will also have the following characteristics:

Class

Record

Date(1)

Delay/Accrual

Period(2)

Interest Accrual Convention

Final Scheduled Payment

Date(3)

Expected Final Payment

Date(4)

Minimum Denomination or Percentage

Interest(5)

Incremental Denomination

CUSIP Number

S-1

SUMMARY OF TERMS

This summary highlights selected information from this prospectus supplement and does not contain all of the information that you need to consider in making your investment decision. To understand all of the terms of the offering of the bonds, you should carefully read this entire prospectus supplement and the accompanying prospectus.

While the summary contains an overview of certain calculations, cash flow priorities and other information to aid your understanding, you should read carefully the full description of these calculations, cash flow priorities and other information in this prospectus supplement and the accompanying prospectus before making any investment decision.

Whenever we refer to a percentage of some or all of the mortgage loans in the trust fund, that percentage has been calculated on the basis of the total stated principal balance of those mortgage loans as of [_______, ____] unless we specify otherwise. We explain in this prospectus supplement how the stated principal balance of a mortgage loan is determined. Whenever we refer in this Summary of Terms or in the Risk Factors section to the total stated principal balance of any mortgage loans, we mean the total of their stated principal balances determined by that method, unless we specify otherwise.

Sponsor

[RWT Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Redwood Trust, Inc. (“Redwood Trust”) (the “Sponsor”)]

Seller

[RWT Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Redwood Trust, Inc.], has previously acquired the mortgage loans, directly or indirectly from the originators. On the closing date, [_______________________], as seller (the “Seller”), will sell all of its interest in the mortgage loans to the depositor.

Depositor

[Sequoia Mortgage Funding Corporation] [or] [Sequoia Residential Funding, Inc.], a Delaware special purpose corporation and indirect wholly-owned subsidiary of Redwood Trust, Inc. (the “Depositor”) On the closing date, [Sequoia Mortgage Funding Corporation] [or] Sequoia Residential Funding, Inc.] will assign all of its interest in the mortgage loans to the issuing entity. The depositor’s address is One Belvedere Place, Suite [320] [or] [330], Mill Valley, California 94941, and its telephone number is (415) 389-7373.

Issuing Entity

[Sequoia Mortgage Loan Trust [______________]] [or] [Sequoia Alternative Loan Trust [_____________]], [a statutory trust established under the laws of the State of Delaware] [or] [a common law trust formed under the laws of the State of New York] (the “Issuing Entity”).

Bond Trustee

[_______________________], a banking corporation organized under the laws of [_____________] (the “Bond Trustee”).

Owner Trustee

[_______________________], a banking corporation organized under the laws of the state of Delaware (the “Owner Trustee”).

S-2

Issuing Entity Administrator

[_______________________] (the “Issuing Entity Administrator”), will perform certain administrative duties with respect to the bonds, on behalf of the bond trustee including acting as authentication agent, calculation agent, paying agent, bond registrar and the party responsible for preparing distribution statements and tax information for bondholders and preparing tax filings for the issuing entity.

Master Servicer

[_______________________] (the “Master Servicer”) will act as master servicer for the mortgage loans.

Servicer

[_______________________] (the “Servicer”) will be servicer of the mortgage loans. [All Servicers that service 10% or more of the pool assets will be identified.]

Originator

[_______________________] (the “Originator”) originated the mortgage loans, directly or through its correspondents. [All Originators of 10% or more of the pool assets will be identified.]

Custodian

[_______________________] (the “Custodian”) will maintain custody of the mortgage files relating to the mortgage loans, on behalf of the issuing entity.

Cut-Off Date

[____________, 200__] (the “Cut-Off Date”).

Closing Date

On or about [___________, 200__] (the “Closing Date”).

The Bonds

The classes of Sequoia Mortgage Trust [_______] Bonds, Series [_____], or Sequoia Alternative Loan Trust [____], Series [____], issued with the initial approximate characteristics set forth under “The Offered Bonds” in the table on page S-1.

The Offered Bonds [other than _______] will be issued in book-entry form, and will be issued in minimum denominations in principal amount of $[________] and integral multiples of $[_______] in excess thereof.

The bonds will represent obligations of the issuing entity and will be secured by collateral consisting of [describe assets of the issuing entity].

The issuing entity will also issue an ownership certificate which will not be entitled to monthly payments of principal and interest, but rather solely to any excess cashflow remaining after all payments on the bonds and certain other fees and expenses of the issuing entity have been made on the related payment date.

The ownership certificate and the Class [_______] Bonds are not offered by this prospectus supplement. The Offered Bonds will have an approximate total initial principal amount of $[_______]. Any difference between the total principal amount of the Offered Bonds on the date they are issued and the approximate total principal amount of the Offered Bonds as reflected in this prospectus supplement will not exceed [________]%.

Principal and interest on the bonds will be paid on the [25]th day of each month, beginning in [_______]. However, if the [25]th day is not a business day, payments will be made on the next business day after the [25]th day of the month.

S-3

The rights of holders of the Class [____] Bonds to receive payments of principal and interest will be subordinate to the rights of the holders of bonds having a higher priority of payment, as described in “—Enhancement of Likelihood of Payment on the Bonds—Subordination of Payments” below. We refer to the Class [____] Bonds as “subordinate” bonds, and we refer to the Class [____] Bonds as “senior” bonds.

Payments of Interest

On each payment date, to the extent of available funds, each class of bonds will, subject to the limitations described herein, be entitled to receive accrued and unpaid interest determined on the basis of the outstanding class principal amount of such class immediately prior to such payment date, the applicable bond interest rate and the related accrual period.

Interest will accrue on each class of bonds at the applicable annual rates described as follows: [the least of (1) the applicable annual rate as described in the table on page S-[__], (2) [___]% annually and (3) the available funds rate].

[If the option to purchase the mortgage loans is not exercised by the holder of the ownership certificate on the first payment date following the month in which the total principal balance of the mortgage loans declines to less than [_____]% of their initial total principal balance as described under “—Optional Purchase of the Mortgage Loans” below, then with respect to the next payment date and each payment date thereafter, the interest rate calculation described in the paragraph above will be increased for each class of bonds, by substituting in clause (1) the applicable annual rate as described in the table on page S-[_____], subject in each case to the limitations described above.] [To be provided as applicable.]

[We refer you to “—Optional Purchase of the Mortgage Loans” below.]

The available funds rate is a limitation generally based on the amount of interest collections received from the mortgage loans during the applicable collection period, net of certain fees and expenses of the issuing entity.

For a complete description of the available funds rate and the priority of payment of interest, see “Description of the Bonds—Payments of Interest” in this prospectus supplement.

Payments of Principal

The amount of principal payable on each class of bonds will be determined by (1) funds received on the mortgage loans that are available to make payments of principal on the bonds, (2) formulas that allocate portions of principal payments received on the mortgage loans among different classes of bonds and (3) the application of excess interest to pay principal on the bonds, as described in this prospectus supplement.

Funds received on the mortgage loans may consist of monthly scheduled payments as well as unscheduled payments resulting from prepayments by borrowers, liquidation of defaulted mortgage loans, or purchases of mortgage loans under the circumstances described in this prospectus supplement.

The manner of allocating payments of principal on the mortgage loans will differ, as described in this prospectus supplement, [depending upon whether a payment date occurs before the stepdown date described in this prospectus supplement or on or after that date, and] depending upon whether the delinquency and loss performance of the mortgage loans is worse than certain levels set by the rating agencies.

We refer you to “Description of the Bonds—Payments of Principal” in this prospectus supplement.

Priority of Payments

On each payment date, available funds in respect of the mortgage loans will be distributed in the following order of priority: [Description of flow of funds, payment priorities and allocations to be provided for each series of bonds.] [To the extent helpful to the understanding of the securities, a graphic illustration of the flow of funds, payment priorities and allocations will be included.]

S-4

Any realized losses on the mortgage loans not covered by any credit enhancement feature will be allocated first to the Investor Certificate, second to the subordinated bonds and third, in the event the insurer defaults on its obligations under the bond insurance policy, to the senior bonds.

We refer you to “Description of the Bonds — Priority of Payments and Allocation of Shortfalls” in this prospectus supplement for more information.

Limited Recourse

The only source of cash available to make interest and principal payments on the bonds will be the assets of the issuing entity pledged to secure the bonds. The issuing entity will have no source of cash other than collections and recoveries on the mortgage loans through insurance or otherwise [and any payments received under the interest rate [cap] [swap] agreement[s] described below]. No other entity will be required or expected to make any payments on the bonds.

Credit Enhancement

The payment structure of this securitization includes excess interest, overcollateralization, subordination [as well as a bond insurance policy] [and interest rate swap agreements] to enhance the likelihood that holders of more senior classes of bonds will receive regular payments of interest and principal.

The Class [______] Bonds are more likely to experience losses than the Class [______] Bonds and the senior bonds; the Class [______] Bonds are more likely to experience losses than the senior bonds.

Excess Interest. The mortgage loans owned by the issuing entity will bear interest each month that, in the aggregate, is expected to exceed the amount needed to pay monthly interest on the bonds and certain fees and expenses of the issuing entity. This “excess interest” received from the mortgage loans each month will be available to absorb realized losses on the mortgage loans and to achieve and maintain overcollateralization at the required levels.

Overcollateralization. On the closing date, the total principal balance of the mortgage loans is expected to approximately equal the total principal amount of the bonds. Thereafter, to the extent described in this prospectus supplement, commencing with the first payment date, any interest received on the mortgage loans in excess of the amount needed to pay interest on the bonds and certain fees and expenses of the issuing entity (referred to in this prospectus supplement as “excess interest”) will be used to reduce the total principal amount of the bonds until the total principal balance of the mortgage loans exceeds the total principal amount of the bonds by an amount set by the rating agencies. We call this condition “overcollateralization.” We cannot, however, assure you that sufficient excess interest will be generated by the mortgage loans in the mortgage pool to achieve and maintain the required level of overcollateralization set by the rating agencies.

Subordination. The subordinated bonds and the investor certificate will provide credit enhancement for the senior bonds. The investor certificate will provide credit enhancement for the subordinated bonds.

The rights of holders of the subordinated bonds and the investor certificate to receive payments with respect to the mortgage loans will be subordinated to such rights of the holders of the senior bonds, and the rights of the holder of the investor certificate will be further subordinated to such rights as the holders of the subordinated bonds.

Bond Insurance Policy. [___________] will issue a financial guaranty insurance policy pursuant to which it will irrevocably and unconditionally guarantee payment of the insured payment if the bond trustee determines that available funds for a payment date are less than the senior bond interest payment amount and the senior bond principal payment amount. The insurer’s claims paying ability is rated [________] by [_______________].

Interest Rate Swap Agreements. On or before the closing date, the issuing entity will enter into [____] interest rate [cap] [swap] agreements[s] with [___], as [cap] [swap] counterparty. [On each payment date, the issuing entity will be obligated to make fixed payments under each interest rate swap agreement at a rate of [____]% (for [___]-year hybrid mortgage loans), [___] (for [___]-year hybrid mortgage loans) and [____]% (for [___]-year hybrid mortgage loans), and the swap counterparty will be obligated to make floating payments at LIBOR (as determined pursuant to the related interest rate swap agreement), in each case calculated on a notional amount equal to the lesser of (i) the outstanding aggregate principal balance of the [____]-year hybrid mortgage loans, [____]-year hybrid mortgage loans or [____]-year hybrid mortgage loans, as applicable, or (ii) the applicable scheduled notional amount for the related payment date, and adjusted to a monthly basis. To the extent that a fixed payment exceeds a floating payment on any payment date, amounts otherwise available to bondholders will be applied to make a net payment to the swap counterparty, and to the extent that a floating payment exceeds a fixed payment on any payment date, the swap counterparty will owe a net payment to the issuing entity. Any net amounts received by the issuing entity under the interest rate swap agreement will be applied to pay interest shortfalls and basis risk shortfalls and achieve and maintain overcollateralization as described in this prospectus supplement.] [Under the cap agreement[s], the cap counterparty will be required to make monthly payments to the issuing entity for certain specified periods if one-month LIBOR moves above certain specified rates.] The interest rate [cap] [swap] agreement[s] will provide only temporary, limited protection against upward movements in one-month LIBOR, and, to the extent described in this prospectus supplement, may diminish the amount of basis risk shortfalls experienced by the bonds during the periods the interest rate [cap] [swap] agreement[s] are in effect as specified in the [related] interest rate [cap] [swap] agreement.]

S-5

[Third party providers of credit support for 10% or more of the pool assets to be provided as applicable.]

[Other forms of credit enhancement to be identified and described as applicable for each transaction.]

Maturity Date

The maturity date for the bonds will occur on the payment date in [_______]. As to each class, the actual final payment date may be earlier, and could be substantially earlier, than that class’s final maturity date.

Fees and Expenses

Before payments are made on the bonds, and by funds from interest collections, the servicer will be paid a monthly fee, depending on the characteristics of the mortgage loans as described in this prospectus supplement, calculated as [___]% annually, or [____]% annually until the first adjustment date and [___]% annually thereafter, on the principal balances of the related mortgage loans, as described in this prospectus supplement. Such servicer fee will be deducted by the servicer prior to remittance of funds to the trustee for distribution to securityholders.

In addition, the applicable percentage rate described above will increase by an annual percentage ranging from [____]% annually to [___]% annually with respect to each mortgage loan covered by a lender-paid loan-level primary mortgage insurance policy. The servicer will pay the fees related to the lender-paid loan-level primary mortgage insurance policies on behalf of the issuing entity.

The bond trustee, the owner trustee and the custodian will each be paid a fixed annual fee from investment earnings on funds held in the collection account. The master servicer will receive as compensation the investment income on funds held in the collection account after payment of the fees of the bond trustee, the owner trustee and the custodian. The issuing entity administrator will not receive any additional compensation with respect to the performance of its duties on behalf of the issuing entity.

The servicer, the master servicer, the bond trustee, the owner trustee, the issuing entity administrator and the custodian will also be entitled to reimbursement of certain expenses from the issuing entity before payments are made on the bonds.

The Mortgage Loans

Statistical Information. The statistical information on the mortgage loans presented herein is based on the principal balance of such mortgage loans as of the cut-off date. Such information does not take into account defaults, delinquencies and prepayments that may have occurred with respect to the mortgage loans since such date. As a result, the statistical distribution of the characteristics in the final mortgage pool as of the closing date will vary from the statistical distribution of such characteristics as presented in this prospectus supplement, although such variance will not be material.

General. On the closing date, the assets of the issuing entity will consist primarily of [___ pool[s] of] [described mortgage loans] with a total principal balance as of [_____], of approximately $[_____]. The mortgage loans will be secured by mortgages, deeds of trust or other security instruments, all of which are referred to in this prospectus supplement as mortgages. [Describe any second lien mortgage loans.]

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The mortgage loans have interest rates that adjust at the intervals and based on the indices described in this prospectus supplement. Approximately [_____]% of the mortgage loans have original terms to maturity of [___] years, approximately [___]% of the mortgage loans have original terms to maturity of [____] years, and approximately [___]% of the mortgage loans have original terms to maturity of [____] years.

The mortgage loans will not be insured or guaranteed by any government agency.

The Depositor expects that the mortgage loans will have the following approximate characteristics as of the cut-off date:

Mortgage Pool Summary

	Range or Total	Weighted Average	Total Percentage
Number of Mortgage Loans
Total Principal Balance
Principal Balances
Mortgage Rates
Original Terms to Maturity (in months)
Remaining Terms to Maturity (in months)
Original Loan-to Value Ratios
Number of One-Year LIBOR Mortgage Loans
Number of One-Year CMT Mortgage Loans
Number of Interest Only Mortgage Loans
Geographic Concentration in Excess of 10.00% of the Total Scheduled Principal Balance:
· California
Maximum Single Zip Code Concentration
Credit Scores
Number of Mortgage Loans with Prepayment Penalties at Origination
Gross Margins
Maximum Mortgage Rates
Minimum Mortgage Rates
Months to Next Mortgage Rate Adjustment
Initial Caps
Periodic Caps

* The weighted average is based only on the mortgage loans having credit scores.

[Pre-funding Feature

On the closing date, the securities administrator will deposit up to approximately $[________] of the net proceeds from the issuance of the notes, which represents approximately [_____]% of the mortgage loans as of the cut-off date, into a separate pre-funding account established for the mortgage pool, to acquire additional mortgage loans for the mortgage pool. During the pre-funding period (i.e., from the closing date to[_________]) amounts on deposit in the pre-funding account may be withdrawn by the securities administrator from time to time to purchase from the depositor additional mortgage loans meeting the same criteria applicable to the mortgage pool described in this prospectus supplement, provided certain other conditions are satisfied at the time of purchase. The seller has identified additional mortgage loans that are expected to have the characteristics described under “Description of the Mortgage Pool— Acquisition by the Issuing Entity of Additional Mortgage Loans.” Funds on deposit in the pre-funding account may only be applied to acquire additional mortgage loans for the mortgage pool.

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If funds in the pre-funding account are not completely used for that purpose during the pre-funding period, the remaining funds in the pre-funding account will be paid as a principal prepayment to related noteholders in accordance with the principal payment priority provisions described in this prospectus supplement. This payment will be made on the [__________] payment date. The depositor anticipates that substantially all of the funds in the pre-funding account will be used to purchase additional mortgage loans prior to the close of the pre-funding period.

At the closing date, the depositor will also deposit approximately $[_______] in a capitalized interest account for use by the securities administrator as needed during the pre-funding period to ensure that all required interest payments are made on the notes.

See “DESCRIPTION OF THE MORTGAGE POOL; Acquisition by the Issuing Entity of Additional Mortgage Loans” in this prospectus supplement and “THE ISSUING ENTITIES AND THE ISSUING ENTITY ASSETS—The Loans” and “THE ISSUING ENTITIES AND THE ISSUING ENTITY ASSETS—Pre-Funding” in the prospectus for a general description of the characteristics of the initial and subsequent mortgage loans.]

[Revolving Period

On each payment date during the revolving period (i.e. from the closing date until [________]), the depositor may direct the securities administrator to purchase from the depositor for inclusion in the trust fund additional mortgage loans[, up to an aggregate maximum purchase price of $[______], which represents approximately [____]% of the total principal balance of the mortgage loans as of the cut-off date]. If the depositor so directs, the securities administrator will deposit all or a portion of the amount of principal payable on the mortgage loans [and excess interest] that would otherwise be made to noteholders into a separate revolving account established for the mortgage pool, and will apply deposits in the revolving account to fund the purchase of such additional mortgage loans, provided certain other conditions are satisfied at the time of purchase. Funds on deposit in the revolving account may only be applied to acquire additional mortgage loans for the mortgage pool. The additional mortgage loans will have the same general characteristics as the mortgage pool described in this prospectus supplement.

See “DESCRIPTION OF THE MORTGAGE POOL; Acquisition by the Issuing Entity of Additional Mortgage Loans” in this prospectus supplement and “THE ISSUING ENTITIES AND THE ISSUING ENTITY ASSETS—Revolving Period” in the prospectus for a general description of the characteristics of any mortgage loans to be acquired by the issuing entity during the revolving period.]

Mortgage Loan Representations and Warranties

The seller has made or assigned certain representations and warranties concerning the mortgage loans to the depositor under the mortgage loan purchase agreement (the “Mortgage Loan Purchase Agreement”). The depositor’s rights to these representations and warranties will be assigned to the issuing entity under the sale and servicing agreement and pledged by the issuing entity to the bond trustee under the indenture for the benefit of bondholders.

Following the discovery of a breach of any representation or warranty that materially and adversely affects the value of a mortgage loan, or receipt of notice of that breach, the seller [or originator] will be required to (1) cure that breach, (2) repurchase the affected mortgage loan from the issuing entity or (3) in certain circumstances, substitute another mortgage loan.

In order to substitute a new mortgage loan for a mortgage loan that has been removed from the trust because of a breach of a representation or warranty, (a) substitution must generally take place within [two] years from the closing date and (b) a mortgage loan that is materially similar to the deleted mortgage loan must be available for substitution.

Mortgage Loan Servicing

The mortgage loans will be master serviced by [______]. The master servicer will oversee the servicing of the mortgage loans by the servicer under the servicing agreements, but will not be ultimately responsible for the servicing of the mortgage loans, except as provided in the sale and servicing agreement and described in this prospectus supplement.

The mortgage loans will be serviced by [_________________] under the applicable servicing agreement.

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If the servicer is removed due to default or otherwise, a successor servicer acceptable to the master servicer and the rating agencies will assume responsibility for the servicing of the mortgage loans, as described in this prospectus supplement.

Optional Redemption of the Bonds

The bonds may be redeemed at a redemption price equal to 100% of the unpaid principal amount of such bonds, plus accrued and unpaid interest thereon at the applicable bond interest rate. The bonds are not otherwise subject to redemption or call at the option of the issuing entity nor are they subject to special redemption.

Acceleration of Maturity at Events of Default

If an Event of Default occurs and is continuing with respect to the Bonds, then and in every such case the Trustee or the Holders of Bonds representing more than 50% of the aggregate Class Principal Amount of the Bonds of the Controlling Class may declare all the Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Trustee if given by Bondholders), and upon any such declaration such Bonds shall become immediately due and payable in an amount as defined in the Indenture.

At any time after such a declaration of acceleration of maturity of the Bonds has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of Bonds representing more than 50% of the aggregate Class Principal Amount of the Controlling Class, by written notice to the Issuer and the Trustee, may rescind and annul such declaration and its consequences under certain circumstances as set forth in the Indenture. No such rescission shall affect any subsequent Default or impair any right consequent thereon.

Tax Status

For federal income tax purposes the Bonds will be characterized as debt. Each holder of a Bond, by its acceptance of a Bond, will agree to treat the Bonds as debt. The issuing entity [will not][may] be classified as a taxable mortgage pool [but even if so classified, will not be subject to federal income tax as a corporation as long as all of the securities classified as equity interests in the issuing entity for federal income tax purposes are held by an entity that qualifies as a “real estate investment trust,” or are held directly or indirectly through one or more wholly owned “qualified REIT subsidiaries”].

We refer you to “Risk Factors — Issuing Entity Could Become a Taxable Entity” in this prospectus supplement and “Material Federal Income Tax Consequences” in this prospectus supplement and the accompanying prospectus for additional information concerning the application of federal income tax laws to the bonds.

ERISA Considerations

A fiduciary of any employee benefit plan (the “Plan”) subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or section 4975 of the Internal Revenue Code of 1986, as amended (the “Code“), should carefully review with its legal advisors whether the purchase or holding of Class A Bonds could give rise to a transaction prohibited or not otherwise permissible under applicable law.

Legal Investment

The Class [________] Bonds will [not] constitute “mortgage related securities“ under the Secondary Mortgage Market Enhancement Act of 1984 (“SMMEA”).

There may be other restrictions on the ability of certain types of investors to purchase the bonds that prospective investors should also consider:

Bond Rating

Each class of offered bonds will initially have the ratings from [______] specified on page S-1. It is a condition of the issuance of the offered bonds that they receive ratings from the rating agencies not lower than the ratings set forth in the table on page S-1.

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These ratings are not recommendations to buy, sell or hold these bonds. A rating may be changed or withdrawn at any time by the assigning rating agency.

The ratings do not address the possibility that, as a result of principal prepayments, the yield on your bonds may be lower than anticipated.

The ratings do not address the payment of any basis risk shortfalls with respect to the offered bonds.

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RISK FACTORS

The following information, which you should carefully consider, identifies certain significant sources of risk associated with an investment in the offered bonds. You should also consider the risk factors described in the accompanying prospectus. All statistical information referred to in this section is based on the mortgage pool as constituted on the cut-off date.

The Current Turbulence in the Financial Markets and Economy May Adversely Affect the Performance and Market Value of Your Securities and These Conditions May Not Improve in the Near Future

Recent market and economic conditions have been unprecedented and challenging with tighter credit conditions and slower growth through the end of 2008. Continued concerns about the systemic impact of inflation or deflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market, and the declining real estate market in the U.S. have contributed to increased market volatility and diminished expectations for the U.S. economy. Beginning in 2008, added concerns fueled by the federal government conservatorship of the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”), the bankruptcy of Bear Stearns & Co., Inc. and Lehman Brothers Holdings, Inc., the merger of Bank of America and Merrill Lynch & Co., the receivership of Washington Mutual, the emergency extension of approximately $152 billion in credit by the US Treasury to AIG, and the establishment of the Troubled Asset Relief Program (“TARP”) through the Emergency Economic Stabilization Act of 2008, the Term Asset-Backed Securities Loan Facility (“TALF”), the Public-Private Investment Program and other components of the President’s Financial Stability Plan to provide liquidity and stabilize the United States financial system have led to increased market uncertainty and instability in both U.S. and international capital and credit markets. These conditions combined with volatile oil prices, declining business and consumer confidence, and increased unemployment have contributed to volatility in domestic and international markets at unprecedented levels.

As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets and the strength of counterparties has led many lenders and institutional investors to reduce, and in some cases cease, lending to borrowers. Continued turbulence in the U.S. and international markets and economies may contribute to a continuing deterioration in the U.S. housing market and in the credit performance and market value of residential mortgage loans. This could adversely affect the performance and market value of your securities. There can be no assurance that governmental actions will improve these conditions in the near future.

Recent Trends in the Residential Mortgage Market May Adversely Affect the Performance and Market Value of Your Securities

Since mid-2007, the mortgage market has encountered difficulties which may adversely affect the performance or market value of your securities. Residential mortgage-backed securities (“RMBS”) backed by mortgage loans originated in recent years, particularly since 2005, have generally been the focus of attention due to a higher and earlier than expected rate of delinquencies. Additionally, the performance of earlier vintages of RMBS may be deteriorating. Many RMBS, in particular those of recent vintages, have been subject to rating agency downgrades. These downgrades have included downgrades of “AAA” securities, and in some cases have occurred within a few months of issuance. There may be further downgrades of RMBS in the future. There can be no assurance that your securities will not be downgraded in the future.

Since late 2006, delinquencies, defaults and foreclosures on residential mortgage loans have increased, and they may continue to increase in the future. In addition to higher delinquency, default and foreclosure rates, loss severities on all types of residential mortgage loans have increased due to declines in residential real estate values, resulting in reduced home equity. Home price appreciation rates have been negative since late 2007, and this trend may expect to continue. Higher loan-to-value ratios and combined loan-to-value ratios generally result in lower recoveries on foreclosure, and an increase in loss severities above those that would have been realized had property values remained the same or continued to increase.

Current market conditions may impair borrowers’ ability to refinance or sell their residential properties, which may contribute to higher delinquency and default rates. Borrowers seeking to avoid increased monthly payments by refinancing may no longer be able to find available replacement loans at comparably low interest rates. In the past two years, in response to increased delinquencies and losses with respect to mortgage loans, originators have implemented more conservative underwriting criteria for mortgage loans, which will likely result in reduced availability of refinancing alternatives for borrowers. These risks would be exacerbated to the extent that prevailing mortgage interest rates increase from current levels. Home price depreciation experienced to date, and any further price depreciation, may also leave borrowers with insufficient equity in their homes to permit them to refinance. Borrowers who intended to sell their homes on or before the expiration of the fixed rate periods on their adjustable rate mortgage loans may find that they cannot sell their property for an amount equal to or greater than the unpaid principal balance of their loans. In addition, some mortgage loans may include prepayment premiums that would further inhibit refinancing.

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The value of RMBS may also be affected by recent financial difficulties experienced by insurers of RMBS. Any downgrades of insurers of RMBS would severely impact the securities they insure and the market for RMBS generally. In addition, the failure of primary mortgage insurers to meet their obligations will adversely affect recoveries with respect to the related mortgage loans. [Similarly, downgrades of entities that provided credit default swaps referencing RMBS (and failure to comply with associated collateral posting requirements) may result in those credit default swaps being terminated, thereby reducing the carrying value of those RMBS in the hands of investors who purchased those credit default swaps.]

The conservatorship of Fannie Mae and Freddie Mac in September 2008 may adversely affect the real estate market and the value of real estate assets generally. It is unclear at this time to what extent these conservatorships will curtail the long-term ability of Fannie Mae and Freddie Mac to continue to act as the primary sources of liquidity in the residential mortgage markets, both by purchasing mortgage loans for portfolio and by guaranteeing mortgage-backed securities. A reduction in the ability of mortgage loan originators to access Fannie Mae and Freddie Mac to sell their mortgage loans may adversely affect the financial condition of mortgage loan originators. In addition, any decline in the value of agency securities may affect the value of RMBS as a whole.

These adverse changes in market and credit conditions collectively have had, and may continue to have, the effect of depressing the market values of RMBS generally, and substantially reducing the liquidity of RMBS generally. These developments may adversely affect the performance and market value of your securities.

[Risks Related to Mortgage Loans with Interest-Only Payments

Approximately [___] of the mortgage loans to be included in the trust provide for payment of interest at the related mortgage interest rate, but no payment of principal, for a period of [___] years following the origination of the mortgage loan. Following the interest-only period, the monthly payment with respect to each of these mortgage loans will be increased to an amount sufficient to amortize the principal balance of the mortgage loan over the remaining term and to pay interest at the applicable mortgage interest rate.

The interest-only mortgage loans may present special default and prepayment risks, particularly for bonds purchased at a discount.

We refer you to “Yield, Prepayment and Weighted Average Life— General” in this prospectus supplement and “Risk Factors — Risks Related to Mortgage Loans with Interest-Only Payments” and “— Changes in U.S. Economic Conditions May Adversely Affect the Performance of Mortgage Loans, Particularly Adjustable Rate Loans of Various Types” in the accompanying prospectus.]

[Special Default Risk of Second Lien Mortgage Loans

Approximately [___]% of the mortgage loans are secured by second liens on the related mortgaged properties. These second lien mortgage loans are subordinate to the rights of the mortgagee under the related first mortgages and may present special risks upon default of any second lien mortgage loans.

We refer you to “Risk Factors — Special Default Risk of Second Lien Mortgage Loans” and “— Risks Related to Simultaneous Second Liens and Other Borrower Debt” in the accompanying prospectus.]

[Risks Related to Simultaneous Second Liens and Other Borrower Debt

Approximately [____]% of the mortgage loans in the trust are first lien mortgage loans with respect to which, at the time of origination, the originator or other lender also originated second lien mortgage loans that may not be included in the trust. The weighted average indicative combined loan-to-value ratio, which is the ratio of the total outstanding principal balance of a first lien mortgage loan and the related simultaneous second lien mortgage loan to the value of the related mortgaged property, of these mortgage loans is [___]%. In addition, other borrowers whose first lien loans are included in the trust may have obtained secondary mortgage financing following origination of the first lien loans. In addition, borrowers may increase their aggregate indebtedness substantially by assuming consumer debt of various types. Consequently, investors should consider that borrowers who have less equity in their homes, or who have substantial mortgage and consumer indebtedness, may be more likely to default and may be more likely to submit to foreclosure proceedings.

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We refer you to “Risk Factors — Risks Related to Simultaneous Second Liens and Other Borrower Debt” in the accompanying prospectus.]

Geographic Concentration of Mortgage Loans

Approximately [____]% of the mortgage loans to be included in the trust are secured by properties located in [____] and approximately [____]% of the mortgage loans to be included in the trust are secured by properties located in [_______]. The rate of delinquencies, defaults and losses on the mortgage loans may be higher than if fewer of the mortgage loans were concentrated in those states because adverse economic conditions and natural disasters will have a disproportionate impact on the mortgage loans in general.

We refer you to “Yield, Prepayment and Weighted Average Life” in this prospectus supplement and “Risk Factors — Geographic Concentration of the Mortgage Loans” in the accompanying prospectus. For additional information regarding the geographic concentration of the mortgage loans to be included in the mortgage pool, see the applicable table(s) in Annex A of this prospectus supplement.

Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds

The bonds will accrue interest at [describe interest rate], but those interest rates are subject to certain limitations, generally based on the weighted average interest rates of the mortgage loans in the trust or as otherwise described below, net of certain allocable fees and expenses of the issuing entity and any payments owed on derivative instruments. The mortgage loans to be included in the trust will have interest rates that either are fixed or adjust based on a variable index, as described in this prospectus supplement.

Any adjustable rate mortgage loans in the trust may also have periodic maximum and minimum limitations on adjustments to their interest rates, and may have the first adjustment to their interest rates a number of years after their first payment dates. In addition, adjustable rate mortgage loans generally have lifetime maximum interest rates. As a result, your variable rate bonds may accrue less interest than they would accrue if their interest rates were solely based on the specified index plus the specified margin.

A variety of factors could limit the interest rates and adversely affect the yields to maturity on the variable rate securities. Some of these factors are described below.

The interest rates for your bonds adjust [monthly] based on the [___ index], while the interest rates on the mortgage loans to be included in the trust adjust [monthly][semi-annually] [based on a different index or not adjust at all]. Consequently, the limits on the interest rates on these notes may prevent increases in the interest rates for extended periods in a rising interest rate environment.

The interest rates on adjustable rate mortgage loans may respond to economic and market factors that differ from those that affect the [____ index] applicable to your variable rate bonds. It is possible that the interest rates on any adjustable rate mortgage loans may decline while the interest rates on the bonds are stable or rising. It is also possible that the interest rates on any adjustable rate mortgage loans and the interest rates on the bonds may both decline or increase during the same period, but that the interest rates on your bonds may decline or may increase more slowly or rapidly.

To the extent that fixed rate or adjustable rate mortgage loans are subject to default or prepayment, the interest rates on the bonds may be reduced as a result of the net funds cap limitations described in this prospectus supplement.

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We refer you to “Description of the Bonds — Payments of Interest” and “— Credit Enhancement — Overcollateralization” in this prospectus supplement. For a general description of the interest rates of the related mortgage loans, we refer you to “Description of the Mortgage Pool” in this prospectus supplement..

Potential Inadequacy of Credit Enhancement

[The bonds are not insured by any surety bond.] The credit enhancement features of subordination and loss allocation, excess interest, overcollateralization and limited cross-collateralization, [together with any primary mortgage insurance and financial guaranty insurance policies], are intended to enhance the likelihood that holders of more senior classes of bonds will receive regular payments of interest and principal, but are limited in nature and may be insufficient to cover all losses on the related mortgage loans.

Subordination and Allocation of Losses. If the applicable subordination is insufficient to absorb losses, then holders of subordinate bonds[, particularly the Class [_____ Bonds,] will likely incur losses and may never receive all of their principal payments. You should consider that:

if you buy a Class [____] Bond and losses on the related mortgage loans exceed the total principal amount of the class of bonds subordinate to your bonds (if any), plus, if applicable to the trust and as specified in this prospectus supplement, any excess interest and any overcollateralization that has been created, the principal amount of your bonds will be reduced proportionately with the principal amounts of the other bonds of your class by the amount of that excess; and

after the total principal amount of the subordinate bonds has been reduced to zero, losses on the mortgage loans may reduce the principal amounts (or notional amounts) of the senior bonds.

Losses on the related mortgage loans will reduce the loss protection provided by the subordinate bonds to the senior bonds and will increase the likelihood that the senior bonds will not receive all of their expected principal payments.

If overcollateralization is maintained at the required amount and the related mortgage loans generate interest in excess of the amount needed to pay interest and principal on your bonds, the fees and expenses of the issuing entity and any payments owed to a derivatives counterparty, then excess interest may be used to pay you and the other bondholders the amount of any reduction in the aggregate principal balance of the mortgage loans caused by application of losses. These payments will generally be made in order of seniority. We cannot assure you, however, that any excess interest will be generated and, in any event, unless otherwise specified in this prospectus supplement, no interest will be paid to you on the amount by which the principal amount of your bonds was reduced because of the application of losses.

Overcollateralization. In order to create and maintain overcollateralization, it will be necessary that the mortgage loans generate more interest than is needed to pay interest on the bonds, as well as any fees and expenses of the issuing entity and any payments owed to a derivative counterparty. If the bonds have the benefit of excess interest and/or overcollateralization, we expect that the mortgage loans will generate more interest than is needed to pay those amounts, at least during certain periods, because the weighted average of the interest rates on the mortgage loans is expected to be higher than the weighted average of the interest rates on the bonds plus the weighted average aggregate expense rate. Any remaining interest generated by the mortgage loans will be used to absorb losses on the mortgage loans and to maintain overcollateralization. In addition, on the closing date, the total scheduled principal balance of the mortgage loans may exceed the total principal amount of the bonds. This excess is referred to as “overcollateralization” and will be available to absorb losses. We cannot assure you, however, that the mortgage loans will generate enough excess interest to maintain this overcollateralization level as set by the applicable rating agencies. In addition, there may be no amounts available from any interest rate derivative agreement described in this prospectus supplement to cover shortfalls. The following factors will affect the amount of excess interest that the related mortgage loans will generate:

Every time a mortgage loan is prepaid in whole or in part, total excess interest after the date of prepayment will be reduced because that mortgage loan will no longer be outstanding and generating interest or, in the case of a partial prepayment, will be generating less interest. The effect of this reduction on your bonds will be influenced by the amount of prepaid loans and the characteristics of the prepaid loans. Prepayment of a disproportionately high number of high interest rate mortgage loans would have a greater negative effect on future excess interest.

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If the rates of delinquencies, defaults or losses on the mortgage loans turn out to be higher than expected, excess interest available for overcollateralization or to absorb losses will be reduced. Every time a mortgage loan is liquidated or charged off, excess interest will be reduced because that mortgage loan will no longer be outstanding and generating interest.

[Limited Cross-Support. The trust contains [two or more] separate mortgage pools, as specified in this prospectus supplement. Principal payments on the senior bonds will depend, for the most part, on collections on the mortgage loans in the related pool. However, as specified in this prospectus supplement, the senior bonds have the benefit of credit enhancement in the form of subordination from one or more of the other pools. That means that even if the rate of losses on mortgage loans in the pool related to your class of senior bonds is low, losses in an unrelated pool may reduce the loss protection for your bonds.]

[Interest Rate Derivative Agreements. Any amounts received under any interest rate cap or swap agreement will generally be applied as described in this prospectus supplement to pay interest shortfalls and, if applicable, to maintain overcollateralization and cover losses. However, we cannot assure you that any amounts will be received under that interest rate derivative agreement, or that any such amounts that are received will be sufficient to maintain any required overcollateralization or to cover interest shortfalls and losses on the mortgage loans.]

[Primary Mortgage Insurance. Approximately [___]% of the mortgage loans are first lien mortgage loans which have original loan-to-value ratios greater than 80%. Approximately [___]% and [___]% of those mortgage loans are covered by existing borrower- or lender- paid primary mortgage insurance policies. The existing borrower- or lender- paid primary mortgage insurance policies will generally have the effect of reducing the original loan-to-value ratios of those covered mortgage loans to the [___]% to [___]%.]

[In addition, one or more loan-level primary mortgage insurance policies may be acquired on behalf of the issuing entity from primary mortgage insurance providers, providing the initial insurance coverage specified in this prospectus supplement for those first lien mortgage loans with original loan-to-value ratios greater than 80%.]

These loan-level primary mortgage insurance policies will generally have the effect of reducing the original loan-to-value ratios of those covered mortgage loans to the percentage specified in this prospectus supplement.

However, these policies will only cover first lien mortgage loans and will be subject to various other limitations and exclusions. In addition, borrower-paid primary mortgage insurance may be subject to cancellation by the related borrower. As a result, coverage may be rescinded or denied on some mortgage loans. Primary mortgage insurance providers will generally curtail the insured payments on a foreclosed mortgage loan if the related servicer does not foreclose that mortgage loan within a limited time period determined by the insurance provider. In addition, because the amount of coverage under these policies depends on the loan-to-value ratio of the related mortgaged property at the inception of these policies, a decline in the value of the related mortgaged property will not result in increased coverage, and the trust may still suffer a loss on a covered mortgage loan. Accordingly, these primary mortgage insurance policies will provide only limited protection against losses on the mortgage loans.]

Unpredictability and Effect of Prepayments

The rate of prepayments on the mortgage loans will be sensitive to prevailing interest rates. Generally, if prevailing interest rates decline, mortgage loan prepayments may increase due to the availability of refinancing at lower interest rates. If prevailing interest rates rise, prepayments on the mortgage loans may decrease.

Borrowers may prepay their mortgage loans in whole or in part at any time; however, some or all of the mortgage loans to be included in the trust may require the payment of a prepayment premium in connection with any voluntary prepayments in full, and certain voluntary prepayments in part, made during periods ranging from the periods specified in this prospectus supplement. These prepayment premiums may discourage borrowers from prepaying their mortgage loans during the applicable period. [or Borrowers may prepay their mortgage loans in whole or in part at any time without penalty.]

Prepayments on the mortgage loans may occur as a result of solicitations of the borrowers by mortgage loan originators, including the seller and its affiliates, the servicer or servicers, as applicable, and any master servicer. In addition, the availability of newer mortgage products with more flexible payment terms or that require lower monthly payments, such as “option ARMs,” may result in an increase in the number of borrowers who prepay their mortgage loans to take advantage of new products.

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The timing of prepayments of principal may also be affected by liquidations of or insurance payments on the mortgage loans. In addition, the sponsor, as the seller of the mortgage loans to the depositor, or such other seller as specified in this prospectus supplement, may be required to purchase mortgage loans from the trust in the event that certain breaches of representations and warranties made with respect to the mortgage loans are not cured. These purchases will have the same effect on bondholders as prepayments of mortgage loans.

A prepayment of a mortgage loan will usually result in a payment of principal on the bonds:

If you purchase bonds at a discount, especially any principal-only bonds, and principal prepayments on the related mortgage loans are received at a rate slower than you anticipate, then your yield may be lower than you anticipate.

If you purchase bonds at a premium, especially any interest-only bonds, and principal prepayments on the related mortgage loans are received at a rate faster than you anticipate, then your yield may be lower than you anticipate.

The prepayment experience of the mortgage loans to be included in the trust may differ significantly from that of other first and second lien residential mortgage loans.

We refer you to “Yield, Prepayment and Weighted Average Life” in this prospectus supplement and “Yield, and Prepayment Considerations” in the accompanying prospectus for a description of factors that may influence the rate and timing of prepayments on the mortgage loans.

Delay in Receipt of Liquidation Proceeds; Liquidation Proceeds May Be Less Than Mortgage Balance

Substantial delays could be encountered in connection with the liquidation of delinquent mortgage loans. Further, reimbursement of advances made by a servicer and liquidation expenses such as legal fees, real estate taxes and maintenance and preservation expenses may reduce the portion of liquidation proceeds payable to bondholders. If a mortgaged property fails to provide adequate security for the related mortgage loan, you could incur a loss on your investment if the applicable credit enhancement is insufficient to cover the loss.

Mortgage Loan Modification Programs and Future Legislative Action May Adversely Affect the Performance and Market Value of Your Securities

During the third quarter of 2008 and the first quarter of 2009, the federal government, through the Federal Housing Administration and the Federal Deposit Insurance Corporation, commenced implementation of programs designed to provide homeowners with assistance in avoiding residential mortgage loan foreclosures. In addition, certain mortgage lenders and servicers have voluntarily, or as part of settlements with law enforcement authorities, established loan modification programs relating to the mortgages they hold or service. In January 2009, the President announced his “Homeowner Affordability and Stability Plan,” which is focused on reducing foreclosures. These programs may involve, among other things, the modification of mortgage loans to reduce the principal amount of the loans or the rate of interest payable on the loans, or to extend the payment terms of the loans. In addition, members of the U.S. Congress have indicated support for additional legislative relief for homeowners, including a proposed amendment of the bankruptcy laws to permit the modification of mortgage loans in bankruptcy proceedings. These loan modification programs, as well as future law enforcement and legislative or regulatory actions, including amendments to the bankruptcy laws that result in the modification of outstanding mortgage loans, may adversely affect the performance and market value of your securities.

Risks Associated With New Laws Relating to Mortgage Loan Servicing

Numerous laws, regulations and rules related to the servicing of mortgage loans, including efforts to delay or suspend foreclosure actions for a specified period, have been proposed recently by federal, state and local governmental authorities. A number of these laws have been enacted, including in California. These laws, regulations and rules will result in delays in the foreclosure process, and may lead to reduced payments by borrowers or increased reimbursable servicing expenses. You bear the risk that these regulatory developments will adversely impact your securities, whether due to delayed or reduced distributions or reduced market value.

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Violation of Various Federal, State and Local Laws May Result in Losses on the Mortgage Loans

Applicable state laws generally regulate interest rates and other charges, require certain disclosure, and require licensing of lenders. In addition, other state laws, public policy and general principles of equity relating to the protection of consumers, unfair and deceptive practices and debt collection practices may apply to the origination, servicing and collection of mortgage loans.

Mortgage loans are also subject to various federal laws, including:

the federal Truth-in-Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to borrowers regarding the terms of their mortgage loans;

the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit discrimination on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act, in the extension of credit; and

the Fair Credit Reporting Act, which regulates the use and reporting of information related to the borrower’s credit experience.

Violations of certain provisions of these federal laws may limit the ability of the servicers to collect all or part of the principal of or interest on the related mortgage loans and in addition could subject the trust to damages and administrative enforcement.

The seller of the mortgage loans made or assigned the representation in the mortgage loan sale agreement described in this prospectus supplement that each mortgage loan was originated in compliance with applicable federal, state and local laws and regulations. In the event of a breach of this representation, the seller [or originator] will be obligated to cure the breach or repurchase or replace the affected mortgage loan in the manner described in this prospectus supplement and under “The Agreements— _______]” in this prospectus supplement.

Risks Associated With Potential New Laws Relating to Mortgage Loan Origination

The U.S. Congress and various state and local legislatures are considering legislation, which, among other things, would permit limited assignee liability for certain violations in the mortgage loan origination process. We cannot predict whether or in what form Congress or various state and local legislatures may enact such legislation or how such legislation might impact your securities. We are also unable to predict how changes in regulations promulgated by federal, state or local authorities may affect your securities.

Predatory Lending Laws/High Cost Loans

Various federal, state and local laws have been enacted that are designed to discourage predatory lending practices. The federal Home Ownership and Equity Protection Act of 1994, commonly known as HOEPA, prohibits inclusion of certain provisions in mortgage loans that have mortgage rates or origination costs in excess of prescribed levels, and requires that borrowers be given certain disclosures prior to the origination of mortgage loans. Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA.

In addition, under the anti-predatory lending laws of some states, the origination of certain mortgage loans (including loans that are not classified as “high cost” loans under applicable law) must satisfy a net tangible benefits test with respect to the related borrower. This test may be highly subjective and open to interpretation. As a result, a court may determine that a mortgage loan does not meet the test even if the related originator reasonably believed that the test was satisfied.

Failure to comply with these laws, to the extent applicable to any of the mortgage loans, could subject the trust, as an assignee of the related mortgage loans, to monetary penalties and could result in the borrowers rescinding the affected mortgage loans. Lawsuits have been brought in various states making claims against assignees of high cost loans for violations of state law. Named defendants in these cases have included numerous participants within the secondary mortgage market, including some securitization trusts. The cost of defending such cases, including legal fees incurred by the securitization trust, are typically paid out of collections on trust assets and hence reduce the amounts otherwise distributable to trust securityholders.

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The seller will represent that the trust does not include any mortgage loans that are subject to HOEPA or that would be classified as “high cost” loans under any similar state or local predatory or abusive lending law. There may be mortgage loans in the trust that are subject to the state or local requirement that the loan provide a net tangible benefit (however denominated) to the borrower; the seller will represent that these mortgage loans are in compliance with applicable requirements. If it is determined that the trust includes loans subject to HOEPA or otherwise classified as high cost loans, or which do not comply with applicable net tangible benefit requirements, the seller will be required to repurchase the affected loans and to pay any liabilities incurred by the trust due to any violations of these laws. If the loans are found to have been originated in violation of predatory or abusive lending laws and the seller does not repurchase the affected loans and pay any related liabilities, bondholders could incur losses.

Bankruptcy or Insolvency Proceedings Could Delay or Reduce Payments on the Bonds

Each transfer of a mortgage loan to the sponsor [or other seller as described herein], from the seller to the depositor and, in connection with the issuance of any asset-backed securities, from the depositor to the trust, will be intended to be an absolute and unconditional sale of that mortgage loan and will be reflected as such in the applicable documents. However, in the event of the bankruptcy or insolvency of a prior owner of a mortgage loan, a trustee in bankruptcy or a receiver or creditor of the insolvent party could attempt to recharacterize the sale of that mortgage loan by the insolvent party as a borrowing secured by a pledge of the mortgage loan. Such an attempt, even if unsuccessful, could result in delays in payments on the bonds. If such an attempt were successful, it is possible that the affected mortgage loans could be sold in order to liquidate the assets of the insolvent entity. In the case of the bankruptcy or insolvency of the applicable seller, there can be no assurance that the proceeds of such a liquidation would be sufficient to repay the bonds in full.

[Issuing Entity Could Become a Taxable Entity

For federal income tax purposes, the issuing entity may be a taxable mortgage pool. However, as long as all of the securities classified as equity interests in the issuing entity for federal income tax purposes are held by an entity that qualifies as a “real estate investment trust,” or are held directly or indirectly through one or more wholly owned “qualified REIT subsidiaries,” the taxable mortgage pool will not be subject to federal income tax as a corporation. If any holder of a class of securities characterized as equity in the issuing entity for federal income tax purposes were to fail to qualify as a real estate investment trust or a qualified REIT subsidiary, the issuing entity could become subject to federal income tax as though it were a corporation. Any tax imposed on the issuing entity would reduce cashflow that would be available to make payments on the bonds and could cause losses which would adversely affect the bonds, and in particular, the subordinated bonds (We refer you to “Material Federal Income Tax Consequences” in this prospectus supplement)].

DESCRIPTION OF THE MORTGAGE POOL

Wherever reference is made herein to a percentage of some or all of the Mortgage Loans, that percentage (unless otherwise specified) is determined on the basis of the total scheduled principal balance of such Mortgage Loans as of the cut-off date. [As indicated at “Description of the Bonds — General,” subsequent to the Closing Date, but no later than [_________], the Trust may from time to time acquire subsequent mortgage loans from the Depositor. The procedures and selection criteria for acquiring subsequent mortgage loans are set forth at “— Conveyance of Subsequent Mortgage Loans” below. The discussion that follows in this Prospectus Supplement will apply to subsequent mortgage loans only where specific reference is made to “Subsequent Mortgage Loans” or “Mortgage Loans.”]

General

On the Closing Date, the Trust is expected to include approximately [________] [describe Mortgage Loans] Mortgage Loans, [______] of which have original terms to maturity from the first due date of the monthly payment of not more than [_______] years, and which have a total scheduled principal balance (after giving effect to monthly payments due on the cut-off date) of approximately $[_______]. Approximately [_______]% of the Mortgage Loans are first lien mortgage loans and approximately [_______]% of the Mortgage Loans are second lien mortgage loans. Approximately [______]% of the Mortgage Loans have original terms to maturity from the due date of the first monthly payment of 20 years, approximately [_______]% of the Mortgage Loans have original terms to maturity from the due date of the first monthly payment of 25 years, and approximately [_____]% of the Mortgage Loans have original terms to maturity from the due date of the first monthly payment of 30 years.

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The underwriting guidelines generally applied by the Originator in originating the Mortgage Loans are described under “Underwriting Standards” below. The Mortgage Loans will be acquired by the Depositor from the Seller and the Depositor will, in turn, convey the Mortgage Loans to the Trust. We refer you to “The Mortgage Loan Purchase Agreement and the Sale and Servicing Agreement—Sale of the of Mortgage Loans.”

The Mortgage Loans are [_______] rate Mortgage Loans. Interest on the Mortgage Loans accrues on the basis of [______].

Pursuant to its terms, each Mortgage Loan[, other than a loan secured by a condominium unit,] is required to be covered by a standard hazard insurance policy in an amount generally equal to the lower of the unpaid principal amount thereof or the replacement value of the improvements on the related Mortgaged Loan. Generally, a condominium association is responsible for maintaining hazard insurance covering the entire building.

[[______] of the Mortgage Loans provide for monthly payments of interest, but not principal, for a period of up to ten years following origination, after which the monthly payments will be increased to amounts sufficient to pay interest and to amortize the principal balances over the remaining terms. Approximately [______]% of the Mortgage Loans provide for monthly payments of interest, but not principal, for periods shorter than ten years. If the monthly payment at the end of the interest only period is substantially higher than the interest only payment, that loan may be subject to an increased risk of default.] [To be provided as applicable.]

[Approximately [______]% of the Mortgage Loans are partially insured by the FHA (the “FHA Mortgage Loans”) or are partially guaranteed by the VA (the “VA Mortgage Loans”). The benefits of the FHA insurance and VA guaranty as to each of these Mortgage Loans are limited as described herein. [Some] [None] of the FHA Mortgage Loans and the VA Mortgage Loans will be serviced on a full recourse basis.]

[As of the cut-off date, approximately [_____]% of the first lien mortgage loans have original Loan-to-Value Ratios in excess of 80%. Approximately [_____]% of these Mortgage Loans are not covered by existing borrower- or lender-paid loan-level primary mortgage insurance policies. In addition, approximately [____]% of the second lien mortgage loans have original combined loan-to-value ratios in excess of 80% and approximately [______]% of the first lien mortgage loans have original Indicative combined loan-to-value ratios in excess of 80%.] [To be provided as applicable.]

[Approximately [_____]%,[_____]%,[_____]%% and v% of the mortgage loans are secured by mortgaged properties located in the states of [_____]%, respectively.]

[Disclose if any state or geographic region has a 10% or greater concentration.]

The Seller will represent and warrant that no Mortgage Loan is a “high cost” or “covered” loan under federal, state or local predatory lending laws.

[Seller’s Selection Procedures]

[Insert Description] [and] [Insert amount of expenses incurred by Depositor in connection with the selection and acquisition of the pool assets payable from the offering proceeds.]

[The Fixed Rate Mortgage Loans

The “Fixed Rate Mortgage Loans” consist of approximately [_____] fixed rate Mortgage Loans, with an aggregate principal balance as of the cut-off date of approximately $[_____]. The Fixed Rate Mortgage Loans had individual principal balances at origination of at least $[_____] but not more than $[_____], with an average principal balance at origination of approximately $[_____]. Approximately[_____]% of the Fixed Rate Mortgage Loans have terms to maturity from the date of origination of not more than thirty years. The Fixed Rate Mortgage Loans have a weighted average remaining term to calculated maturity of approximately [_____] months as of the cut-off date. Approximately [_____]% of the Fixed Rate Mortgage Loans are balloon Mortgage Loans. Approximately [____]% of the Fixed Rate Mortgage Loans have been modified.]

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[To be provided as applicable.]

[Adjustable Mortgage Rates

As of the cut-off date, [________ ]% of the Mortgage Loans will provide for semi-annual adjustment of the related Mortgage Rate based on the six-month LIBOR index and [______]% of the Mortgage Loans will provide for monthly adjustment of the related Mortgage Rate based on the one-month LIBOR index, each as described under “—The Indices” below. With respect to each Mortgage Loan, there will be corresponding adjustments to the monthly payment amount, in each case on each Adjustment Date applicable thereto; provided that the first such adjustment for all of the Mortgage Loans will occur, in the case of approximately [_______]% of the Mortgage Loans, after an initial period of approximately six months following origination, in the case of approximately [_______]% of the Mortgage Loans, after an initial period of approximately three years following origination, in the case of approximately [_____]% of the Mortgage Loans, after an initial period of approximately five years following origination and, in the case of approximately _______ [_____]% of the Mortgage Loans, after an initial period of approximately seven years following origination. On each Adjustment Date for a Mortgage Loan, the Mortgage Rate will be adjusted to equal the sum, rounded generally to the next highest or nearest multiple of 1/8%, of the related Index and the related Gross Margin (the “Gross Margin”), provided that the Mortgage Rate on each such Mortgage Loan will not increase or decrease by more than the related Periodic Cap (ranging from [____]% to [____]%) as specified in the related mortgage note on any related Adjustment Date and will not exceed the related Maximum Rate (the “Maximum Rate”) over the life of such Mortgage Loan or be less than the Minimum Rate. Effective with the first monthly payment due on each Mortgage Loan after each related Adjustment Date after the interest-only period, if any, has concluded, the monthly payment amount will be adjusted to an amount that will amortize fully the outstanding principal balance of the related Mortgage Loan over its remaining term, and pay interest at the Mortgage Rate as so adjusted. Due to the application of the Periodic Caps and Maximum Rates, the Mortgage Rate on each such Mortgage Loan, as adjusted on any related Adjustment Date, may be less than the sum of the related Index and the related Gross Margin, rounded as described herein. We refer you to “—The Indices” below.

The Mortgage Loans do not permit the related borrower to convert the adjustable Mortgage Rate to a fixed Mortgage Rate.]

[To be provided as applicable.] [May vary in accordance with structure of transaction.]

[The Indices

As indicated above, the index applicable to the determination of the Mortgage Rates for the Mortgage Loans will be either the one-month LIBOR index or the six-month LIBOR index as most recently available as of the first business day of the month preceding the month of such Adjustment Date. In the event that the one-month LIBOR index or the six-month LIBOR index becomes unavailable or otherwise unpublished, the Servicer will select a comparable alternative index over which it has no direct control and which is readily verifiable. For One-Month LIBOR Loans, the one-month LIBOR index is determined as of the date that occurs twenty-five (25) days before each Adjustment Date. For the Six-Month LIBOR Loans (including all hybrid loans), the six-month LIBOR index is determined as of the first Business Day of the month immediately preceding the month in which the Adjustment Date occurs.] [Discussion of any other index described in the prospectus and applicable to the Mortgage Loans to be provided, if applicable. We refer you to “The Trusts and the Trust Assets — The Mortgage Loans — General” in the prospectus.]

[To be provided as applicable.]

[Primary Mortgage Insurance

Approximately [____]% of the Mortgage Loans are 80+ loan-to-value loans. We refer you to “Description of the Mortgage Pool[s] — General.” Approximately[___]% and [_____]% of the 80+ loan-to-value loans are covered by existing borrower-paid loan-level primary mortgage insurance policies and lender-paid loan-level primary mortgage insurance policies, respectively. Approximately [____]% of the 80+ loan-to-value loans are not covered by existing borrower- or lender-paid loan-level primary mortgage insurance policies.

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These primary mortgage insurance policies provide limited protection against losses on defaulted 80+ loan-to-value loans and such protection is subject to various limitations and exclusions including, for example, losses resulting from fraud. As a result, coverage may be denied or limited on some 80+ lTV Loans. In addition, because the amount of coverage depends on the Loan-to-Value Ratio at the inception of the policy, a decline in the value of a Mortgaged Property will not result in increased coverage, and the Trust may still suffer a loss on a Mortgage Loan covered by a primary mortgage insurance policy. The providers of the primary mortgage insurance policies may also affect the timing and conduct of foreclosure proceedings and other servicing decisions regarding defaulted Mortgage Loans covered by the related primary mortgage insurance policy. The Servicer is responsible for paying the premiums under the LPMI Policies. We refer you to “Insurance — Primary Mortgage Insurance Policies” in the prospectus.]

[To be provided as applicable.]

Certain Characteristics of the Mortgage Loans

The Mortgage Loans are expected to have the approximate aggregate characteristics as of the cut-off date as set forth in Annex A attached to this prospectus supplement and incorporated by reference herein. Prior to the issuance of the Bonds, Mortgage Loans may be removed from the Mortgage Pool[s] as a result of incomplete documentation or otherwise, if the Depositor deems such removal necessary or appropriate.

[Delinquency and Loss Information for the Pool Assets

Delinquency and loss information for the mortgage pool, including statistical information regarding delinquencies and losses, will be included.]

[Conveyance of Subsequent Mortgage Loans

On the Closing Date, approximately $[_____] will be deposited by the Issuing Entity Administrator into an eligible account. During the period from the Closing Date to [_______], the Depositor is expected to purchase from time to time subsequent mortgage loans from the Seller and, in turn, sell all such subsequent mortgage loans to the Trust for inclusion in the Mortgage Pool. The purchase price for each subsequent mortgage loan will equal its scheduled principal balance as of the date of origination (reduced by principal payments due or paid prior to the purchase date, if any) and will be paid by the Issuing Entity Administrator from the related pre-funding amount.

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As of the cut-off date, the mortgage loans expected to be conveyed as the subsequent mortgage loans by the Seller are expected to have the following characteristics:

Number of Subsequent Mortgage Loans

Total Scheduled Principal Balance

Mortgage Rates:
Weighted Average
Range

Weighted Average Remaining Term to Maturity (in months)

Original Loan-to-Value Ratios:
Weighted Average
Range

Scheduled Principal Balances:
Average
Range

Pursuant to the Sale and Servicing Agreement, the conveyance of subsequent mortgage loans to the Trust may be made on any Business Day during the Pre-Funding Period, subject to certain conditions in the Sale and Servicing Agreement being satisfied, including, among others, that:

[The subsequent mortgage loans conveyed on the subsequent transfer date must satisfy the same representations and warranties applicable to the initial mortgage loans set forth in the Mortgage Loan Purchase Agreement, which representations and warranties have been confirmed by the rating agencies rating the Bonds;

The subsequent mortgage loans conveyed on the subsequent transfer date are selected in a manner reasonably believed not to be adverse to the interests of the Bondholders;

[The Bond Trustee receives an Officer’s Certificate confirming the satisfaction of each condition precedent specified in the Sale and Servicing Agreement and opinions of counsel with respect to certain corporate, bankruptcy and tax matters relating to the transfer of subsequent mortgage loans in the forms substantially similar to those delivered on the Closing Date;]

The conveyance of the subsequent mortgage loans on the subsequent transfer date will not result in a reduction or withdrawal of any ratings assigned to the Offered Bonds;

[No subsequent mortgage loan conveyed on the subsequent transfer date may be more than one monthly payment delinquent in payment;]

Each subsequent mortgage loan will have been underwritten substantially in accordance with the applicable originator’s underwriting guidelines;

No subsequent mortgage loan may have a remaining term to maturity exceeding [___] months;

[No subsequent mortgage loan may have a Loan-to-Value Ratio greater than [125]%;]

The weighted average Mortgage Rate for all the Mortgage Loans at the end of the Pre-Funding Period must not be more than 100 basis points lower than the weighted average Mortgage Rate of the initial mortgage loans;

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Following the conveyance of the subsequent mortgage loans on the subsequent transfer date, the weighted average characteristics of the Mortgage Loans the Mortgage Pool will remain substantially similar to the characteristics of the initial mortgage loans in the Mortgage Pool as of the cut-off date; and

[An independent accountant must provide the Depositor, the applicable rating agencies rating the Bonds, the Bond Trustee and the Underwriters with a letter stating that the characteristics of the subsequent mortgage loans conform to the characteristics described above and in the Sale and Servicing Agreement.]]

If the Trust does not apply the full pre-funding amount towards the purchase of subsequent mortgage loans prior to the end of the Pre-Funding Period, then such remaining proceeds in the pre-funding account will be paid as a principal prepayment to the related Bondholders on the [___] Payment Date.

On the Closing Date, the Issuing Entity Administrator will also establish a capitalized interest account which will be funded by an initial deposit made by the Depositor on the Closing Date of approximately $[____], which represents approximately [_____]% of the total principal balance of the Mortgage Loans as of the cut-off date. Amounts in the capitalized interest account will be applied by the Issuing Entity Administrator during the Pre-Funding Period to pay interest on that portion of the Bonds supported by the pre-funding amount. At the end of the Pre-Funding Period, any remaining funds in the capitalized interest account will be paid to the Depositor and the account will be terminated.]

[Acquisition by the Issuing Entity of Additional Mortgage Loans

On the first Payment Date and until [___________], 200[__] (the “Revolving Period”), the Depositor may direct the Issuing Entity Administrator on behalf of the Issuing Entity to apply all or a portion of the payments that would otherwise be made to Bondholders in respect of principal [and excess interest] to purchase from the Depositor for inclusion in the Trust Fund additional mortgage loans (“Additional Mortgage Loans”) of the same general character as the Mortgage Loans included in the Trust Fund on the Closing Date. If the Depositor so directs, the Issuing Entity Administrator on behalf of the Issuing Entity will deposit all or a portion of the amount of principal payable on the Mortgage Loans [and excess interest] that would otherwise be made to Bondholders into an eligible account (the “Revolving Account”), and will apply deposits in the Revolving Account to fund the purchase of Additional Mortgage Loans, provided certain other conditions are satisfied at the time of purchase. Funds on deposit in the Revolving Account may only be applied to acquire Additional Mortgage Loans for the Mortgage Pool.

The purchase price for each Additional Mortgage Loan will equal its scheduled principal balance as of the date of origination (reduced by principal payments due or paid prior to the purchase date, if any)[, and the aggregate Purchase Price of all Additional Mortgage Loans purchased by the Trust Fund during the Revolving Period may not exceed $[_____], which represents approximately [______]% of the total principal balance of the Mortgage Loans as of the cut-off date]. Additional Mortgage Loans will have the same general characteristics as the Mortgage Loans transferred to the Trust Fund on the Closing Date.

Pursuant to the Sale and Servicing Agreement, the conveyance of Additional Mortgage Loans to the Issuing Entity Administrator on behalf of the Issuing Entity may be made on any Business Day during the Revolving Period, subject to certain conditions set forth in the Sale and Servicing Agreement being satisfied, including, among others that:

[The Additional Mortgage Loans at the time of conveyance to the Trust must satisfy the representations and warranties set forth in the Mortgage Loan Purchase Agreement, which representations and warranties have been confirmed by the rating agencies rating the Bonds;

The Additional Mortgage Loans are selected in a manner reasonably believed not to be adverse to the interests of the Bondholders;

[The Bond Trustee receives an Officer’s Certificate confirming the satisfaction of each condition precedent specified in the Sale and Servicing Agreement and opinions of counsel with respect to certain corporate, bankruptcy and tax matters relating to the transfer of Additional Mortgage Loans in the forms substantially similar to those delivered on the Closing Date;]

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The conveyance of the Additional Mortgage Loans will not result in a reduction or withdrawal of any ratings assigned to the Offered Bonds;

[No Additional Mortgage Loan may be more than one monthly payment delinquent in payment at the time of conveyance to the Trust];

Each Additional Mortgage Loan will have been underwritten substantially in accordance with the applicable originator’s underwriting guidelines;

No Additional Mortgage Loan may have a remaining term to maturity exceeding [_____] months;

[No Additional Mortgage Loan may have a Loan-to-Value Ratio greater than 100%;]

The weighted average Mortgage Rate for all the Mortgage Loans at the end of the Revolving Period must not be more than [100] basis points lower than the weighted average Mortgage Rate of the Mortgage Loans as of the cut-off date;

Following the conveyance of the Additional Mortgage Loans on a subsequent transfer date, the weighted average characteristics of the Mortgage Loans in the Mortgage Pool will remain substantially similar to the characteristics of the Mortgage Loans in the Mortgage Pool as of the cut-off date; and

[An independent accountant must provide the Depositor, the applicable rating agencies rating the Bonds, the Bond Trustee and the Underwriters at [applicable interval] with a letter stating that the characteristics of the Additional Mortgage Loans conform to the characteristics described above and in the Sale and Servicing Agreement.]

[Additional transfer requirements and termination triggers to be described, as applicable.]

Any amounts remaining in the Revolving Account at the end of the Revolving Period will be distributed [priority of payment to be provided, as applicable].

STATIC POOL INFORMATION

Static pool information with respect to the sponsor’s prior securitized pools during the period from [specify date] to [specify date], presented by pool, is available online at http://www.sequoia-reports.com. Access to this web address is unrestricted and free of charge. Information available at this web address is deemed to be part of this prospectus supplement, except to the extent provided under “Static Pool Information” in the accompanying prospectus. [A reference to any third-party static pool information is to be provided, as applicable.]

The mortgage loans will continue to be serviced in accordance with accepted servicing practices through charge-off, which we define as the ultimate liquidation of the loan or any REO acquired in respect of the loan. For purposes of Form 10-D reporting and other such reporting under the Securities Exchange Act, delinquency information on the mortgage loans will be provided through charge-off in thirty (30) day segments, measured as of the end of the month prior to the reporting month.

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ADDITIONAL INFORMATION

The depositor has filed the registration statement with the Securities and Exchange Commission (the “SEC”) (Registration No. _________). The depositor is also subject to some of the information requirements of the Exchange Act, and, accordingly, will file reports thereunder with the SEC. The registration statement and the exhibits thereto, and reports and other information filed by the depositor under the Exchange Act can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, and at certain of its Regional Offices located as follows: Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Northeast Regional Office, 233 Broadway, New York, New York 10279 and electronically through the SEC’s Electronic Data Gathering, Analysis and Retrieval System at the SEC’s website (http://www.sec.gov).

The description in this prospectus supplement of the trust fund and the mortgaged properties is based upon the mortgage pool as expected to be constituted at the close of business on the cut-off date, as adjusted for the scheduled principal payments due on or before the cut-off date. Prior to the issuance of the offered bonds, mortgage loans may be removed from the trust fund as a result of incomplete documentation or otherwise, if the depositor deems that removal necessary or appropriate. A limited number of other mortgage loans may be added to the trust fund prior to the issuance of the offered bonds. The depositor believes that the information in this prospectus supplement will be substantially representative of the characteristics of the mortgage pool as it will be constituted at the time the offered bonds are issued although the range of mortgage rates and maturities and some other characteristics of the mortgage loans in the trust fund may vary.

A current report on Form 8-K will be available to purchasers of the offered bonds and will be filed, together with the indenture, with the SEC after the initial issuance of the offered bonds. In the event a material number of mortgage loans are removed from or added to the trust fund as described in the preceding paragraph, that removal or addition will be noted in the current report.

Pursuant to the indenture, the issuing entity administrator will prepare a monthly statement to bondholders containing the information described under “The Agreements — Certain Matters Under the Indenture — Reports to bondholders.” The issuing entity administrator may make available each month, to any interested party, the monthly statement to bondholders via the issuing entity administrator’s website. The issuing entity administrator’s website will be located at [www._______], and assistance in using the website can be obtained by calling the issuing entity administrator’s customer service desk at [_________]. Parties that are unable to use the above distribution option are entitled to have a paper copy mailed to them via first class mail by notifying the issuing entity administrator at the following address: [___________]. The issuing entity administrator will have the right to change the way such reports are distributed in order to make such payments more convenient and/or more accessible, and the issuing entity administrator will provide timely and adequate notification to such parties regarding any such changes.

In addition, within a reasonable period of time after the end of each calendar year, the issuing entity administrator will, upon request, prepare and deliver to each bondholder of record during the previous calendar year a statement containing information necessary to enable bondholders to prepare their tax returns. These statements will not have been examined and reported upon by an independent public accountant.

THE ISSUING ENTITY

General

The “issuing entity” is a statutory trust established under the laws of the State of Delaware by an amended and restated deposit trust agreement, dated as of [_________], 200[__] . The issuing entity was formed for the sole purpose of issuing the bonds and the investor certificate. The depositor is the settlor and sole beneficiary of the issuing entity and [_____________] is the owner trustee of the issuing entity. The depositor is a limited purpose finance corporation the capital stock of which is wholly owned by [_________________] Redwood Trust, Inc., a Maryland corporation. Redwood Trust will be the manager of the issuing entity pursuant to a management agreement (the “Management Agreement”) entered into with the issuing entity. None of the depositor, Redwood Trust, [_______________] or any of their respective affiliates has guaranteed or is otherwise obligated with respect to payment of the bonds and no person or entity other than the issuing entity is obligated to pay the bonds, except as specifically set forth in this prospectus supplement with regard to the bond insurance policy.

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The Issuing Entity’s assets will consist almost entirely of the mortgages which will be pledged to secure the bonds. If the mortgage loans and other collateral securing the bonds are insufficient for payment of the bonds, it is unlikely that significant other assets of the issuing entity will be available for payment of the bonds. The amount of funds available to pay the bonds may be affected by, among other things, realized losses incurred on defaulted mortgage loans.

The Indenture prohibits the Issuing Entity from incurring any indebtedness other than the bonds, or assuming or guaranteeing the indebtedness of any other person.

The Owner Trustee

[__________] will act not in its individual capacity but solely as the Owner Trustee under the Trust Agreement. [________] is a [___________] and its principal offices are located at [_____________]. The on going fees of the Owner Trustee will be paid by the Master Servicer. The Owner Trustee will be entitled to reimbursement for expenses and certain other amounts (including its fees to the extent not paid by the Master Servicer and certain indemnification amounts) prior to payment of any amounts to Bondholders.

The Issuing Entity Administrator and the Depositor will perform on behalf of the Owner Trustee and the Trust certain administrative functions required under the Indenture, the Trust Agreement and the Sale and Servicing Agreement pursuant to the terms of the Administration Agreement.

[Disclosure regarding the Owner Trustee’s experience serving as a trustee in the securitization of similar asset types to be provided for each transaction.]

The Ownership Certificate

The equity ownership in the Trust will be evidenced by the Ownership Certificate. The holder of the Ownership Certificate will be entitled to receive on each Payment Date any remaining cashflow from Mortgage Loan collections after all principal and interest on the Bonds and other expenses of the Trust for such Payment Date have been made.

DESCRIPTION OF THE BONDS

General

The Bonds will be issued pursuant to the Indenture. Set forth below are summaries of the specific terms and provisions pursuant to which the Bonds will be issued. The following summaries are subject to, and are qualified in their entirety by reference to, the provisions of the Indenture. When particular provisions or terms used in the Indenture are referred to, the actual provisions (including definitions of terms) are incorporated by reference.

The Sequoia Mortgage Trust [____], Collateralized Mortgage Bonds (the “Bonds”), will consist of the Class [___] Bonds (the “Senior Bonds”) and the Class [___] Bonds (the “Subordinated Bonds”). The Issuing Entity will also issue the Investor Certificate (the “Investor Certificate”) as described herein. The Senior Bonds and the Subordinated Bonds are collectively referred to herein as the “Offered Bonds.” Only the Bonds are offered hereby. The Classes of Bonds will have the respective Bond Interest Rates described on the cover hereof. The Investor Certificate will bear interest at the “Certificate Interest Rate” described herein.

The “Class Principal Amount” of (a) the Senior Bonds (the “Senior Class Principal Amount”) as of any Payment Date is the Original Senior Class Principal Amount reduced by all amounts previously distributed to holders of the Senior Bonds as payments of principal, (b) the Subordinated Bonds (the “Subordinated Class Principal Amount”) as of any Payment Date is the lesser of (i) the aggregate of the Stated Principal Balances of the Mortgage Loans, less the Senior Class Principal Amount immediately prior to such date, and (ii) the Original Subordinated Class Principal Amount reduced by all amounts previously distributed to holders of the Subordinated Bonds as payments of principal. The Senior Bonds will have an original Senior Class Principal Amount of $[________] (the “Original Senior Class Principal Amount”) and the Subordinated Bonds will have an original Subordinated Class Principal Amount of $[________] (the “Original Subordinated Class Principal Amount”). The “Invested Amount” of the [______________] as of any Payment Date is the lesser of (i) the aggregate of the Stated Principal Balances of the Mortgage Loans, less the sum of (x) the Senior Class Principal Amount and (y) the Subordinated Class Principal Amount, in each case immediately prior to such date, and (ii) the Original Invested Amount reduced by all amounts previously distributed to the holder of the Investor Certificate in reduction of the Invested Amount. The Investor Certificate will have an original Invested Amount of approximately $[________] (the “Original Invested Amount”).

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Book-Entry Bonds

The Bonds will be book-entry Bonds (each, a Class of “Book-Entry Bonds”). Persons acquiring beneficial ownership interests in the Bonds (“Bond Owners”) may elect to hold their Bonds through the Depository Trust Company (“DTC”) in the United States, or CEDEL or Euroclear (in Europe) if they are participants of such systems, or indirectly through organizations which are participants in such systems. The Book-Entry Bonds will be issued in one or more certificates which equal the aggregate principal amount of the Bonds and will initially be registered in the name of Cede & Co., the nominee of DTC. CEDEL and Euroclear will hold omnibus positions on behalf of their participants through customers’ securities accounts in CEDEL’s and Euroclear’s names on the books of their respective depositaries which in turn will hold such positions in customers’ securities accounts in the depositaries’ names on the books of DTC. Citibank, N.A., will act as depositary for CEDEL and The Chase Manhattan Bank will act as depositary for Euroclear (in such capacities, individually the “Relevant Depositary” and collectively the “European Depositaries”). Investors may hold such beneficial interests in the Book-Entry Bonds in minimum denominations representing Class Principal Amounts of $[________] and in multiples of $1,000 in excess thereof. Except as described below, no person acquiring a Book-Entry Bond (each, a “beneficial owner”) will be entitled to receive a physical certificate representing such Bond (a “Definitive Bond”). Unless and until Definitive Bonds are issued, it is anticipated that the only “Bondholders” of the Bonds will be Cede & Co., as nominee of DTC. Bond Owners will not be Bondholders as that term is used in the Indenture. Bond Owners are only permitted to exercise their rights indirectly through the participating organizations that utilize the services of DTC, including securities brokers and dealers, banks and trust companies and clearing corporations and certain other organizations (“Participants”) and DTC.

The beneficial owner’s ownership of a Book-Entry Bond will be recorded on the records of the brokerage firm, bank, thrift institution or other financial intermediary (each, a “Financial Intermediary”) that maintains the beneficial owner’s account for such purpose. In turn, the Financial Intermediary’s ownership of such Book-Entry Bond will be recorded on the records of DTC (or of a participating firm that acts as agent for the Financial Intermediary, whose interest will in turn be recorded on the records of DTC, if the beneficial owner’s Financial Intermediary is not a DTC participant, and on the records of CEDEL or Euroclear, as appropriate).

Bond Owners will receive all payments of principal of, and interest on, the Bonds from the Bond Trustee through DTC and DTC participants. While the Bonds are outstanding (except under the circumstances described below), under the rules, regulations and procedures creating and affecting DTC and its operations (the “Rules”), DTC is required to make book-entry transfers among Participants on whose behalf it acts with respect to the Bonds and is required to receive and transmit payments of principal of, and interest on, the Bonds. Participants and indirect participants which have indirect access to the DTC system, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (“Indirect Participants”), with whom Bond Owners have accounts with respect to Bonds are similarly required to make book-entry transfers and receive and transmit such payments on behalf of their respective Bond Owners. Accordingly, although Bond Owners will not possess certificates, the Rules provide a mechanism by which Bond Owners will receive payments and will be able to transfer their interest.

Bond Owners will not receive or be entitled to receive certificates representing their respective interests in the Bonds, except under the limited circumstances described below. Unless and until Definitive Bonds are issued, Bond Owners who are not Participants may transfer ownership of Bonds only through Participants and Indirect Participants by instructing such Participants and Indirect Participants to transfer Bonds, by book-entry transfer, through DTC for the account of the purchasers of such Bonds, which account is maintained with their respective Participants. Under the Rules and in accordance with DTC’s normal procedures, transfers of ownership of Bonds will be executed through DTC and the accounts of the respective Participants at DTC will be debited and credited. Similarly, the Participants and Indirect Participants will make debits or credits, as the case may be, on their records on behalf of the selling and purchasing Bond Owners.

Because of time zone differences, credits of securities received in CEDEL or Euroclear as a result of a transaction with a Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or Euroclear as a result of sales of securities by or through a CEDEL Participant (as defined herein) or Euroclear Participant (as defined herein) to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant CEDEL or Euroclear cash account only as of the business day following settlement in DTC. For information relating to tax documentation procedures relating to the Bonds, see “MATERIAL FEDERAL INCOME TAX CONSEQUENCES — Withholding with Respect to Certain Foreign Investors” and “— Backup Withholding” in the prospectus and “GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES — Certain U.S. Federal Income Tax Documentation Requirements” in Annex B hereto, which Annex B is attached to this prospectus supplement and is incorporated by reference herein.

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Payments on Mortgage Loans; Accounts

On or prior to the Closing Date, the Master Servicer will establish and maintain or cause to be established and maintained a separate account or accounts for the collection of payments on the Mortgage Loans (the “Collection Account”). On or prior to the Closing Date, the Bond Trustee will establish an account (the “Payment Account”), which will be maintained with the Bond Trustee in trust for the benefit of the Bondholders. On or prior to the business day immediately preceding each Payment Date, the Master Servicer will withdraw from the Collection Account the Bond Payment Amount for such Payment Date, to the extent of Available Funds on deposit therein, and will deposit such amount in the Payment Account. The “Bond Payment Amount” for any Payment Date will equal the sum of (i) the Senior Interest Payment Amount, (ii) the Senior Principal Payment Amount, (iii) the Subordinated Interest Payment Amount and (iv) the Subordinated Principal Payment Amount (as each such term is defined herein). Funds credited to the Bond Account or the Payment Account may be invested at the direction of the Depositor for the benefit and at the risk of the Depositor in Permitted Investments, as defined in the Master Servicing Agreement, that are scheduled to mature on or prior to the business day preceding the next Payment Date.

Payments

Payments on the Bonds will be made by the Bond Trustee on [the th day of each month], or if such day is not a business day, on the first business day thereafter, commencing in [____________, 200__] (each, a “Payment Date”), to the persons in whose names such Bonds are registered at the close of business on the last business day of the month preceding the month of such Payment Date (the “Record Date”).

Payments on each Payment Date will be made by check mailed to the address of the person entitled thereto as it appears on the applicable bond register or, in the case of a Bondholder who holds 100% of a Class of Bonds or who holds Bonds with an aggregate initial Class Principal Amount of $1,000,000 or more and who has so notified the Bond Trustee in writing in accordance with the Indenture, by wire transfer in immediately available funds to the account of such Bondholder at a bank or other depository institution having appropriate wire transfer facilities; provided, however, that the final payment in retirement of the Bonds will be made only upon presentment and surrender of such Bonds at the Corporate Trust Office of the Bond Trustee.

As more fully described herein, payments will be made on each Payment Date from Available Funds in the following order of priority: (i) to interest on the Senior Bonds; (ii) to principal of the Senior Bonds; (iii) to interest on the Subordinated Bonds; (iv) to principal of the Subordinated Bonds; (v) to interest on the Investor Certificate; (vi) to principal of the Investor Certificate; and (vii) to the holder of the Investor Certificate, all remaining Available Funds, subject to certain limitations set forth herein under “— Principal.”

“Available Funds” with respect to any Payment Date will be equal to the sum of (i) all scheduled installments of interest (net of the related Expense Fees) and principal due [on the Due Date in the month] in which such Payment Date occurs and received prior to the related Determination Date, together with any Advances in respect thereof; (ii) all proceeds of any primary mortgage guaranty insurance policies and any other insurance policies with respect to the Mortgage Loans, to the extent such proceeds are not applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the applicable Servicer’s or the Master Servicer’s normal servicing procedures (collectively, “Insurance Proceeds”) and all other cash amounts received and retained in connection with the liquidation of defaulted Mortgage Loans, by foreclosure or otherwise (“Liquidation Proceeds”), during the [month] preceding the month of such Payment Date (in each case, net of unreimbursed expenses incurred in connection with a liquidation or foreclosure and unreimbursed Advances, if any); (iii) all partial or full prepayments received during the [month] preceding the month of such Payment Date; and (iv) amounts received with respect to such Payment Date as the Substitution Adjustment Amount or purchase price in respect of a Deleted Mortgage Loan or a Mortgage Loan purchased by Redwood Trust [or by the Master Servicer or the Depositor] as of such Payment Date, reduced by amounts in reimbursement for Advances previously made and other amounts as to which the applicable Servicer or the Master Servicer is entitled to be reimbursed pursuant to the Master Servicing Agreement.

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On each Payment Date after the Subordinated Class Principal Amount and the Invested Amount have been reduced to zero, the amount, if any, by which the Senior Interest Payment Amount and the Senior Principal Payment Amount exceed the Available Funds, shall be paid by the Insurer to the Senior Bondholders pursuant to the Bond Insurance Policy.

Interest

The Bond Interest Rate for each Class of Bonds for each Payment Date (each, a “Bond Interest Rate”) is described on the cover hereof. On each Payment Date, to the extent of funds available therefor, each Class of Bonds and the Investor Certificate will be entitled to receive an amount allocable to interest as described below (as to each such Class or the Investor Certificate, as applicable, the “Interest Payment Amount”) with respect to the related Interest Accrual Period. With respect to each Payment Date, the “Interest Accrual Period” for each Class of Bonds and the Investor Certificate will be the [calendar month] preceding the month of such Payment Date.

The Interest Payment Amount for the Senior Bonds (the “Senior Interest Payment Amount”) will be equal to the sum of (i) interest at the Senior Bond Interest Rate on the Senior Class Principal Amount, and (ii) the sum of the amounts, if any, by which the amount described in clause (i) above on each prior Payment Date exceeded the amount actually distributed as interest on such prior Payment Dates and not subsequently distributed. The Interest Payment Amount for the Subordinated Bonds (the “Subordinated Interest Payment Amount”) will be equal to the sum of (i) interest at the Subordinated Bond Interest Rate on the Subordinated Class Principal Amount, (ii) interest at the Subordinated Bond Interest Rate on any Subordinated Principal Carryover Shortfall, (iii) the sum of the amounts, if any, by which the sum of the amounts described in clauses (i) and (ii) above on each prior Payment Date exceeded the amount actually distributed as interest on such prior Payment Dates and not subsequently distributed (the “Subordinated Interest Carryover Shortfall”) and (iv) interest at the Subordinated Bond Interest Rate on any Subordinated Interest Carryover Shortfall (to the extent permitted by applicable law). The Interest Payment Amount for the Investor Certificate (the “Certificate Interest Payment Amount”) will be equal to interest at the Certificate Interest Rate on the Invested Amount. The Senior Bonds will not be entitled to interest on any Senior Interest Payment Amount not paid when due prior to such time as the Bonds are declared immediately due and payable upon the occurrence of an Event of Default as described herein under “— Priority of Payments and Allocation of Shortfalls.” The Investor Certificate will not be entitled to interest on any Certificate Interest Payment Amount not paid when due.

The interest payable on any Payment Date as described above, but not the entitlement thereto, for the Subordinated Bonds, and in the event of a default of the Insurer under the Bond Insurance Policy, the Senior Bonds, will be reduced by their respective proportionate amounts of “Net Interest Shortfalls” for such Payment Date, if any, based on the amount of interest each Class of Bonds would otherwise be entitled to receive on such Payment Date before taking into account any reduction in such amounts resulting from such Net Interest Shortfalls. With respect to any Payment Date, the “Net Interest Shortfall” is equal to the amount by which the sum of (i) the amount of interest which would otherwise have been received with respect to any Mortgage Loan that was the subject of a Relief Act Reduction and (ii) any Prepayment Interest Shortfalls, in each case during the calendar month preceding the month of such Payment Date, exceeds the sum of (i) the master servicing fee for such period and (ii) the amounts otherwise payable on such Payment Date to the holder of the Investor Certificate as described in clauses “fifth,” “sixth” and “seventh” under “— Priority of Payments and Allocation of Shortfalls” below. A “Relief Act Reduction” is a reduction in the amount of monthly interest payment on a Mortgage Loan pursuant to the Servicemembers Civil Relief Act. A “Prepayment Interest Shortfall” is the amount by which interest paid by a borrower in connection with a prepayment of principal on a Mortgage Loan is less than one month’s interest at the related Mortgage Rate on the Stated Principal Balance of such Mortgage Loan.

Accrued interest to be paid on any Payment Date will be calculated, in the case of each Class of Bonds and the Investor Certificate, on the basis of the related Class Principal Amount or Invested Amount, as applicable, immediately prior to such Payment Date. Interest will be calculated and payable on the basis of a 360-day year divided into twelve 30-day months.

Principal

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General. All payments and other amounts received in respect of principal of the Mortgage Loans will be allocated among the Senior Bonds, the Subordinated Bonds and the Investor Certificate.

Senior Principal Payment Amount. On each Payment Date, the Available Funds remaining after payment of interest with respect to the Senior Bonds, up to the amount of the Senior Principal Payment Amount for such Payment Date, will be distributed as principal of the Senior Bonds. The “Senior Principal Payment Amount” for any Payment Date will equal the Senior Percentage of the sum of (a) the principal portion of the scheduled payment due on each Mortgage Loan [on the related Due Date], (b) the principal portion of the purchase price of each Mortgage Loan that was purchased by Redwood Trust or another person pursuant to the Mortgage Loan Purchase Agreement (as defined herein) [or any optional purchase by the Master Servicer or the Depositor of a default Mortgage Loan] as of such Payment Date, (c) the Substitution Adjustment Amount in connection with any Deleted Mortgage Loan received with respect to such Payment Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received during the [calendar month] preceding the month of such Payment Date, (e) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during the [calendar month] preceding the month of such Payment Date, the Stated Principal Balance of such Mortgage Loan, and (f) all partial and full principal prepayments by borrowers received during the [calendar month] preceding the month of such Payment Date.

“Stated Principal Balance” means, as to any Mortgage Loan and Due Date, the unpaid principal balance of such Mortgage Loan as of such Due Date, as specified in the amortization schedule at the time relating thereto (before any adjustment to such amortization schedule by reason of any moratorium or similar waiver or grace period), after giving effect to any previous partial principal prepayments and Liquidation Proceeds received and to the payment of principal due on such Due Date and irrespective of any delinquency in payment by the related Mortgagor. The “Pool Principal Balance” with respect to any Payment Date equals the aggregate of the Stated Principal Balances of the Mortgage Loans outstanding on the Due Date in the month preceding the month of such Payment Date.

The “Senior Percentage” for any Payment Date is the percentage equivalent of a fraction the numerator of which is the Senior Class Principal Amount immediately prior to such date and the denominator of which is the sum of (i) the Senior Class Principal Amount, (ii) the Subordinated Class Principal Amount and (iii) the Invested Amount, in each case immediately prior to such date. The “Subordinated Percentage” for any Payment Date is the percentage equivalent of a fraction the numerator of which is the Subordinated Class Principal Amount immediately prior to such date and the denominator of which is the sum of (i) the Senior Class Principal Amount, (ii) the Subordinated Class Principal Amount and (iii) the Invested Amount, in each case immediately prior to such date. The “Investor Percentage” for any Payment Date will be calculated as the difference between 100% and the sum of the Senior Percentage and the Subordinated Percentage for such date.

Subordinated Principal Payment Amount. On each Payment Date, to the extent of Available Funds therefor, the Subordinated Principal Payment Amount for such Payment Date will be distributed as principal of the Subordinated Bonds. The “Subordinated Principal Payment Amount” for any Payment Date will equal the sum of (i) the Subordinated Percentage of the sum of (a) the principal portion of the scheduled payment due on each Mortgage Loan [on the related Due Date], (b) the principal portion of the purchase price of each Mortgage Loan that was purchased by Redwood Trust or another person pursuant to the Mortgage Loan Purchase Agreement [or by the Master Servicer or the Depositor in connection with any optional purchase by the Master Servicer of a defaulted Mortgage Loan] as of such Payment Date, (c) the Substitution Adjustment Amount in connection with any Deleted Mortgage Loan received with respect to such Payment Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received during the [calendar month] preceding the month of such Payment Date, (e) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during the [calendar month] preceding the month of such Payment Date, the Stated Principal Balance of such Mortgage Loan and (f) all partial and full principal prepayments by borrowers received during the [calendar month] preceding the month of such Payment Date and (ii) any Subordinated Principal Carryover Shortfall. The “Subordinated Principal Carryover Shortfall” for any Payment Date will equal the excess of (a) the Original Subordinated Class Principal Amount reduced by all amounts previously distributed to holders of the Subordinated Bonds as payments of principal or Subordinated Principal Carryover Shortfall, over (b) the Subordinated Class Principal Amount immediately prior to such date.

Invested Amount Payment. On each Payment Date, to the extent of Available Funds therefor, the Invested Amount Payment for such Payment Date will be distributed in reduction of the Invested Amount of the Investor Certificate. The “Invested Amount Payment” for any Payment Date will equal the sum of (i) the Investor Percentage of the sum of (a) the principal portion of the scheduled payment due on each Mortgage Loan [on the related Due Date], (b) the principal portion of the purchase price of each Mortgage Loan that was purchased by Redwood Trust or another person pursuant to the Mortgage Loan Purchase Agreement (as defined herein) [or any optional purchase by the Master Servicer or the Depositor of a defaulted Mortgage Loan] as of such Payment Date, (c) the Substitution Adjustment Amount in connection with any Deleted Mortgage Loan received with respect to such Payment Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received during the [calendar month] preceding the month of such Payment Date, and (e) all partial and full principal prepayments by borrowers received during the [calendar month] preceding the month of such Payment Date and (ii) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan during the [calendar month] preceding the month of such Payment Date, the Liquidation Proceeds allocable to principal received with respect to such Mortgage Loan, after application of such amounts pursuant to clause (e) of the definition of Senior Principal Payment Amount and clause (e) of the definition of Subordinated Principal Payment Amount.

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Priority of Payments and Allocation of Shortfalls

Prior to the declaration that the Bonds are due and payable, on any Payment Date Available Funds will be applied in the following order of priority:

first, to the Senior Interest Payment Amount;

second, to the Senior Principal Payment Amount;

third, to the Subordinated Interest Payment Amount;

fourth, to the Subordinated Principal Payment Amount;

fifth, to the Investor Certificate Interest Payment Amount;

sixth, to the Investor Certificate Principal Payment Amount; and

seventh, to the holder of the Investor Certificate, the balance of any Available Funds remaining in the Bond Account.

[To the extent helpful to the understanding of the securities, a graphic illustration of the flow of funds, payment priorities and allocations will be inserted here.]

If a Realized Loss results in the Stated Principal Balances of the Mortgage Loans declining in an amount greater than the sum of (i) the payments of principal on the Senior Bonds, (ii) the payments of principal on the Subordinated Bonds and (iii) the payment in reduction of the Invested Amount, the Senior Percentage, the Subordinated Percentage and the Investor Percentage may shift (as a result of their methods of computation as described above under “— Principal”) such that funds available in the Payment Account for payments of principal on each future Payment Date may be allocated in a higher ratio to the Senior Bonds as a result of such shortfall. This shift of the Senior Percentage, the Subordinated Percentage and the Investor Percentage may cause the Senior Bonds to amortize more rapidly, and the Subordinated Bonds and the Investor Certificate to amortize more slowly, than would otherwise have been the case in the absence of such shortfalls. An investor should consider the risk that, in the case of any Bond purchased at a discount, a slower than anticipated rate of principal payments on the Mortgage Loans could result in an actual yield to such investor that is lower than the anticipated yield and, in the case of any Bond purchased at a premium, a faster than anticipated rate of principal payments on the Mortgage Loans could result in an actual yield to such investor that is lower than the anticipated yield. In addition, an investor in the Bonds should consider the risk that there can be no assurance that investors in the Bonds will be able to reinvest the payments thereon at yields equaling or exceeding the yields on such Bonds. It is possible that yields on any such reinvestments will be lower, and may be significantly lower, than the yields on the Bonds. In general, a “Realized Loss” means, with respect to a Liquidated Mortgage Loan, the amount by which the remaining unpaid principal balance of the related Mortgage Loan exceeds the amount of Liquidation Proceeds applied to the principal balance of the related Mortgage Loan. A “Liquidated Mortgage Loan” is a defaulted Mortgage Loan as to which the Master Servicer has determined that all recoverable liquidation and insurance proceeds have been received.

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Under the Indenture, an Event of Default will not occur solely due to the occurrence of Shortfalls that affect only the Subordinated Bonds until all the Senior Bonds have been paid in full and then only if Shortfalls on the Subordinated Bonds have not been paid. In addition, an Event of Default by reason of any Shortfalls that affect the Senior Bonds will occur on any Payment Date only when the Pool Principal Balance is less than the principal amount of the Senior Bonds outstanding after application of all available amounts on deposit in the Payment Account on such Payment Date. Nevertheless, at any time following an Event of Default arising from a Shortfall affecting the Senior Bonds, the holders of outstanding Bonds, whether Senior Bonds or Subordinated Bonds, representing more than 50% in principal amount of all Bonds then outstanding, may declare the Bonds due and payable or take any other action pursuant to the terms of the Indenture. Until the Bonds have been declared due and payable following an Event of Default, the holders of the Subordinated Bonds may not request the Bond Trustee to take any action, other than the application of available funds in the Payment Account to pay principal and interest as provided herein, and may not otherwise cause any action to be taken to enforce the obligation of the Issuing Entity to pay principal and interest on the Subordinated Bonds. Additionally, prior to the Bonds being declared due and payable following an Event of Default, the Senior Bonds will not accrue interest in any form on the interest component of any Shortfall attributable to the Senior Bonds. Should an Event of Default occur, payments will be allocated on each Payment Date in accordance with the priorities described herein under “— Principal”, which would otherwise be applicable on such Payment Date had an Event of Default not occurred.

If Available Funds are insufficient to make payments on the Senior Bonds, Senior Bondholders will be dependent upon the ability of the Insurer to meet its obligations under the Bond Insurance Policy. For any Payment Date, the amount of Available Funds will be dependent in part upon whether any Realized Losses have been incurred on the Mortgage Loans during the most recent Prepayment Period. Realized Losses on the Mortgage Loans will be allocated first to the Investor Certificate, second to the Subordinated Bonds and third, in the event the Insurer defaults on its obligations under the Bond Insurance Policy, to the Senior Bonds.

Stated Maturity

The Stated Maturity for each Class of Bonds is the date determined by the Depositor which is years after the Payment Date immediately following the latest maturity date of any Mortgage Loan. The Stated Maturity of each Class of Bonds is [___________, 200__].

Structuring Assumptions

Unless otherwise specified, the information in the tables in this Prospectus Supplement has been prepared on the basis of the following assumed characteristics of the Mortgage Loans and the following additional assumptions (collectively, the “Structuring Assumptions”): (i) the Mortgage Loan Pool (the “Mortgage Loan Pool”) consists of one Mortgage Loan with the following characteristics:

Principal Balance	Mortgage Rate	Net Mortgage Rate	Original Term in Maturity (in Months)	Remaining Term to Maturity (in months)
$	%	%

(ii) the Mortgage Loans prepay at the specified constant Prepayment Assumptions, (iii) no defaults in the payment by Mortgagors of principal of and interest on the Mortgage Loans are experienced, (iv) scheduled payments on the Mortgage Loans are received on the first day of each month commencing in the calendar month following the Closing Date and are computed prior to giving effect to prepayments received on the last day of the prior month, (v) prepayments are allocated as described herein without giving effect to loss and delinquency tests, (vi) there are no Net Interest Shortfalls and prepayments represent prepayments in full of individual Mortgage Loans and are received on the last day of each month, commencing in the calendar month of the Closing Date, (vii) the scheduled monthly payment for each Mortgage Loan has been calculated based on the assumed mortgage loan characteristics described in item (i) above such that each such mortgage loan will amortize in amounts sufficient to repay the principal balance of such assumed mortgage loan by its remaining term to maturity, (viii) the initial Class Principal Amount or Invested Amount, as applicable, of each Class of Bonds and the Investor Certificate, respectively, is as set forth on the cover page hereof and under “SUMMARY — Securities Other than the Bonds” herein, (ix) interest accrues on each Class of Bonds and the Investor Certificate at the applicable interest rate described on the cover hereof or described herein, (x) payments in respect of the Bonds and the Investor Certificate are received in cash on the th day of each month commencing in the calendar month following the Closing Date, (xi) the closing date of the sale of the Bonds is [__________, 200__], (xii) Redwood Trust is not required to purchase or substitute for any Mortgage Loan and (xiii) [the Master Servicer or the Depositor does not exercise any option to purchase any Mortgage Loans described herein under “— Optional Purchase of Defaulted Loans”] and the Issuing Entity does not exercise any option to redeem the Bonds as described herein under “— Redemption at the Option of the Issuing Entity.” While it is assumed that each of the Mortgage Loans prepays at the specified constant Prepayment Assumptions, this is not likely to be the case. Moreover, discrepancies exist between the characteristics of the actual Mortgage Loans which will be delivered to the Bond Trustee and characteristics of the Mortgage Loans assumed in preparing the tables herein.

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Prepayments of mortgage loans commonly are measured relative to a prepayment standard or model. The model used in this Prospectus Supplement (the “Prepayment Assumption”) represents an assumed rate of prepayment each month relevant to the then outstanding principal balance of a pool of mortgage loans. The Prepayment Assumption does not purport to be either an historical description of the prepayment experience of any pool of mortgage loans or a prediction of the anticipated rate of prepayment of any pool of mortgage loans, including the Mortgage Loans. A 100% Prepayment Assumption assumes a Constant Prepayment Rate (“CPR”) of [____]% per annum of the then outstanding principal balance of such mortgage loans in the first month of the life of the mortgage loans and an additional [____]% per annum in each month thereafter until the month. Beginning in the month and in each month thereafter during the life of such mortgage loans, a 100% Prepayment Assumption assumes a CPR of [____]% per annum each month. As used in the tables below, a [____]% Prepayment Assumption assumes a prepayment rate equal to [____]% of the Prepayment Assumption. Correspondingly, a [____]% Prepayment Assumption assumes a prepayment rate equal to [____]% of the Prepayment Assumption, and so forth.

Optional Purchase of Defaulted Loans

The Master Servicer or the Depositor may, at its option, purchase from the Issuing Entity any Mortgage Loan which is delinquent in payment by [____] days or more. Any such purchase will be at a price equal to 100% of the Stated Principal Balance of such Mortgage Loan plus accrued interest thereon at the applicable Mortgage Rate from the date through which interest was last paid by the related Mortgagor or advanced to the first day of the month in which such amount is to be distributed.

Weighted Average Lives of the Bonds

The weighted average life of a Bond is determined by (a) multiplying the amount of the reduction, if any, of the Class Principal Amount of such Bond on each Payment Date by the number of years from the date of issuance to such Payment Date, (b) summing the results and (c) dividing the sum by the aggregate amount of the reductions in Class Principal Amount of such Bond referred to in clause (a).

For a discussion of the factors which may influence the rate of payments (including prepayments) of the Mortgage Loans, see “RISK FACTORS — Yield, Prepayment and Maturity Risks” herein and “RISK FACTORS — Prepayment and Yield Considerations” in the Prospectus.

In general, the weighted average lives of the Bonds will be shortened if the level of prepayments of principal of the Mortgage Loans increases. However, the weighted average lives of the Bonds will depend upon a variety of other factors, including the timing of changes in such rate of principal payments and the priority sequence of payments of principal of the Classes of Bonds.

The interaction of the foregoing factors may have different effects on the Senior Bonds and the Subordinated Bonds and the effects on any Class may vary at different times during the life of such Class. Accordingly, no assurance can be given as to the weighted average life of any Class of Bonds. Further, to the extent the prices of the Bonds represent discounts or premiums to their respective original Class Principal Amounts, variability in the weighted average lives of such Classes of Bonds will result in variability in the related yields to maturity. For an example of how the weighted average lives of the Classes of Bonds may be affected at various constant Prepayment Assumptions, see the Decrement Tables below.

Decrement Tables

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The following tables indicate the percentages of the initial Class Principal Amounts of the Classes of Bonds that would be outstanding after each of the dates shown at various constant Prepayment Assumptions and the corresponding weighted average lives of such Classes. The tables have been prepared on the basis of the Structuring Assumptions. It is not likely that (i) all of the Mortgage Loans will have the characteristics assumed, (ii) all of the Mortgage Loans will prepay at the constant Prepayment Assumptions specified in the tables or at any constant Prepayment Assumption or (iii) all of the Mortgage Loans will prepay at the same rate. Moreover, the diverse remaining terms to maturity of the Mortgage Loans could produce slower or faster principal payments than indicated in the tables at the specified constant Prepayment Assumptions, even if the weighted average remaining term to maturity of the Mortgage Loans is consistent with the remaining terms to maturity of the Mortgage Loans specified in the Structuring Assumptions.

PERCENT OF INITIAL CLASS PRINCIPAL AMOUNTS OUTSTANDING

[DECREMENT TABLES]

Redemption at the Option of the Residual Holder

The Bonds may be redeemed in whole, but not in part, at the Residual Holder’s option, on any Payment Date on or after the earlier of (a) years after the initial issuance of the Bonds and (b) the Payment Date on which the sum of (i) the Senior Class Principal Amount (ii) the Subordinated Class Principal Amount and (iii) the Invested Amount, after giving effect to payments to be made on such Payment Date, [____]% or less of the aggregate of the Stated Principal Balances of the Mortgage Loans as of the cut-off date, at a redemption price equal to 100% of the unpaid principal amount of such Bonds (including, in the case of the Subordinated Bonds, any unpaid Subordinated Principal Carryover Shortfall), plus accrued and unpaid interest at the applicable Bond Interest Rate through the month preceding the month in which such optional redemption date occurs. The Bonds are not otherwise subject to call or redemption at the option of the Residential Holder nor are they subject to special redemption.

Notice of any redemption to be made at the option of the Residual Holder must be given by the Residual Holder to the Bond Trustee not less than 30 days prior to the redemption date and must be mailed by the Residential Holder or the Bond Trustee to affected Bondholders at least ten days prior to the redemption date.

Acceleration of Maturity at Events of Default under the Indenture

“Event of Default,” wherever used herein, means, with respect to Bonds issued under the Indenture, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

[(1) if the Issuer shall:

(A) default in the payment when and as due of any installment of principal of or interest on any Bond, or

(B) default in the payment of the Redemption Price of any Bond which has been called for optional redemption pursuant to the Indenture;

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(2) if the Issuer shall breach, or default in the due observance, of any one or more of the covenants set forth in the Indenture;

(3) if the Issuer shall breach, or default in the due observance or performance of, any other of its covenants in the Indenture, and such Default shall continue for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of Bonds representing more than 50% of the aggregate Class Principal Amount of the Controlling Class, a written notice specifying such Default and requiring it to be remedied and stating that such notice is a “Notice of Default”;

(4) if any representation or warranty of the Issuer made in the Indenture or any certificate or other writing delivered pursuant or in connection with the Indenture shall prove to be incorrect in any material respect as of the time when the same shall have been made and, within 30 days after there shall have been given, by registered or certified mail, written notice thereof to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of Bonds representing more than 50% of the aggregate Class Principal Amount of the Controlling Class, the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured;

(5) the entry of a decree or order for relief by a court having jurisdiction in respect of the Issuer in an involuntary case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or

(6) the commencement by the Issuer of a voluntary case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future federal or state bankruptcy, insolvency or similar law, or the consent by the Issuer to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or of any substantial part of its property or the making by the Issuer of an assignment for the benefit of creditors or the failure by the Issuer generally to pay its debts as such debts become due or the taking of corporate action by the Issuer in furtherance of any of the foregoing.]

Notwithstanding the foregoing, (a) prior to the payment in full of the Senior Bonds, the failure of the Issuer to pay when and as due any installment of principal of or interest (regardless of the lapse of any grace period) on any Subordinate Bond shall not constitute an Event of Default hereunder. In addition, notwithstanding any applicable provision of this Indenture, upon payment in full of the Senior Bonds, the prior occurrence of any such shortfalls attributable to the Subordinate Bonds, which shortfalls have previously been paid in full, shall not constitute an Event of Default hereunder in respect of the Subordinate Bonds; and (b) the failure of the Issuer to pay when and as due any installment of principal of (regardless of the lapse of any grace period) any Senior Bond shall not constitute an Event of Default hereunder unless the aggregate Class Principal Amount of the Senior Bonds exceeds the aggregate Stated Principal Balances of the Mortgage Loans after application of all available amounts on deposit in the Distribution Account and application of losses on a Payment Date.

Controlling Class Under the Indenture

For the purposes described in the prospectus under the headings “The Indenture — Modification of Indenture,” “— Events of Default” and “Rights Upon Event of Default,” the “Controlling Class“ shall be the Class [___] Bondholders or, if the Class [___] Bonds are no longer outstanding, the Class [___] Bondholders.

Credit Enhancement

Credit enhancement for the Senior Bonds will be provided by the Subordinated Bonds, by the Investor Certificate and by the Bond Insurance Policy (as defined herein). Credit enhancement for the Subordinated Bonds will be provided by the Investor Certificate.

Subordination

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The rights of holders of the Subordinated Bonds and the Investor Certificate to receive payments with respect to the Mortgage Loans will be subordinated to such rights of the holders of the Senior Bonds and the rights of the holders of the Investor Certificate will be subordinated to such rights of the holders of the Subordinated Bonds, in each case only to the extent described herein.

The subordination of the Subordinated Bonds and the Investor Certificate to the Senior Bonds and the further subordination of the Investor Certificate to the Subordinated Bonds are each intended to increase the likelihood of timely receipt by the holders of Bonds with higher relative payment priority of the maximum amount to which they are entitled on any Payment Date and to provide such holders protection against losses resulting from defaults on Mortgage Loans to the extent described herein. However, the amount of protection afforded the Subordinated Bondholders by subordination of the Investor Certificate may be exhausted and Shortfalls in payments on the Subordinated Bonds could result. Any losses realized on the Mortgage Loans in excess of the protection afforded by the Investor Certificate will result in losses on the Subordinated Bonds.

The Bond Insurance Policy

[description of bond insurance policy]

The Insurer

[description of insurer]

[Third party providers of credit support for 10% or more of the pool assets to be provided as applicable.]

[Other forms of credit enhancement to be identified and described as applicable for each transaction.]

[Information regarding significant credit enhancement providers, including financial information of each such credit enhancement provider as required by Item 1114(b), to be provided as applicable.]

[Information regarding any entity or group of affiliated entities providing derivative instruments, including financial information of each derivative instrument provider as required by Item 1115(a) and (b), to be provided as applicable.]

The Issuing Entity Administrator

[___________________] will act as Issuing Entity Administrator for so long as it is also the Master Servicer. The Issuing Entity Administrator will act as paying agent and Bond registrar and will be responsible for preparing certain investor reports, including the monthly payment date statement to Bondholders and the monthly Payment Date statement to the Residual Holder, providing all customary tax reports to Bondholders related to their investment, providing monthly calculations to the Bond trustee regarding payments to Bondholders and to the Owner Trustee regarding payments to the Residual Holder. The Issuing Entity Administrator will be compensated by the Master Servicer for its services. The Issuing Entity Administrator will be entitled to reimbursement from the Trust for certain expenses prior to payment of any amounts to Securityholders. The office of the Issuing Entity Administrator for purposes of presentation of the Bonds for transfer and exchange and final payment is located at [______________________], or any other address that the Issuing Entity Administrator may designate from time to time by notice to the Bondholders, the Depositor, the Bond trustee, the Servicer and the Owner Trustee.

[Disclosure regarding the Issuing Entity Administrator’s experience serving as such in the securitization of similar asset types to be provided.]

The Issuing Entity Administrator may resign at any time, in which event the Issuing Entity will be obligated to appoint a successor Issuing Entity Administrator. The Issuing Entity may also remove the Issuing Entity Administrator if the Issuing Entity Administrator ceases to be eligible to continue as such under the Sale and Servicing Agreement or if the Issuing Entity Administrator becomes incapable of acting, bankrupt, insolvent or if a receiver takes charge of the Issuing Entity Administrator or its property. Upon such resignation or removal of the Issuing Entity Administrator, the Issuing Entity will be entitled to appoint a successor Issuing Entity Administrator. Any resignation or removal of the Issuing Entity Administrator and appointment of a successor Issuing Entity Administrator will not become effective until acceptance of the appointment by the successor Issuing Entity Administrator. If at any time [___________] resigns, or transfers or assigns its rights and obligations, or is removed as Master Servicer, then at such time, [__________] will resign as Issuing Entity Administrator.

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[Disclosure regarding the Issuing Entity Administrator’s experience serving as an issuing entity administrator in the securitization of similar asset types to be provided for each transaction.]

The Bond Trustee

[___________________] will be the Bond Trustee under the Indenture. The Bond Trustee’s on going fees for its services will be paid by the Master Servicer. The Bond Trustee will be entitled to reimbursement from the Trust for expenses and certain other amounts prior to payment of any amounts to Bondholders. The Bond Trustee’s Corporate Trust Office is located at [___________________], or any other address that the Bond Trustee may designate from time to time by notice to the Bondholders, the Owner Trustee, the Depositor, the Issuing Entity Administrator, the Master Servicer and the Servicer.

[Disclosure regarding the Bond Trustee’s experience serving as a trustee or bond trustee in the securitization of similar asset types to be provided for each transaction.]

The Bond Trustee’s functions, duties and responsibilities are described under [“The Agreements — The Bond Trustee]” in the prospectus. As compensation for its services, the Bond Trustee will be paid [________________], as set forth under “Fees and Expenses of the Issuing Entity” below.

The Issuing Entity

On the closing date, and until the termination of the issuing entity pursuant to the indenture, [Sequoia Mortgage Loan Trust [______________]] [or] [Sequoia Alternative Loan Trust [___]] (the “issuing entity”) will be a [statutory trust formed under the laws of the State of Delaware] [or] [common law trust formed under the laws of the State of New York]. The issuing entity will be created under the indenture by the depositor for the sole purpose of issuing the bonds and the investor certificate and its assets will consist of the trust fund.

On the closing date, the assets included in the trust fund will be the only assets of the issuing entity. The issuing entity will not have any liabilities as of the closing date, other than as provided in the indenture. The fiscal year end of the issuing entity will be December 31 of each year.

The issuing entity will not have any employees, officers or directors. The owner trustee, the bond trustee, the depositor, the master servicer, the issuing entity administrator, the servicer and each custodian will act on behalf of the issuing entity, and may only perform those actions on behalf of the issuing entity that are specified in the indenture, the servicing agreement or the custodial agreements, as set forth in this prospectus supplement.

The Custodian

[____________] will be the Custodian under the Custodial Agreement. The Custodian’s on going fees for its services will be paid by the Master Servicer. The Custodian will be entitled to reimbursement from the Trust for expenses and certain other amounts prior to payment of any amounts to Bondholders.

[Disclosure regarding the Custodian’s experience serving as a custodian in the securitization of similar asset types to be provided for each transaction.]

FEES AND EXPENSES OF THE ISSUING ENTITY

In consideration of their duties on behalf of the issuing entity, the servicer, the master servicer, the issuing entity administrator, the bond trustee, the owner trustee and the custodian(s) will receive from the assets of the issuing entity certain fees as set forth in the following table:

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Fee Payable to:	Frequency of Payment:	Amount of Fee:	How and When Fee Is Payable:

Servicer	[Monthly]	A monthly fee paid to the servicer, from amounts that would otherwise be distributed to bondholders in respect of interest, calculated on the outstanding principal balance of each mortgage loan, at the applicable servicing fee rate, plus, all income earned on amounts on deposit in the custodial account.	[Withdrawn from the custodial account in respect of each mortgage loan before distribution of any amounts to bondholders.]

Master Servicer	[Monthly]	All investment earnings on amounts on deposit in the collection account.	[Retained by the master servicer from the collection account before distribution of any amounts to bondholders.]

Issuing Entity Administrator	[Monthly]	A monthly fee paid to the issuing entity administrator, from the master servicing fee.	[Paid by the master servicer from the master servicing fee.]

Bond Trustee	[Monthly]	A fixed annual fee of $[__________].	[Paid by the master servicer from the master servicing fee pursuant to a separate agreement between the trustee and the master servicer.]

Owner Trustee	[Monthly]	A fixed annual fee of $[________].	[Payable from investment earnings on amounts on deposit in the Collection Account.]

Custodian(s)	[Monthly]	A monthly fee paid to each custodian, from the master servicing fee.	[Paid by the master servicer from the master servicing fee.]

The custodial fees set forth in the table above may not be increased without amendment of the related custodial agreement. The servicing fees set forth in the table above may not be increased without amendment of the servicing agreement as described under “ — Servicing — Amendment of the Servicing Agreements” above. None of the other fees set forth in the table above may be changed without amendment of the indenture as described under “The Agreements — Certain Matters Under the Indenture — Amendment of the Indenture” above.

[Expenses of the servicer, the master servicer, the issuing entity administrator, the bond trustee, the owner trustee and the custodian(s) will be reimbursed before payments are made on the bonds.]

[May vary in accordance with the structure of the transaction.]

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MATERIAL LEGAL PROCEEDINGS

At the closing date, other than litigation in the ordinary course of business involving foreclosures or other exercise of its rights as a creditor, there were no material pending proceedings to which any of the sponsor, the seller, the depositor, the bond trustee, the issuing entity, the owner trustee, the master servicer, the issuing entity administrator or the servicer were a party or of which any of their property was subject, and the depositor is not aware of any material pending legal proceedings known to be contemplated by governmental authorities against the sponsor, the seller, the depositor, the bond trustee, the issuing entity, the owner trustee, the master servicer, the issuing entity administrator or the servicer or the originator.

THE SPONSOR

RWT Holdings, Inc. (“RWT Holdings”), is a Delaware corporation and wholly-owned subsidiary of Redwood Trust, Inc. and is headquartered in Mill Valley, California. RWT Holdings has acquired residential mortgage loans, directly or indirectly, from the originators since it was organized in February 1998. RWT Holdings been active as a sponsor in the securitization market since 2002. As a sponsor, RWT Holdings acquires residential mortgage loans in the secondary mortgage market and initiates the securitization of the loans it acquires by transferring the mortgage loans to the depositor, which loans will ultimately be transferred to the issuing entity for the related securitization.

As of [_____________, 200_], RWT Holdings has sponsored the securitization of approximately $[____] billion of residential mortgage loans ($[_______] in 200[_], $[_______] in 200[_], $[______] in 200[_], $[_______] in 200[_] and $[_________] in 200[_]). RWT Holdings buys residential mortgage loans under several loan purchase agreements from mortgage loan originators or sellers nationwide that meet its seller/servicer eligibility requirements. We refer you to “Loan Program—Qualifications of Sellers” in the prospectus for a general description of the characteristics used to determine eligibility of collateral sellers. Prior to acquiring the mortgage loans, RWT Holdings conducts a review of the related mortgage loan seller and of the mortgage loans. RWT Holdings has developed a quality control program to monitor the quality of loan underwriting at the time of acquisition and on an ongoing basis. All loans purchased will be subject to this quality control program. RWT Holdings in certain cases submits a sample of mortgage loans to a third party nationally recognized underwriting review for a compliance check of underwriting and review of income, asset and appraisal information. None of the Sponsor’s prior securitizations have defaulted and RWT Holdings has not experienced an early amortization triggering event in any of its prior securitizations.

RWT Holdings acquires mortgage loans secured by first and second liens on one- to four- family residential properties. As a sponsor, RWT Holdings acquires mortgage loans and initiates their securitization by transferring the mortgage loans to the depositor, which loans will ultimately be transferred to the issuing entity for the related securitization. On the closing date, RWT Holdings, as seller, will sell all of its interest in the mortgage loans to the depositor. RWT Holdings works in coordination with the underwriters and rating agencies in structuring each securitization transaction. RWT Holdings does not currently service mortgage loans but rather contracts with third party servicers for servicing the mortgage loans that it acquires. Third party servicers are assessed based upon the servicing rating and the credit quality of the servicing institution, as well as for their systems and reporting capabilities, review of collection procedures and confirmation of servicers’ ability to provide detailed reporting on the performance of the securitization pool.

THE DEPOSITOR

[Sequoia Mortgage Funding Corporation] [or] [Sequoia Residential Funding, Inc.], a Delaware corporation and indirect wholly-owned subsidiary of Redwood Trust, Inc. (the “Depositor”), was organized in September 1999 and is headquartered in Mill Valley, California. The depositor has been engaged since the end of 2001 in the securitization of mortgage loans of the types described in the accompanying prospectus. Since 2002, Sequoia Residential Funding, Inc. has been the depositor on 30 securitization deals that have issued approximately $[____] billion of residential mortgage loans ($[__________] in 200[_], $[_________] in 200[_], $[___________] in 200[_], $[________] in 200[_]and $[__________] worth of residential mortgage-backed securities.

The certificate of incorporation of the depositor limits its activities to those necessary or convenient to carry out its securitization activities. The depositor will have limited obligations with respect to a series of securities. The depositor will obtain the mortgage loans from the sponsor/seller and on the closing date will assign all of its interest in the mortgage loans to the trustee for the benefit of bondholders. In addition, after the issuance of a series of securities, the depositor will have certain obligations with respect to such series, such as the repurchase of mortgage loans as to which there is defective or incomplete documentation or a breach of a representation or warranty, and may have certain approval or consent rights as described in this prospectus supplement.

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AFFILIATIONS AND RELATED TRANSACTIONS

[Whether, and how, the Sponsor, Depositor and/or Issuing Entity is an affiliate of any of the following parties as well as, to the extent known and material, whether, and how, any of the following parties are affiliates of any of the other following parties, will be described, if applicable: any Servicer or any other entity involved in the servicing function, including the Master Servicer and the Issuing Entity Administrator; the Bond Trustee; the Owner Trustee; any Originator; any significant obligor contemplated by Item 1112 of Regulation AB; any enhancement or support provider contemplated by Items 1114 or 1115 of Regulation AB; and any other material party related to the Offered Bonds and contemplated by Item 1100(d)(1) of Regulation AB.]

[The general character of any business relationship or arrangement that is entered into outside the ordinary course of business or on terms other than would be obtained in an arm’s length transaction with an unrelated third party, apart from the establishment of the Trust and the issuance of the Bonds, between any of the parties listed in the preceding paragraph, or any affiliates of such parties, that currently exists or that existed during the past two years and that is material to an investor’s understanding of the Bonds, will be described, if applicable.]

[To the extent material, any specific relationships involving or relating to the Offered Bonds or the Mortgage Pool, including the material terms and approximate dollar amount involved, between or among any of the parties listed in the first paragraph of this section, or any affiliates of such parties, that currently exists or that existed during the past two years, will be described, if applicable.]

THE ORIGINATOR(S)

[_______________________] originated the mortgage loans, directly or through its correspondents. [All Originator(s) of 10% or more of the pool assets to be identified.]

[________________ originated 20% or more of the pool assets.] [Description of the Originator(s)’ [that originated 20% or more of the pool assets] origination program and prior experience to be provided as applicable.]

THE MASTER SERVICER AND THE SERVICER

Master Servicer

[____________________] is a [_______________] with executive offices located at [________________] [and master servicing offices located at [_________________]]. The Master Servicer is engaged in the business of [master servicing single-family residential mortgage loans secured by properties located in all 50 states and the District of Columbia].

The Servicer or the Subservicer will directly service the Mortgage Loans under the supervision of the Master Servicer. The Master Servicer, however, will not be ultimately responsible for the servicing of the Mortgage Loans except to the extent described under “Mortgage Loan Servicing” below.

Servicer

[As applicable, provide updated information with respect to (i) whether any prior securitizations of the same asset type involving the Servicer or Subservicer have defaulted or experienced an early amortization or other performance triggering event because of servicing or (ii) whether there has been previous disclosure of material noncompliance with servicing criteria with respect to other securitizations involving the Servicer or Subservicer.] [To the extent that there is a material risk that the Servicer’s or Subservicer’s financial condition could have a material impact on pool performance or performance of the securities, information regarding the Servicer’s or Subservicer’s, as applicable, financial condition will be included here.]

[Insert description of all affiliated and unaffiliated Servicer[s] or Subservicer[s] that service 10% or more of the pool assets, or of any other material servicer identified]

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[Insert the following information with respect to any servicer or subservicer: (i) how long the servicer/subservicer has been servicing assets in general and specifically the assets of the type included in the current transaction, (ii) material changes to the servicer’s/subservicer’s policies and procedures in servicing assets of the same type over the past three years, (iii) to the extent material, information regarding the size, composition and growth of the servicer’s/subservicer’s portfolio of serviced assets of the type to be securitized and information on factors related to the servicer/subservicer that may be material to an analysis of the servicing of the assets or the securities, as applicable, (iv) whether any prior securitizations of the same asset type involving the servicer/subservicer have defaulted or experienced an early amortization or other performance triggering event because of servicing, (v) the extent of outsourcing the servicer/subservicer utilizes or (vi) whether there has been previous disclosure of material noncompliance with servicing criteria with respect to other securitizations involving the servicer/subservicer.] [To the extent that there is a material risk that the Servicer’s or Subservicer’s financial condition could have a material impact on pool performance or performance of the securities, information regarding the Servicer’s or Subservicer’s, as applicable, financial condition will be included here.]

Delinquency and Foreclosure Experience.

[To be inserted for each Servicer as applicable.]

[The following tables set forth the delinquency and foreclosure experience of first and second lien adjustable rate residential mortgage loans originated by and serviced by [Servicer] on behalf of securitization trusts and third parties for whom [Servicer] is servicing similar mortgage loan products, as of the certain dates indicated, each date having a separate table of data. There can be no assurance, and no representation is made, that the delinquency and foreclosure experience with respect to the Mortgage Loans will be similar to that reflected in the tables below, nor is any representation made as to the rate at which losses may be experienced on liquidation of defaulted Mortgage Loans. In addition, because the delinquency and foreclosure experience of the mortgage loans in the tables below only reflects such experience as of the end of the previous [_____] calendar quarters, such data may not be reflective of the delinquency and foreclosure experience of the mortgage loans to be expected over an extended period of time. Accordingly, the information should not be considered to reflect the credit quality of the Mortgage Loans, or as a basis for assessing the likelihood, amount or severity of losses on the Mortgage Loans.

The actual loss and delinquency experience on the Mortgage Loans will depend, among other things, upon the value of the real estate securing such Mortgage Loans, interest rates, economic conditions and the ability of borrowers to make required payments.]

Delinquencies and Foreclosures(1)

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[__]	$[__]	[___]%	[___]%
Period of Delinquency(2)
30 to 59 days	[__]	[__]	[___]%	[___]%
60 to 89 days	[__]	[__]	[___]%	[___]%
90 days or more	[__]	[__]	[___]%	[___]%
Foreclosures/ Bankruptcies(3)	[__]	[__]	[___]%	[___]%
Real Estate Owned	[__]	[__]	[___]%	[___]%
Total Portfolio	[__]	[__]	[___]%	[___]%

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	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[__]	$[__]	[___]%	[___]%
Period of Delinquency(2)
30 to 59 days	[__]	[__]	[___]%	[___]%
60 to 89 days	[__]	[__]	[___]%	[___]%
90 days or more	[__]	[__]	[___]%	[___]%
Foreclosures/ Bankruptcies(3)	[__]	[__]	[___]%	[___]%
Real Estate Owned	[__]	[__]	[___]%	[___]%
Total Portfolio	[__]	[__]	[___]%	[___]%

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[__]	$[__]	[___]%	[___]%
Period of Delinquency(2)
30 to 59 days	[__]	[__]	[___]%	[___]%
60 to 89 days	[__]	[__]	[___]%	[___]%
90 days or more	[__]	[__]	[___]%	[___]%
Foreclosures/ Bankruptcies(3)	[__]	[__]	[___]%	[___]%
Real Estate Owned	[__]	[__]	[___]%	[___]%
Total Portfolio	[__]	[__]	[___]%	[___]%

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[__]	$[__]	[___]%	[___]%
Period of Delinquency(2)
30 to 59 days	[__]	[__]	[___]%	[___]%
60 to 89 days	[__]	[__]	[___]%	[___]%
90 days or more	[__]	[__]	[___]%	[___]%
Foreclosures/ Bankruptcies(3)	[__]	[__]	[___]%	[___]%
Real Estate Owned	[__]	[__]	[___]%	[___]%
Total Portfolio	[__]	[__]	[___]%	[___]%

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	As of [_____________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[__]	$[__]	[___]%	[___]%
Period of Delinquency(2)
30 to 59 days	[__]	[__]	[___]%	[___]%
60 to 89 days	[__]	[__]	[___]%	[___]%
90 days or more	[__]	[__]	[___]%	[___]%
Foreclosures/ Bankruptcies(3)	[__]	[__]	[___]%	[___]%
Real Estate Owned	[__]	[__]	[___]%	[___]%
Total Portfolio	[__]	[__]	[___]%	[___]%

_____________

(1)	These tables show mortgage loans which were delinquent or for which foreclosure proceedings had been instituted as of the date indicated.

(2)	No mortgage loan is included in this table as delinquent until it is 30 days past due.

(3)	Exclusive of the number of loans and principal balance shown in the period of delinquency.

ADMINISTRATION OF THE ISSUING ENTITY

Servicing and Administrative Responsibilities

The Subservicer, the Servicer, the Master Servicer, the Issuing Entity Administrator, the Owner Trustee, the Bond Trustee and the Custodian will have the following responsibilities with respect to the Trust:

[Subservicer] [Servicer]. Performing the servicing functions with respect to the Mortgage Loans and the Mortgaged Properties in accordance with the provisions of the Subservicing Agreement, including, but not limited to:

[collecting monthly remittances of principal and interest on the Mortgage Loans from the related borrowers, depositing such amounts (net of the related servicing fees) in the Servicing Account, and delivering all amounts on deposit in the Servicing Account to the Master Servicer for deposit in the Collection Account on the Servicer Remittance Date;

collecting amounts in respect of taxes and insurance from the related borrowers, depositing such amounts in the related escrow account, and paying such amounts to the related taxing authorities and insurance providers, as applicable;

making Monthly Advances with respect to delinquent payments of principal and interest on the Mortgage Loans;

making Servicing Advances in respect of reasonable and customary “out of pocket” costs and expenses;

providing monthly loan-level reports to the [Servicer] and the Master Servicer;

maintaining certain insurance policies relating to the Mortgage Loans; and

initiating foreclosure proceedings.]

We refer you to “Mortgage Loan Servicing” below.

[Servicer]. [Contractually responsible for the servicing of the Mortgage Loans pursuant to the terms of the Sale and Servicing Agreement. [Monitors the performance of the Subservicer under the Subservicing Agreement, including but not limited to:

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verifying that the Subservicer’s reporting and remitting are mathematically accurate and are being performed in accordance with the terms of the Sale and Servicing Agreement;

verifying that the Servicing Account reconciliations are being performed according to Uniform Single Attestation Program for Mortgage Bankers guidelines;

monitoring the Delinquency Rate and identifying any substantial increases or decreases on a monthly basis; and

performing the servicing functions with respect to Mortgage Loans described under “Subservicer” above in the event that the Subservicer fails to perform such functions.

We refer you to “Mortgage Loan Servicing” below.]

Master Servicer. Performing the master servicing functions in accordance with the provisions of the Sale and Servicing Agreement, including but not limited to:

[[monitoring the Servicer’s performance and enforcing the Servicer’s obligations under the Sale and Servicing Agreement;]

collecting monthly remittances from or on behalf of the Servicer for deposit in the Collection Account on the Servicer Remittance Date and delivering all amounts on deposit in the Collection Account to the Paying Agent for deposit in the Bond Payment Account on the Master Servicer Remittance Date;

gathering the monthly loan-level reports delivered by or on behalf of the Servicer and providing a comprehensive loan-level report to the Issuing Entity Administrator with respect to the Mortgage Loans;

upon the occurrence of a Servicer event of default under the Sale and Servicing Agreement, at its discretion, terminating the Servicer;

upon the termination of the Servicer under the Sale and Servicing Agreement, appointing a successor servicer or succeeding as Servicer; and

upon the Master Servicer’s becoming the successor Servicer and in the event the terminated Servicer failed to make Advances with respect to a Mortgage Loan, making those Advances to the extent provided in the Sale and Servicing Agreement.]

We refer you to “Mortgage Loan Servicing” below.

Issuing Entity Administrator. Performing the issuing entity administrator functions in accordance with the provisions of the Administration Agreement, the Sale and Servicing Agreement, the Trust Agreement and the Indenture, including but not limited to:

[acting as Bond Registrar and Paying Agent;

receiving monthly remittances from the Master Servicer for deposit in the Bond Payment Account;

distributing all amounts on deposit in the Bond Payment Account in accordance with the priorities described under “Description of the Bonds—Payments of Interest,” “—Payments of Principal” and “—Credit Enhancement—Application of Monthly Excess Cashflow” on each Payment Date;

performing the calculation of accrual of original issue discount and the amortization of premium on the Securities;

preparing and making available on its website a payment statement to Securityholders based on information received from the Servicer and the Master Servicer; and

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preparing and filing periodic reports with the Securities and Exchange Commission on behalf of the Issuing Entity with respect to the Bonds.]

We refer you to “The Mortgage Loan Purchase Agreement and the Sale and Servicing Agreement — Administration,” “— Reports to Securityholders” and “The Trust Agreement and the Indenture — Administration” below.

Owner Trustee. Performing the owner trustee functions in accordance with the provisions of the Trust Agreement, or causing the Issuing Entity Administrator or the Depositor to perform such functions, pursuant to the Administration Agreement, including but not limited to:

[discharging (or causing to be discharged) all of its responsibilities pursuant to the terms of the Trust Agreement and the other document or agreement to which the Issuing Entity or the Owner Trustee is a party and administering the Trust (or causing it to be administered) in the interest of the Residual Holder, subject to each such respective document or agreement and in accordance with the provisions of the Trust Agreement; and

taking direction from the Residual Holder regarding the management of the Trust.]

We refer you to “The Trust Agreement and the Indenture — Certain Matters Under the Agreements — Duties of the Owner Trustee” below.

Bond Trustee. Performing the bond trustee functions in accordance with the provisions of the Indenture, or causing the Issuing Entity Administrator to perform such functions, pursuant to the Administration Agreement, including but not limited to:

[examining certificates, statements and opinions required to be furnished to it to ensure they are in the form required under the Indenture;

enforcing the obligations of each of the Master Servicer and the Issuing Entity Administrator under the Sale and Servicing Agreement, the Indenture and the Administration Agreement, as applicable;

upon the occurrence of a Master Servicer event of default under the Sale and Servicing Agreement, at its discretion (or if so directed by the Residual Holder or Bondholders having more than 50% of the voting rights applicable to each Class of Bonds affected thereby), terminating the Master Servicer; and

upon such termination of the Master Servicer under the Sale and Servicing Agreement, appointing a successor Master Servicer or succeeding as Master Servicer.]

We refer you to “The Trust Agreement and the Indenture—Certain Matters Under the Agreements—Duties of the Bond Trustee” below.

Custodian. Performing the custodial functions in accordance with the provisions of the Sale and Servicing Agreement, including but not limited to:

[holding and maintaining the Mortgage Loan documents related to the Mortgage Loans on behalf of the Bond Trustee.]

We refer you to “The Agreements—The Custodial Agreement” in the prospectus.

Issuing Entity Accounts

All amounts in respect of principal and interest received from the borrowers or other recoveries in respect of the Mortgage Loans [and payments received from the Swap Counterparty under the Swap Agreements] will, at all times before payment thereof to the Bondholders, be invested in the [Servicing Account, the Collection Account, [the Swap Payment Account], [the Cap Account] and the Bond Payment Account, which accounts will be established in the name of the Bond Trustee, and the Collection Account, which account shall be established in the name of the Issuing Entity Administrator]. Funds on deposit in the Issuing Entity Accounts may be invested by the party responsible for such

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Issuing Entity Account in Eligible Investments. The Issuing Entity Accounts will be established by the applicable parties listed below, and any investment income earned on each Issuing Entity Account will be retained or distributed as follows:

Issuing Entity Account	Responsible Party:	Application of any Investment Earnings:

Servicing Account	Servicer (or Subservicer on its behalf)	[Any investment earnings (net of any losses realized) will be paid as compensation to the Servicer (or, if the account is maintained by the Subservicer, the Subservicer) and will not be available for payments to Bondholders.]

Collection Account	Master Servicer	[Any investment earnings (net of the Bond Trustee Fee, the Owner Trustee Fee, the Custodian Fee and any losses realized) will be paid as compensation to the Master Servicer and will not be available for payments to Bondholders.]

Bond Payment Account	Issuing Entity Administrator	[Any investment earnings (net of the Bond Trustee Fee, the Owner Trustee Fee, the Custodian Fee and any losses realized) will be paid as compensation to the Master Servicer, and will not be available for payments to Bondholders.]

Collection Account	Issuing Entity Administrator	[Amounts on deposit in the Collection Account will not be invested.]

[Swap Payment Account]	[Issuing Entity Administrator]	[Amounts on deposit in the Swap Payment Account will not be invested.]

[Cap Account]	[Issuing Entity Administrator]	[Amounts on deposit in the Swap Payment Account will not be invested.]

[Capitalized Interest Account]	[Issuing Entity Administrator]	[Any investment earnings (net of any losses realized) will be paid to the Depositor and will not be available for payments to Bondholders.]

[Pre-Funding Account]	[Issuing Entity Administrator]	[Any investment earnings (net of any losses realized) will be paid to the Depositor and will not be available for payments to Bondholders.]

[Revolving Account]	[Issuing Entity Administrator]	[Any investment earnings will be paid to the Depositor and will not be available for payments to Bondholders.]

If funds deposited in the [Servicing Account, the Collection Account, the Bond Payment Account, the Collection Account, [the capitalized interest account], [the pre-funding account] [or the Revolving Account]] are invested by the responsible party identified in the table above, the amount of any net losses incurred in respect of any such investments will be deposited in the related Issuing Entity Account by such responsible party, or in the case of the Bond Payment Account, the Master Servicer, out of its own funds, without any right of reimbursement therefor.

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Example of Payments

The following sets forth an example of collection of payments from borrowers on the Mortgage Loans, transfer of amounts among the Issuing Entity Accounts and payments on the Bonds for the Payment Date in [_____]:

[_____]	Collection Period:	[Payments due during the related Collection Period ([___] through [____]) from borrowers will be deposited in the Servicing Account as received and will include scheduled principal and interest payments due during the related Collection Period.]
[_____]	Prepayment Period for partial and full prepayments received from Mortgage Loans:	[Partial principal prepayments and principal prepayments in full received by the Servicer during the related Prepayment Period ([____] through [____]) will be deposited into the Servicing Account for remittance to the Master Servicer on the Servicer Remittance Date ([____] [18]).]
[____] [18]	Servicer Remittance Date:	[The Servicer will remit collections and recoveries in respect of the Mortgage Loans to the Master Servicer for deposit into the Collection Account on or prior to the [18]th day of each month (or if the [18]th day is not a Business Day, the immediately preceding Business Day).]
[___] [24]	Master Servicer Remittance Date:	[The Master Servicer will remit to the Paying Agent amounts on deposit in the Collection Account for deposit into the Bond Payment Account, including any Advances made by the Servicer, the Subservicer or the Master Servicer for that Payment Date, on or before the Master Servicer Remittance Date.]
[____] [24]	Record Date:	[Payments will be made to Bondholders of record for all classes of Bonds as of the Business Day immediately preceding the related Payment Date.]
[____] [25]	Payment Date:	[On the [25]th day of each month (or if the [25]th day is not a Business Day, the next Business Day), the Paying Agent will make payments from amounts on deposit in the Bond Payment Account to Bondholders and, to the extent of funds available after all other required payments are made, will deposit into the Collection Account any amounts remaining.]

Succeeding months follow the same pattern.

THE AGREEMENTS

General

The following summary describes certain terms of the indenture, the mortgage loan purchase and sale agreement, the deposit trust agreement, the servicing agreements and the custodial agreements (collectively, the “agreements”). The summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the agreements. The following summary supplements, and to the extent inconsistent with, replaces, the description of the general terms and provisions of the agreements under the heading “The Agreements” in the accompanying prospectus.

The Bonds will be issued pursuant to the Indenture. Bonds in certificated form will be transferable and exchangeable at the Corporate Trust Office of the Issuing Entity Administrator, which will serve as bond registrar and paying agent. The Issuing Entity Administrator will provide to a prospective or actual Bondholder, without charge, on written request, an electronic copy (without exhibits) of the Indenture, the Trust Agreement and the Sale and Servicing Agreement. Requests should be addressed to [___].

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Assignment of the Mortgage Loans

Under the mortgage loan purchase and sale agreement, [RWT Holdings, Inc.], as seller or sponsor, will sell the mortgage loans to the depositor. The seller will make or assign certain representations, warranties and covenants relating to, among other things, certain characteristics of the mortgage loans. Such representations and warranties will include the representations and warranties set forth under “The Agreements-Representations and Warranties” in the prospectus. Subject to the limitations described below, the seller [or originator] will be obligated as described herein to purchase or substitute a similar mortgage loan for any mortgage loan as to which there exists deficient documentation or as to which there has been an uncured breach of any such representation or warranty relating to the characteristics of the mortgage loan that materially and adversely affects the value of such mortgage loan or the interests of the bondholders in such mortgage loan (a “defective mortgage loan”).

Pursuant to the Indenture, the Issuing Entity on the Closing Date will pledge, transfer, assign, set over and otherwise convey without recourse to the Bond Trustee in trust for the benefit of the Bondholders all right, title and interest of the Issuing Entity in and to each Mortgage Loan and all right, title and interest in and to all other assets included in the Collateral, including all principal and interest received on or with respect to the Mortgage Loans, exclusive of principal and interest due on or prior to the cut-off date.

In connection with such transfer and assignment, the Issuing Entity will deliver or cause to be delivered to the Bond Trustee, or a custodian for the Bond Trustee, among other things, the original promissory note (the “Mortgage Note”) (and any modification or amendment thereto) endorsed in blank without recourse, the original instrument creating a first lien on the related Mortgaged Property (the “Mortgage”) with evidence of recording indicated thereon, an assignment in recordable form of the Mortgage, the title policy with respect to the related Mortgaged Property and, if applicable, all recorded intervening assignments of the Mortgage and any riders or modifications to such Mortgage Note and Mortgage (except for any such document not returned from the public recording office, which will be delivered to the Bond Trustee as soon as the same is available to the Issuing Entity) (collectively, the “Mortgage File”). [Assignments of the Mortgage Loans to the Bond Trustee (or its nominee) will be recorded in the appropriate public office for real property records, except in states such as California where, in the opinion of counsel, such recording is not required to protect the Bond Trustee’s interest in the Mortgage Loans against the claim of any subsequent transferee or any successor to or creditor of the Issuing Entity.]

The Bond Trustee will review each Mortgage File within [_______] days of the Closing Date (or promptly after the Bond Trustee’s receipt of any document permitted to be delivered after the Closing Date) and if any document in a Mortgage File is found to be missing or defective in a material respect and the Issuing Entity does not cure such defect within [_______] days of notice thereof from the Bond Trustee (or within such longer period not to exceed [______] days after the Closing Date as provided in the Mortgage Loan Purchase Agreement in the case of missing documents not returned from the public recording office), the seller will be obligated to purchase the related Mortgage Loan. Rather than purchase the Mortgage Loan as provided above, the seller may remove such Mortgage Loan (a “Deleted Mortgage Loan”) from the Collateral and substitute in its place another mortgage loan (a “Replacement Mortgage Loan”). Any Replacement Mortgage Loan generally will, on the date of substitution, among other characteristics set forth in the Mortgage Loan Purchase Agreement, (i) have a principal balance, after deduction of all scheduled payments due in the month of substitution, not in excess of, and not more than [_____] % less than, the Stated Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to be deposited in the Bond Account by the seller and held for distribution to the Bondholders on the related Payment Date (a “Substitution Adjustment Amount”)), (ii) have a Mortgage Rate not lower than, and not more than [_____]% per annum higher than, that of the Deleted Mortgage Loan, (iii) have a Loan-to-Value Ratio not higher than that of the Deleted Mortgage Loan, (iv) have a remaining term to maturity not greater than (and not more than [___] less than) that of the Deleted Mortgage Loan, and (v) comply with all of the representations and warranties set forth in the Mortgage Loan Purchase Agreement as of the date of substitution. This cure, purchase or substitution obligation constitutes the sole remedy available to Bondholders or the Bond Trustee for omission of, or a material defect in, a Mortgage Loan document.

Each transfer of the mortgage loans from the seller to the depositor and from the depositor to the bond trustee will be intended to be a sale of the mortgage loans and will be reflected as such in the mortgage loan purchase and sale agreement and the indenture, respectively. However, in the event of insolvency of either the seller or the depositor, a trustee in bankruptcy or a receiver or creditor of the insolvent party could attempt to recharacterize the sale of the mortgage loans by the insolvent party as a financing secured by a pledge of the mortgage loans. In the event that a court were to recharacterize the sale of the mortgage loans by either the seller or the depositor as a financing, each of the depositor, as transferee of the mortgage loans from the seller, and the bond trustee will have a security interest in the mortgage loans transferred to it. The bond trustee’s security interest will be perfected by delivery of the mortgage notes to each custodian.

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[On a designated subsequent transfer date, subsequent mortgage loans will be assigned by the depositor to the Bond Trustee, together with all principal and interest received with respect to such subsequent mortgage loans on and after the applicable subsequent cut-off date (other than monthly payments due on that date) in accordance with the procedures set forth at “Description of the Mortgage Pool—Conveyance of Subsequent Mortgage Loans.” At the time of the transfer of the subsequent mortgage loans, the Mortgage Loan schedule appearing as an exhibit to the Sale and Servicing Agreement will be amended to reflect the addition of the subsequent mortgage loans to the Trust.]

Mortgage Loan Servicing

The servicer will service the mortgage loans pursuant to existing servicing agreements, one between the servicer and the seller and another between the servicer and the transferor to the seller (referred to as the “servicing agreement”). The rights of the seller under the servicing agreement will be assigned to the depositor, and the depositor, in turn, will assign such rights to the trustee for the benefit of bondholders. Any further transfer of servicing to one or more successor servicers will be subject to the conditions set forth in the pooling and servicing agreement and the servicing agreement, as applicable.

The servicer will have primary responsibility for servicing the mortgage loans, including, but not limited to, all collection, advancing and loan-level reporting obligations, maintenance of custodial and escrow accounts, maintenance of insurance and enforcement of foreclosure proceedings with respect to the mortgage loans and the mortgaged properties, in accordance with the provisions of the servicing agreement.

Under the servicing agreement, the master servicer has the authority to terminate the servicer for certain events of default which indicate that either the servicer is not performing, or is unable to perform, its duties and obligations under the servicing agreement. If the master servicer terminates the servicer, the master servicer will be required to appoint a successor servicer as provided in the pooling and servicing agreement.

We refer you to “The Agreements — Certain Matters Regarding the Servicer and the Depositor” and — Events of Default; Rights Upon Event of Default” in the accompanying prospectus.

The master servicer is responsible for receiving the monthly servicer reports and remittances and for the oversight of the performance of the servicer under the terms of their underlying servicing agreement. In particular, the master servicer independently calculates monthly loan balances based on servicer data, compares its results to servicer loan-level reports and reconciles any discrepancies with the servicer. The master servicer also reviews the servicing of defaulted loans for compliance with the terms of the pooling and servicing agreement. In addition, upon the occurrence of certain servicer events of default under the terms of any underlying servicing agreement, the master servicer may be required to enforce certain remedies on behalf of the issuing entity against such defaulting servicer.

The master servicer will not be ultimately responsible for the performance of the servicing activities by the servicer, except as described under “— Advances” below. In addition, the master servicer will not be responsible for the supervision of the activities of the servicer related to the resolution of defaulted mortgage loans, including collections, modifications, foreclosure and disposition or management of REO property. If the servicer fails to fulfill its obligations under the servicing agreement, the master servicer will be obligated to terminate the servicer and, within 90 days of such termination, appoint a successor servicer that satisfies the eligibility requirements set forth in the servicing agreement.

The servicer generally may not transfer the servicing to a successor servicer without the consent of the bond trustee and the master servicer. The pooling and servicing agreement requires that, in the case of transfers to a successor servicer, each rating agency confirm in writing that such transfer of servicing will not result in a qualification, withdrawal or downgrade of the then-current ratings of any of the bonds.

Waiver or Modification of Mortgage Loan Terms. [ ].

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Custodial Account. Servicing functions to be performed by the servicer under the servicing agreement include collection and remittance of principal and interest payments, administration of mortgage escrow accounts, collection of certain insurance claims and, if necessary, foreclosure. The servicer may contract with subservicers to perform some or all of the servicer’s servicing duties, but the servicer will not thereby be released from its obligations under the servicing agreement. When used herein with respect to servicing obligations, the term servicer includes a subservicer.

Pursuant to the servicing agreement, the servicer will deposit collections on the mortgage loans into the custodial account established by it. The custodial account is required to be kept segregated from operating accounts of the servicer and to meet the eligibility criteria set forth in the servicing agreement. The servicing agreement does not provide for the investment of amounts on deposit in the custodial account. Any interest earned on deposited amounts will be for the benefit of the servicer.

On or before the closing date, the issuing entity administrator, on behalf of the trustee, will establish the collection account into which the servicer will remit all amounts required to be deposited therein (net of the servicer’s servicing compensation) on the remittance date specified in the servicing agreement. Generally, the servicer will determine the amount of monthly advances for the related Due Period on or before the related Determination Date, and will furnish to the master servicer information with respect to loan level remittance data for such month’s remittance on the reporting date specified in the servicing agreement.

Prepayment Interest Shortfalls. When a borrower prepays a mortgage loan in full between Due Dates, the borrower is required to pay interest on the amount prepaid only to the date of prepayment and not thereafter. Principal prepayments by borrowers received by the servicer during the related Prepayment Period for a Payment Date will be distributed to bondholders on the related Payment Date. Thus, less than one month’s interest may have been collected on mortgage loans that have been prepaid in full with respect to any Payment Date. Pursuant to the servicing agreement, either (i) the related servicing fee for any month will be reduced (but not below zero) by the amount of any Prepayment Interest Shortfall or (ii) the servicer will be required to make payments in respect of Prepayment Interest Shortfalls from its own funds with respect to the mortgage loans. The master servicer is obligated to reduce a portion of its master servicing fee for the related Payment Date to the extent necessary to fund any Prepayment Interest Shortfalls required to be paid but not paid by the servicer. The amount of interest available to be paid to bondholders will be reduced by any uncompensated Prepayment Interest Shortfalls.

Advances. Subject to the limitations described in the following paragraph, the servicer will be required to advance prior to each Payment Date, from its own funds, or funds in the custodial account that are not otherwise required to be remitted to the collection account for such Payment Date, an amount equal to the scheduled payment of interest at the related mortgage rate (less the applicable servicing fee rate) and scheduled principal payment on each mortgage loan which were due on the related Due Date and which were not received prior to the related Determination Date (any such advance, a “monthly advance”). The master servicer will be obligated to make any required monthly advance if the servicer fails in its obligation to do so, to the extent provided in the pooling and the servicing agreement and the servicing agreement.

Monthly advances are intended to maintain a regular flow of scheduled interest and principal payments on the bonds rather than to guarantee or insure against losses. The servicer is obligated to make monthly advances with respect to delinquent payments of interest and principal on each mortgage loan serviced by it, to the extent that such monthly advances are, in its reasonable judgment, recoverable from future payments and collections or insurance payments or proceeds of liquidation of the related mortgage loans. Any failure by the servicer to make a monthly advance as required under the servicing agreement will constitute a default thereunder, in which case the master servicer will be required, as successor servicer, to make a monthly advance in accordance with the terms of the pooling and servicing agreement; provided, however, that in no event will the master servicer be required to make a monthly advance that is not, in its reasonable judgment, recoverable from future payments and collections or insurance payments or proceeds of liquidation of the related mortgage loans. If the servicer determines on any Determination Date to make a monthly advance, such monthly advance will be included with the payment to bondholders on the related Payment Date. Any failure by the master servicer to make a monthly advance as required under the pooling and servicing agreement will constitute a master servicer default thereunder, in which case the trustee or the successor master servicer will be obligated to make such monthly advance.

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Servicing Compensation and Payment of Expenses. The servicer will be entitled to receive, from interest actually collected on each mortgage loan serviced by it, a servicing fee (the “servicing fee”) equal to the product of (1) the principal balance of such mortgage loans as of the first day of the related Due Period and (2) a per annum rate (the “servicing fee rate”) equal to (a) in the case of a mortgage loan that has not reached its first adjustment date, 0.25% annually or (2) in the case of a mortgage loan that has reached its first adjustment date, 0.375% annually. The servicer will also be entitled to receive, to the extent provided in the applicable servicing agreement, additional compensation in the form of prepayment premiums and any interest or other income earned on funds it has deposited in the custodial account pending remittance to the master servicer, as well as late charges and certain fees paid by borrowers and, in certain cases, REO management fees.

As compensation for its services, the master servicer will be entitled to retain interest or other income earned on funds it has deposited in the collection account pending remittance of such funds by the issuing entity administrator to the bondholders. The amount of the master servicing fee and the servicer’s servicing fee is subject to adjustment with respect to prepaid mortgage loans, as described above under “— Prepayment Interest Shortfalls.”

Evidence as to Compliance. The servicing agreement will require the servicer to deliver to the trustee, on or before the date in each year specified in the servicing agreement, and, if required, file with the SEC as part of a Report on Form 10-K filed on behalf of each trust, the following documents:

a report on its assessment of compliance during the preceding calendar year with all applicable servicing criteria set forth in relevant SEC regulations with respect to asset-backed securities transactions taken as a whole involving the servicer that are backed by the same types of assets as those backing the offered securities, as well as similar reports on assessment of compliance received from certain other parties participating in the servicing function as required by relevant SEC regulations;

with respect to each assessment report described in the immediately preceding bullet point, a report by a registered public accounting firm that attests to, and reports on, the assessment made by the asserting party, as set forth in relevant SEC regulations; and

a statement of compliance from the servicer, and similar statements from certain other parties involved in servicing the mortgage loans as required by relevant SEC regulations, signed by an authorized officer, to the effect that: (a) a review of the servicer’s activities during the reporting period and of its performance under the applicable servicing agreement has been made under such officer’s supervision; and (b) to the best of such officer’s knowledge, based on such review, the servicer has fulfilled all of its obligations under the servicing agreement in all materials respects throughout the reporting period or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof.

Each custodial agreement provides that the related custodian will certify to the depositor, the trustee, the servicer and the master servicer that all information prepared by it and provided to the master servicer, the servicer or the issuing entity administrator relating to the mortgage loans is accurate and complete in all material respects as of the last day of the period covered by that report and that generally the custodian is in compliance with its obligations to report to the master servicer, the servicer and the issuing entity administrator and is in compliance with its obligations under the related custodial agreement. The pooling and servicing agreement will provide that each year the master servicer will certify to the trustee that for the prior calendar year, the master servicer has performed and fulfilled its duties, responsibilities and obligations under the pooling and servicing agreement in all material respects throughout that year, or, if there has been a default in the fulfillment of any such duties, responsibilities or obligations, specifying each such default known to the master servicer and the nature and status thereof, and the master servicer has received from the servicer an annual certificate of compliance and a copy of the servicer’s annual audit report, in each case to the extent required under the servicing agreement, or, if any such certificate or report has not been received by the master servicer, the master servicer is using its best reasonable efforts to obtain such certificate or report.

The pooling and servicing agreement will also provide that each year during which the master servicer directly services any of the mortgage loans, as servicer, a firm of independent accountants will furnish a statement to the trustee to the effect that such firm has examined certain documents and records relating to the servicing of mortgage loans similar to the mortgage loans by the master servicer and that, on the basis of such examination, such firm is of the opinion that the servicing has been conducted in accordance with the terms of the pooling and servicing agreement, except for (1) exceptions as the firm believes to be immaterial and (2) any other exceptions set forth in such statement.

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Events of Default. Events of default under the servicing agreement include (i) any failure of the servicer to remit to the collection any required payment which continues unremedied for a specified period after the giving of written notice of such failure to the servicer; (ii) any failure by the servicer to make a monthly advance as required under the servicing agreement, unless cured as specified therein; (iii) any failure by the servicer duly to observe or perform in any material respect any of its other covenants or agreements in the servicing agreement which continues unremedied for a specified period after the giving of written notice of such failure to the servicer; and (iv) certain events of insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceeding and certain actions by or on behalf of the servicer indicating its insolvency, reorganization or inability to pay its obligations.

If the servicer is in default in its obligations under the servicing agreement, the master servicer may, at its option, terminate the defaulting servicer and either appoint a successor servicer in accordance with the servicing agreement and the pooling and servicing agreement or succeed to the responsibilities of the terminated servicer.

In the event of a default by the servicer under its servicing agreement, the master servicer will have the right to remove the servicer and will exercise that right if it considers such removal to be in the best interest of the bondholders. In the event that the master servicer removes the servicer, the master servicer will, in accordance with the pooling and servicing agreement, act as successor servicer under the servicing agreement or will appoint a successor servicer reasonably acceptable to the depositor and the trustee. In connection with the removal of the servicer, the master servicer will be entitled to be reimbursed from the assets of the issuing entity for all of its reasonable costs associated with the termination of the servicer and the transfer of servicing to a successor servicer.

Limitation on Liability of the Servicer and Others. The servicing agreement provides that neither the servicer nor any of the officers, employees or agents of the servicer will be under any liability to the trust for any action taken, or for refraining from taking any action, in good faith pursuant to the servicing agreement, or for errors in judgment. The servicing agreement further provides, however, that such provision will not protect the servicer or any such person against any breach of warranties or representations made by the servicer in the servicing agreement, or the failure of the servicer to perform its obligations in compliance with any standard of care set forth in the servicing agreement, or any liability which would otherwise be imposed by reason of any breach of the terms and conditions of the servicing agreement.

Resignation of Servicer. The servicer may not resign from its obligations and duties under the servicing agreement or assign or transfer its rights, duties or obligations except (i) upon a determination that its duties thereunder are no longer permissible under applicable law, (ii) in certain cases, upon the sale of substantially all of its assets or (iii) upon a sale of its servicing rights with respect to the mortgage loans with the prior written consent of the depositor, which consent may not be unreasonably withheld. No such resignation will become effective until the master servicer or a successor servicer approved by it has assumed the servicer’s obligations and duties under the servicing agreement.

Any person into which the servicer may be merged or consolidated, any person resulting from any merger or consolidation which the servicer is a party, any person succeeding to the business of the servicer or any person to whom the servicer assigns or transfers its duties and obligations, will be the successor of the servicer under the related servicing agreement.

Amendment of the Servicing Agreement. The servicing agreement may generally be amended by written agreement between the servicer and the trustee, as acknowledged by the master servicer, without notice to or consent of the bondholders.

Administration

The Issuing Entity Administrator or the Depositor will agree, to the extent provided in the Management Agreement, to provide certain notices and to perform certain other administrative obligations required to be performed by the Issuing Entity, the Bond trustee and the Owner Trustee under the Management Agreement, the Indenture and the Trust Agreement. [Neither the Issuing Entity Administrator nor the Depositor will receive additional compensation for their services under the Management Agreement.]

Reports to Bondholders

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On each Payment Date, the Issuing Entity Administrator will make available on the Issuing Entity Administrator’s website at [____________] a payment statement containing the items set forth under “The Agreements—Reports to Securityholders” in the prospectus, based solely on information received from the Servicer or the Master Servicer.

Voting Rights

Voting rights under the deposit trust agreement will be allocated as follows:

[98]% to the classes of Bonds in proportion to their respective outstanding Bond Principal Amounts; and

[2]% to the Residual Holder.

Termination of the Issuing Entity

The Issuing Entity will terminate upon the payment to the holders of all classes of Bonds of all amounts required to be paid to the holders and upon the last to occur of:

the final payment or other liquidation, or any related advance, of the last Mortgage Loan;

the disposition of all property acquired in respect of any Mortgage Loan remaining in the Trust; and

exercise by the Residual Holder of its right to purchase the Mortgage Loans and other property of the Trust as described under “Description of the Bond—Optional Purchase of the Mortgage Loans.”

YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE

General

The yields to maturity (or to early termination) of the Offered Bonds will be affected by the rate of principal payments (including prepayments, which may include amounts received by virtue of purchase, condemnation, insurance or foreclosure) on the Mortgage Loans and the application of excess interest to reduce the Class Principal Amounts of the Bonds. Yields will also be affected by the extent to which Mortgage Loans bearing higher Mortgage Rates prepay at a more rapid rate than Mortgage Loans with lower Mortgage Rates, the amount and timing of borrower delinquencies and defaults resulting in Realized Losses, the purchase price paid by investors for the Offered Bonds, and other factors.

Yields on the Offered Bonds will be affected by the rate of principal payments on the Mortgage Loans. Principal prepayments may be influenced by a variety of economic, geographic, demographic, social, tax, legal and other factors, including the credit quality of the Mortgage Loans. In general, if prevailing interest rates fall below the interest rates on the Mortgage Loans, the Mortgage Loans are likely to be subject to a higher rate of prepayments than if prevailing rates remain at or above the interest rates on the Mortgage Loans. Conversely, if prevailing interest rates rise above the interest rates on the Mortgage Loans, the rate of prepayment would be expected to decrease. Other factors affecting prepayment of the Mortgage Loans include such factors as changes in borrowers’ housing needs, job transfers, unemployment, borrowers’ net equity in the mortgaged properties, changes in the values of mortgaged properties, mortgage market interest rates and servicing decisions, as well as refinancings resulting from solicitations by mortgage lenders. [The Mortgage Loans generally have due-on-sale clauses.]

In addition, the rate of principal prepayments may also be influenced by programs offered by the Subservicer and its affiliates or by other lenders. Many mortgage lenders solicit borrowers to refinance their loans. [Lender] does not directly solicit borrowers to refinance, but the availability of [Lender]’s “streamline refi” program, which enables qualifying mortgagors to refinance at greatly reduced cost, may influence some borrowers to do so. These refinancings may increase the rate of prepayment of the Mortgage Loans.

[The Mortgage Loans have Mortgage Rates that provide for a fixed interest rate during an initial period of six months, three years, five years or seven years from the date of the origination and thereafter provide for adjustments to the Mortgage Rates on either a monthly or semi-annual basis. When a Mortgage Loan begins its adjustable rate period, increases and decreases in the Mortgage Rate will be limited by the Periodic Cap, the Maximum Rate and the Minimum Rate, if any, and will be based on the applicable Index in effect on the applicable date prior to the related Adjustment Date plus the applicable Gross Margin. The applicable Index may not rise and fall consistently with mortgage interest rates. As a result, the Mortgage Rates on the Mortgage Loans at any time may not equal the prevailing mortgage interest rates of similar adjustable rate mortgage loans, and accordingly the prepayment rate may be lower or higher than would otherwise be anticipated.] [To be provided as applicable.] Some borrowers who prefer the certainty provided by fixed rate mortgage loans may nevertheless obtain adjustable rate mortgage loans at a time when they regard the mortgage interest rates (and, therefore, the payments) on fixed rate mortgage loans as unacceptably high. These borrowers may be induced to refinance adjustable rate loans when the interest rates and monthly payments on comparable fixed rate mortgage loans decline to levels which these borrowers regard as acceptable, even though such mortgage interest rates and monthly payments may be significantly higher than the current mortgage interest rates and monthly payments on the borrowers’ adjustable rate mortgage loans. The ability to refinance a Mortgage Loan will depend on a number of factors prevailing at the time refinancing is desired, including, without limitation, real estate values, the borrower’s financial situation, prevailing mortgage interest rates, the borrower’s equity in the related Mortgaged Property, tax laws and prevailing general economic conditions.

S-53

[Substantially all of the Mortgage Loans provide for payment of interest at the related Mortgage Rate, but no payment of principal, for a period of ten years following the origination of the related Mortgage Loan. Following the applicable interest-only period, the monthly payment with respect to these Mortgage Loans will be increased to an amount sufficient to amortize the principal balance of such Mortgage Loan over its remaining term, and to pay interest at the related Mortgage Rate.] [To be provided as applicable.]

The rate of principal payments on the Mortgage Loans will also be affected by the amortization schedules of the Mortgage Loans, the rate and timing of prepayments thereon by the borrowers, liquidations of defaulted Mortgage Loans, repurchases of Mortgage Loans due to certain breaches of representations and warranties or defective documentation, and optional purchases of Mortgage Loans as described herein. The timing of changes in the rate of prepayments, liquidations and purchases of the Mortgage Loans may, and the timing of Realized Losses will, significantly affect the yield to an investor, even if the average rate of principal payments experienced over time is consistent with an investor’s expectation. Because the rate and timing of principal payments on the Mortgage Loans will depend on future events and on a variety of factors (as described more fully herein and in the prospectus under “Yield and Prepayment Considerations”), no assurance can be given as to such rate or the timing of principal payments on the Offered Bonds. In general, the earlier a prepayment of principal of the Mortgage Loans, the greater will be the effect on an investor’s yield. The effect on an investor’s yield of principal payments occurring at a rate higher (or lower) than the rate anticipated by the investor during the period immediately following the issuance of the Bonds may not be offset by a subsequent like decrease (or increase) in the rate of principal payments.

From time to time, areas of the United States may be affected by flooding, severe storms, landslides, wildfires, earthquakes or other natural disasters. Under the Mortgage Loan Purchase Agreement, the Seller will represent and warrant that as of the Closing Date each Mortgaged Property was free of material damage. In the event of an uncured breach of this representation and warranty that materially and adversely affects the interests of Bondholders, the Seller will be required to repurchase the affected Mortgage Loan or substitute another mortgage loan therefor. If any damage caused by flooding, storms, wildfires, landslides or earthquakes (or other cause) occurs after the Closing Date, the Seller will not have any repurchase obligation. In addition, the standard hazard policies covering the Mortgaged Properties generally do not cover damage caused by earthquakes, flooding and landslides, and earthquake, flood or landslide insurance may not have been obtained with respect to such Mortgaged Properties. As a consequence, Realized Losses could result. To the extent that the insurance proceeds received with respect to any damaged Mortgaged Properties are not applied to the restoration thereof, the proceeds will be used to prepay the related Mortgage Loans in whole or in part. Any repurchases or repayments of the Mortgage Loans may reduce the weighted average lives and will reduce the yields on the Offered Bonds to the extent they are purchased at a premium.

Prepayments, liquidations and purchases of Mortgage Loans will result in payments to holders of Bonds of principal amounts that would otherwise be paid over the remaining terms of such Mortgage Loans. The rate of defaults on the Mortgage Loans will also affect the rate and timing of principal payments on the Mortgage Loans. In general, defaults on mortgage loans are expected to occur with greater frequency in their early years, especially with respect to adjustable rate mortgage loans, as increases in monthly payments may result in a default rate higher than on level payment mortgage loans. Furthermore, the rate of default on Mortgage Loans with high loan-to-value ratios may be higher than for other Mortgage Loans.

S-54

Certain characteristics of the Mortgage Loans that may influence the rate of defaults or losses are described under “Risk Factors” and “Description of the Mortgage Pool[s].”

[The inclusion of interest only Mortgage Loans in the Trust will generally, absent other considerations, result in longer weighted average lives of the Offered Bonds than would be the case if these Mortgage Loans provided for monthly payments of principal throughout their terms. If an investor purchases Offered Bonds at a discount, the yield may be reduced. In addition, a borrower may view the interest only period as a disincentive to prepayment.] [To be provided as applicable.]

The yields on the Offered Bonds may be adversely affected by Net Prepayment Interest Shortfalls on the Mortgage Loans. The yields on the Offered Bonds will be affected by the level of LIBOR from time to time, and by the Mortgage Rates of the Mortgage Loans from time to time as described under “Risk Factors — Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds.”

[In the event that at the end of the Pre-Funding Period not all of the pre-funding amount in the pre-funding account has been used to acquire subsequent mortgage loans for inclusion in the Trust, the related Bondholders will receive a partial prepayment on the Payment Date in [________] [___], equal to the amount remaining the applicable pre-funding account. Although no assurance can be given, the Depositor expects that the principal balance of the subsequent mortgage loans to be sold to the Trust will require the application of substantially all of the pre-funding amount and that there should be no material principal prepaid to the Bondholders.]

[The yields to investors on the Class [_____] Bonds may be adversely affected by the Trust Fund’s acquisition of Additional Mortgage Loans, which will reduce the amount and timing of principal payments on these Bonds.]

As described herein, excess interest will be applied, to the extent available, as an additional payment of principal on the Bonds to achieve and maintain limited overcollateralization. The amount of excess interest available on any Payment Date will be influenced by, among other things:

the amount of overcollateralization. This means the extent to which interest on the Mortgage Loans is accruing on a higher principal balance than the aggregate Class Principal Amounts of the Bonds;

the loss experience of the Mortgage Loans. For example, excess interest will be reduced as a result of Realized Losses on the Mortgage Loans;

the value of LIBOR;

[to the extent which amounts are received by the Trust under the Swap Agreements; and]

the extent to which the weighted average Net Mortgage Rates of the Mortgage Loans exceed the weighted average of the Bond Interest Rates of the Bonds.

No assurance can be given as to the amount or timing of excess interest payable on the Bonds.

[The yields to investors in the Offered Bonds will be affected by the exercise by the Residual Holder of its right to purchase the Mortgage Loans, as described under “Description of the Bonds — Optional Purchase of the Mortgage Loans” herein or their failure to exercise that right.] [To be provided as applicable.]

If the purchaser of an Offered Bond offered at a discount from its initial principal amount calculates its anticipated yield to maturity (or early termination) based on an assumed rate of payment of principal that is faster than that actually experienced on the related Mortgage Loans, the actual yield may be lower than that so calculated. Conversely, if the purchaser of an Offered Bond offered at a premium calculates its anticipated yield based on an assumed rate of payment of principal that is slower than that actually experienced on the related Mortgage Loans, the actual yield may be lower than that so calculated. For this purpose, prepayments of principal include not only voluntary prepayments made by the borrower, but repurchases of Mortgage Loans by the Seller due to breaches of representations and warranties.

S-55

The Bond Interest Rates applicable to the Bonds will be affected by the level of LIBOR from time to time, and by the Mortgage Rates of the Mortgage Loans from time to time as described under “Risk Factors—Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds.”

S-56

Overcollateralization

The yields of the Offered Bonds will be affected by the application of Monthly Excess Interest as described herein and by the amount of overcollateralization. The amount of Monthly Excess Interest will be affected by the delinquency, default and prepayment experience of the Mortgage Loans. There can be no assurance as to whether overcollateralization will be increased to or maintained at the levels described herein.

Subordination of the Subordinate Bonds

As described herein, Bonds having a relatively higher priority of payment will have a preferential right to receive payments of interest to the extent of Interest Funds and principal to the extent of the Principal Payment Amount. As a result, the yields of the Subordinate Bonds will be more sensitive, in varying degrees, to delinquencies and losses on the Mortgage Loans than the yields of more senior Bonds.

Weighted Average Life

Weighted average life refers to the average amount of time that will elapse from the date of issuance of a security to the date of payment to the investor of each dollar paid in net reduction of principal of such security (assuming no losses). The weighted average lives of the Offered Bonds will be influenced by, among other things, the rate at which principal of the related Mortgage Loans is paid, which may be in the form of scheduled amortization, prepayments or liquidations and the amount of excess interest.

Prepayments on mortgage loans are commonly measured relative to a constant prepayment standard or model. The model used in this prospectus supplement for the Mortgage Loans is CPR. CPR assumes a constant rate of prepayment each month relative to the then outstanding balance of the related pool of mortgage loans for the life of such loans.

CPR does not purport to be either a historical description of the prepayment experience of the Mortgage Loans or a prediction of the anticipated rate of prepayment of any mortgage loans, including the Mortgage Loans to be owned by the Issuing Entity. The percentages of CPR in the tables below do not purport to be historical correlations of relative prepayment experience of the Mortgage Loans or predictions of the anticipated relative rate of prepayment of the Mortgage Loans. Variations in the prepayment experience and the principal balance of the Mortgage Loans that prepay may increase or decrease the percentages of initial Class Principal Amounts (and weighted average lives) shown in the following table. Such variations may occur even if the average prepayment experience of all such Mortgage Loans equals any of the specified percentages of CPR.

The tables below were prepared based on the following assumptions (collectively, the “Modeling Assumptions”): [(1) the initial Class Principal Amounts are as set forth in the table on page S-[__]; (2) each monthly payment of principal and interest is timely received on the first day of each month commencing in [____]; (3) principal prepayments are received in full on the last day of each month commencing in [___] and there are no Net Prepayment Interest Shortfalls; (4) there are no defaults or delinquencies on the Mortgage Loans; (5) Payment Dates occur on the [25]th day of each month commencing in [___]; (6) there are no purchases or substitutions of Mortgage Loans (except in the case of an Optional Termination of the Issuing Entity); (7) the Mortgage Rate of each Mortgage Loan is adjusted on the next applicable rate adjustment date and any subsequent adjustment dates to equal the value of the related Index set forth below plus the related Gross Margin subject to the applicable caps and floor; (8) the Adjustment Date with respect to each assumed Mortgage Loan occurs in the month immediately following the applicable interest adjustment date; (9) the value of Six-Month LIBOR is equal to [___]% and remains constant; and the value of One-Month LIBOR is equal to [___]% and remains constant; (10) there is no Optional Termination of the Issuing Entity (except in the case of Weighted Average Life in Years With Optional Termination); (11) the Bonds are issued on [___]; (12) the Servicing Fee Rate for any Mortgage Loan is equal to the rate for such Mortgage Loan as described under “Fees and Expenses of the Trust” herein; and (13) the Mortgage Loans are aggregated into assumed Mortgage Loans having the following characteristics] [May vary in accordance with structure of transaction]:

S-57

Assumed Characteristics of the Mortgage Loans

Loan Number	Principal Balance ($)	Gross Mortgage Rate (%)	Net Mortgage Rate (%)	Expense Fee Rate	Remaining Term to Maturity (months)	Original Term to Maturity (months)	Months to Next Rate Adjustment Date	Maximum Rate (%)	Minimum Rate (%)	Gross Margin (%)	Initial Periodic Rate Cap (%)	Subsequent Periodic Rate Cap (%)	Rate Adjustment Frequency (months)	Remaining IO Term (months)	Index Type
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21						÷
22
23
24

The actual characteristics and the performance of the Mortgage Loans will differ from the assumptions used in constructing the tables set forth below, which are hypothetical in nature and are provided only to give a general sense of how the principal cashflows might behave under varying prepayment scenarios. For example, it is not expected that the Mortgage Loans will prepay at a constant rate until maturity, that all of the Mortgage Loans will prepay at the same rate or that there will be no defaults or delinquencies on the Mortgage Loans. Moreover, the diverse remaining terms to maturity of the Mortgage Loans could produce slower or faster principal payments than indicated in the tables at the various percentages of CPR specified, even if the weighted average remaining term to maturity are as assumed. Any difference between such assumptions and the actual characteristics and performance of the Mortgage Loans, or the actual prepayment or loss experience, will cause the percentages of initial Class Principal Amounts outstanding over time and the weighted average lives of the Offered Bonds to differ (which difference could be material) from the corresponding information in the tables for each indicated percentage of CPR.

The Mortgage Loans are expected to have the approximate actual aggregate characteristics as of the cut-off date as set forth in Annex A attached to this prospectus supplement and incorporated by reference herein.

Subject to the foregoing discussion and assumptions, the following tables indicate the weighted average lives of the Offered Bonds and set forth the percentages of the initial Class Principal Amounts of the Offered Bonds that would be outstanding after each of the Payment Dates shown at various percentages of CPR.

The weighted average life of a class of Offered Bonds is determined by (1) multiplying the net reduction, if any, of the applicable Class Principal Amount by the number of years from the date of issuance of the Offered Bond to the related Payment Date, (2) adding the results and (3) dividing the sum by the aggregate of the net reductions of Class Principal Amount described in (1) above.

S-58

Percentage of Initial Class Principal Amount of the

Class [____] and Class [___] Bonds Outstanding

at the Following Percentages of CPR

	Class [___] Bonds					Class [___] Bonds
	0%	10%	25%	40%	50%	0%	10%	25%	40%	50%

Initial Percentage
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
[___]
Weighted Average Life in Years: Without Optional Termination
With Optional Termination

[* Indicates a value between 0.0% and 0.5%.]

S-59

USE OF PROCEEDS

The Issuing Entity intends to distribute all of the net proceeds of the issuance of the Bonds to the Depositor which will use such proceeds to pay certain indebtedness incurred by Redwood Trust in connection with the acquisition of the Mortgage Loans. Expenses incurred by the Depositor in connection with this offering are expected to be approximately $[_______] before deducting expenses payable by it of approximately $[_______] ($[_______] of which expenses were incurred in connection with the selection and acquisition of the mortgage loans and other assets of the issuing entity).

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

Tax Classification of the Issuing Entity and of the Bonds

Investors should review the material set forth in this section together with the information in the section “Material Federal Income Tax Consequences” in the prospectus.

Chapman and Cutler LLP has advised us that in its opinion the Bonds will be treated as debt for federal income tax purposes and not as an ownership interest in the mortgage collateral, the issuing entity or a separate association taxable as a corporation. Interest, including original issue discount with respect to any class of Bonds issued with original issue discount, will be taxable to non-exempt bondholders. The Tax Prepayment Assumption (as defined in the prospectus under “Federal Income Tax Consequences — Taxation of Regular Interest Securities — Original Issue Discount”) for the purposes of determining the amount and rate of accrual of original issue discount on the Bonds assumes that the Mortgage Loans are prepaid at a rate of [___]% of the Prepayment Assumption. Based upon (i) [the assumed prepayment rate] and (ii) the expected price to the public of each Class of Bonds as of the date hereof (including interest accrued before the issue date, if any), the Senior Bonds will not be issued with original issue discount and the Subordinated Bonds will be treated as issued with original issue discount. [Although such treatment is not entirely certain, the Issuing Entity intends to treat the Bonds as “Variable Rate Debt Instruments” and the stated interest on the Bonds as “qualified stated interest payments” (as each term is defined in the prospectus under “Material Federal Income Tax Consequences”)].

Notwithstanding the use of [_________] in pricing the bonds, no representation is made that the Mortgage Loans will actually prepay at or at any other rate. The amount of original issue discount and certain other information with respect to each Bond will be set forth on the face of such bond as required by applicable regulations and as described in the prospectus.

The Issuing Entity will not elect to treat the segregated pool of assets securing the Bonds as a real estate mortgage investment conduit (“REMIC”) for federal income tax purposes. Chapman and Cutler LLP has further advised us that, in its opinion, the Issuing Entity [will not be classified as a taxable mortgage pool][may be classified as a taxable mortgage pool, but will not be subject to federal income tax as a corporation as long the all of the securities classified as equity interests in the issuing entity for federal income tax purposes are held by an entity that qualifies as a “real estate investment trust,” or are held directly or indirectly through one or more wholly owned “qualified REIT subsidiaries,” each as defined under section 856 of the Internal Revenue Code of 1986, as amended].

Tax Consequences to Holders of the Bonds

Interest Income on the Bond. The Bonds may be treated as having been issued with original issue discount (“OID”). The beneficial owner of a Bond must include any OID with respect to such Bond in income as it accrues on a constant yield method, regardless of whether the beneficial owner receives any cash currently attributable to such OID (We refer you to “Material Federal Tax Considerations—Taxation of Regular Interest Securities —Original Issue Discount” in the prospectus). The prepayment assumption that will be used in determining the accrual of any OID, market discount or amortizable bond premium, if any, will be a rate equal to [___]% of CPR with respect to the Mortgage Loans. We refer you to “Yield, Prepayment and Weighted Average Life” above. No representation, however, is made as to the rate at which principal payments or recoveries on the Mortgage Loans actually will occur.

Possible Alternative Treatments of the Bond. If, contrary to the opinion of Chapman and Cutler LLP, the Internal Revenue Service successfully asserted that a class of Bonds did not represent debt instruments for federal income tax purposes, those Bonds might be treated as equity interests in the issuing entity. [If, as a result, a REIT did not hold, directly, or indirectly through a qualified REIT subsidiary, 100% of the equity in the issuing entity, the issuing entity could be subject to corporate income tax.] Moreover, if a class of Bonds represented equity in the issuing entity, payments of interest on that class of Bonds to a foreign person generally would be subject to U.S. tax and withholding requirements.

S-60

State and Local Income Tax Considerations. In addition to the federal income tax consequences described under “Material Federal Income Tax Consequences” above, prospective investors should consider the state and local income tax consequences of the acquisition, ownership and disposition of the Bonds. State and local income tax law may differ substantially from the corresponding federal tax law, and this discussion does not purport to describe any aspect of the income tax laws of any state or municipality. Therefore, prospective investors should consult their own tax advisors with respect to the various tax consequences of investments in the Bonds.]

ERISA MATTERS

General

Section 406 of ERISA prohibits, and Section 4975 of the Code imposes adverse tax consequences on, certain transactions between Plans and persons that are “parties in interest” under ERISA or “disqualified persons” under the Code with respect to such Plan. A violation of these “prohibited transaction” rules may result in an excise tax and other penalties and liabilities under ERISA and the Code for such persons.

Certain transactions involving the assets of a trust might be deemed to constitute prohibited transactions under Section 406 of ERISA and the Section 4975 of the Code with respect to a Plan that purchases securities issued by that trust if assets of the issuing entity were deemed to be assets of the Plan (the “Plan”). Under a regulation issued by the United States Department of Labor (the “Plan Assets Regulation”), the assets of an issuing entity would be treated as plan assets of the Plan for the purposes of ERISA and the Section 4975 Code only if the Plan acquired an “equity interest” in the trust and none of the exceptions contained in the Plan Assets Regulation was applicable. An equity interest is defined under the Plan Assets Regulation as an interest other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features.

Purchases of the Offered Bonds

[Although there is little guidance on the subject, at the time of their issuance, the Offered Bonds should be treated as indebtedness without substantial equity features for purposes of the Plan Asset Regulations. This determination is based in part upon (1) tax counsel’s opinion that Offered Bonds transferred on the Closing Date to parties unrelated to the initial holder of the Ownership Certificate will be classified as debt for U.S. federal income tax purposes and that Retained Bonds, if later sold to a party unrelated to the holder of the Ownership Certificate for cash, will be classified as debt instruments for U.S. federal income tax purposes as of the date of such sale, based on certain assumptions (including that the rating of the Offered Bonds as of the Closing Date has not declined below investment grade) and (2) the traditional debt features of the Offered Bonds, including the reasonable expectation of purchasers of the Offered Bonds that they will be repaid when due, as well as the absence of conversion rights, warrants and other typical equity features. Based upon the foregoing and other considerations, subject to the considerations described below, the Offered Bonds may be purchased by a Plan.

Without regard to whether the Offered Bonds are considered an “equity interest” in the Issuing Entity under the Plan Asset Regulations, the acquisition or holding of Offered Bonds by or on behalf of a Plan could be considered to give rise to a prohibited transaction if the Underwriters, the Issuing Entity, the Owner Trustee or the Bond Trustee, or any of their respective affiliates is or becomes a party in interest or a disqualified person with respect to such Plan. In that case, certain prohibited transaction exemptions from the prohibited transaction rules could be applicable, depending on the type of Plan involved and the circumstances of the plan fiduciary’s decision to acquire such Offered Bond. Included among these exemptions are: PTCE 84-14 (relating to transactions effected by a “qualified professional asset manager”); PTCE 90-1 (relating to transactions involving insurance company pooled separate accounts); PTCE 91-38 (relating to transactions involving bank collective investment funds); PTCE 95-60 (relating to transactions involving insurance company general accounts); and PTCE 96-23 (relating to transactions effected by an “in-house asset manager”). Even if the conditions specified in one or more of these exemptions are met, the scope of the relief provided by these exemptions might or might not cover all acts that might be construed as prohibited transactions. There can be no assurance that any of these exemptions, or any other exemption, will be available with respect to any particular transaction involving such Offered Bonds.

S-61

Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA requirements but may be subject to Similar Law.

The Offered Bonds should not be purchased with the assets of a Benefit Plan if the Seller, the Depositor, the Bond Trustee, the Owner Trustee, the Issuing Entity Administrator, the Underwriters or any of their affiliates is a fiduciary or gives investment advice with respect to such Benefit Plan or is an employer maintaining or contributing to such Benefit Plan, unless such purchase and holding of the Offered Bonds would be covered by an applicable prohibited transaction exemption, and will not cause a non-exempt violation of any Similar Law.

Prospective Benefit Plan investors in the Offered Bonds should consult with their legal advisors concerning the impact of ERISA and the Code and any Similar Law, the availability of other exemptions from the prohibited transaction rules that may apply to them, and the potential consequences in their specific circumstances, prior to making an investment in the Offered Bonds. Each Benefit Plan fiduciary should also determine whether under the general fiduciary standards of investment prudence and diversification, an investment in the Offered Bonds is appropriate for the Benefit Plan, taking into account the overall investment policy of the Plan and the composition of the Benefit Plan’s investment portfolio.

Each purchaser and transferee of an Offered Bond will be deemed to represent and warrant to the Issuing Entity that (i) it is not acquiring such Bond for, or with the assets of, a Benefit Plan or (ii) its acquisition and holding of such Bond will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code which is not covered under an Investor-Based Exemption or some other applicable exemption, and will not cause a non-exempt violation of any Similar Law.]

METHOD OF DISTRIBUTION

Subject to the terms and conditions set forth in the Underwriting Agreement between the depositor, Redwood Trust and the Underwriter, the depositor has agreed to cause the Issuing Entity to sell to the Underwriter, and the Underwriter has agreed to purchase from the Issuing Entity, the bonds. Distribution of the Bonds will be made by the Underwriter from time to time in negotiated transactions or otherwise at varying prices to be determined at the time of sale. In connection with the sale of the bonds, the Underwriter may be deemed to have received compensation from the Issuing Entity in the form of underwriting discounts.

The Underwriter intends to make a secondary market in the bonds, but has no obligation to do so. There can be no assurance that a secondary market for the bonds will develop or, if it does develop, that it will continue or that it will provide bondholders with a sufficient level of liquidity of investment. The bonds will not be listed on any national securities exchange.

The depositor and Redwood Trust have agreed to indemnify the underwriter against, or make contributions to the underwriter with respect to, certain liabilities, including liabilities under the Securities Act of 1933, as amended.

LEGAL MATTERS

The validity of the Bonds will be passed upon for the Issuing Entity by Tobin & Tobin, a professional corporation, San Francisco, California. Certain tax matters will be passed upon by for the Issuing Entity by Chapman and Cutler LLP, San Francisco, California. [___________] will act as counsel for the underwriter.

RATINGS

It is a condition of the issuance of the Senior Bonds that they have the applicable rating or ratings by [rating agencies] indicated under Bond Rating in the table on page S-[__].

The rating of “AAA” and “Aaa” are the highest ratings that the applicable rating agency assigns to securities. The ratings assigned by [_________] to collateralized mortgage obligations address the likelihood of the receipt of all payments on the mortgage loans by the related bondholders under the agreements pursuant to which such bonds are issued. [_________]’s ratings take into consideration the credit quality of the related mortgage pool, including any credit support providers, structural and legal aspects associated with such bonds, and the extent to which the payment stream on the mortgage pool is adequate to make the payments required by such bonds. [_________]’s ratings on such bonds do not, however, constitute a statement regarding frequency of prepayments of the mortgage loans.

S-62

The ratings assigned by [_________] to the Senior Bonds address the likelihood of the receipt of all payments on the mortgage loans by the related Bondholders under the agreements pursuant to which such bonds are issued. [_________]’s ratings take into consideration the credit quality of the related mortgage pool, including any credit support providers, structural and legal aspects associated with such bonds, and the extent to which the payment stream on such mortgage pool is adequate to make payments required by such bonds. [_________]’s ratings on such bonds do not, however, constitute a statement regarding frequency of prepayments on the related mortgage loans.

The ratings of the rating agencies do not address the possibility that, as a result of principal prepayments, Bondholders may receive a lower than anticipated yield.

The ratings do not address the likelihood that any Basis Risk Shortfall Carryforward Amount will be repaid to Bondholders from Monthly Excess Cashflow.

The ratings assigned to the Bonds should be evaluated independently from similar ratings on other types of securities. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agencies.

The Issuing Entity has not requested a rating of the Bonds by any rating agency other than the rating agencies; there can be no assurance, however, as to whether any other rating agency will rate the Bonds or, if it does, what rating would be assigned by such other rating agency. The rating assigned by such other rating agency to the Bonds could be lower than the respective ratings assigned by the rating agencies.

No arrangement will be made for ongoing monitoring of the ratings on the Offered Bonds.

S-63

INDEX OF DEFINED TERMS

Page No.

Additional Mortgage Loans	S-23
Adjustment Date	S-20
Advances	S-28
agreements	S-47
Available Funds	S-28
beneficial owner	S-27
Bond Interest Rate	S-29
Bond Owners	S-27
Bond Payment Amount	S-28
Bond Trustee	S-2, S-37
Bondholders	S-27
Bonds	S-26
Book-Entry Bonds	S-27
CEDEL Participant	S-28
Certificate Interest Payment Amount	S-29
Certificate Interest Rate	S-26
Class Principal Amount	S-26
Closing Date	S-3
Code	S-9
Collection Account	S-28
Controlling Class	S-35
Cooperative	S-1
covered	S-19
CPR	S-33
Custodian	S-3
Cut-Off Date	S-3
defective mortgage loan	S-48
Definitive Bond	S-27
Deleted Mortgage Loan	S-48
Depositor	S-2, S-39
disqualified persons	S-60
DTC	S-27
Due Date	S-2
Emergency Economic Stabilization Act of 2008	S-11
equity interest	S-60
ERISA	S-9
Euroclear Operator	S-2
Euroclear Participant	S-28
European Depositaries	S-27
Event of Default	S-34
excess interest	S-5
Fannie Mae	S-11
Federal Home Loan Mortgage Corporation	S-11
Federal National Mortgage Association	S-11
FHA Mortgage Loans	S-19
Financial Intermediary	S-27
Fixed Rate Mortgage Loans	S-19
Freddie Mac	S-11
Gross Margin	S-20
high cost	S-17

I-1

Page No.

HOEPA	S-17
Home Ownership and Equity Protection Act of 1994	S-17
Homeowner Affordability and Stability Plan	S-16
Indirect Participants	S-27
in-house asset manager	S-60
Insurance Proceeds	S-28
Interest Accrual Period	S-29
Interest Payment Amount	S-29
Invested Amount	S-27
Invested Amount Payment	S-31
Investor Certificate	S-26
Investor Percentage	S-30
issuing entity	S-25, S-37
Issuing Entity	S-2
Issuing Entity Administrator	S-3, S-36
Liquidated Mortgage Loan	S-32
Liquidation Proceeds	S-29
Loan-to-Value Ratio	S-21
Management Agreement	S-25
Master Servicer	S-3
Maximum Rate	S-20
Modeling Assumptions	S-56
monthly advance	S-50
Morgan	S-3
Mortgage	S-48
Mortgage File	S-48
Mortgage Loan Pool	S-32
Mortgage Loan Purchase Agreement	S-8
Mortgage Loans	S-18
Mortgage Note	S-48
mortgage related securities	S-9
Mortgaged Property	S-48
Net Interest Shortfall	S-29
Net Interest Shortfalls	S-29
Notice of Default	S-35
offer of bonds to the public	S-ii
Offered Bonds	S-26
OID	S-59
option ARMs	S-16
Original Invested Amount	S-27
Original Senior Class Principal Amount	S-27
Original Subordinated Class Principal Amount	S-27
Originator	S-3
out of pocket	S-43
overcollateralization	S-5, S-14
Owner Trustee	S-2, S-3
Participants	S-27
parties in interest	S-60
Payment Account	S-28
Payment Date	S-28
Periodic Cap	S-20
Plan	S-9, S-60
Plan Assets Regulation	S-60
Pool Principal Balance	S-30

I-2

Page No.


Prepayment Assumption	S-33
Prepayment Interest Shortfall	S-29
President’s Financial Stability Plan	S-11
prohibited transaction	S-60
Prospectus Directive	S-ii
PTCE	S-4
Public-Private Investment Program	S-11
qualified professional asset manager	S-60
qualified REIT subsidiaries	S-9, S-18, S-59
qualified REIT subsidiary	S-59
qualified stated interest payments	S-59
real estate investment trust	S-9, S-18
Realized Loss	S-31
Record Date	S-28
Redwood Trust	S-2
Relevant Depositary	S-27
Relevant Implementation Date	S-i
Relevant Member State	S-i
Relief Act Reduction	S-29
REMIC	S-59
Replacement Mortgage Loan	S-48
Residential mortgage-backed securities	S-11
Revolving Account	S-23
Revolving Period	S-23
RMBS	S-11
Rules	S-27
RWT Holdings	S-39
SEC	S-25
Seller	S-2
senior	S-4
Senior Bond Interest Rate	S-29
Senior Bonds	S-26
Senior Class Principal Amount	S-26
Senior Interest Payment Amount	S-29
Senior Percentage	S-30
Senior Principal Payment Amount	S-30
Servicer	S-3
servicing agreement	S-49
servicing fee	S-50
servicing fee rate	S-50
SMMEA	S-9
Sponsor	S-2
Stated Principal Balance	S-30
streamline refi	S-53
Structuring Assumptions	S-32
subordinate	S-4
Subordinated Bond Interest Rate	S-29
Subordinated Bonds	S-26
Subordinated Class Principal Amount	S-26
Subordinated Interest Carryover Shortfall	S-29
Subordinated Interest Payment Amount	S-29
Subordinated Percentage	S-30
Subordinated Principal Carryover Shortfall	S-30
Subordinated Principal Payment Amount	S-30

I-3

Page No.


Subsequent Mortgage Loans	S-18
Substitution Adjustment Amount	S-48
TALF	S-11
TARP	S-11
Term Asset-Backed Securities Loan Facility	S-11
Terms and Conditions	S-5
Troubled Asset Relief Program	S-11
VA Mortgage Loans	S-19
Variable Rate Debt Instruments	S-59

I-4

ANNEX A – CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS

The mortgage loans are expected to have the following approximate aggregate characteristics as of the cut-off date. Prior to the issuance of the certificates, mortgage loans may be removed from the trust fund as a result of incomplete documentation or otherwise, if the depositor deems such removal necessary or appropriate.

Set forth below is a description of certain additional characteristics of the mortgage loans as of the cut-off date (except as otherwise indicated). All percentages of the mortgage loans are approximate percentages by Cut-off Date Principal Balance (except as otherwise indicated). Unless otherwise specified, all Stated Principal Balances of the mortgage loans are as of the cut-off date. In some instances, percentages may not add to 100% due to rounding.

[Cut-off Date Principal Balance

Cut-off Date

Principal Balances ($)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

____________

Current Mortgage Rates

Current Mortgage Rates (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Original Term

Original Term (Months)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Remaining Term

Remaining Term (Months)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

A-1

Original LTV Ratios

Original LTV Ratios (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

____________

Credit Score

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

____________

Geographic Distribution of Mortgaged Properties

Geographic Distribution

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Occupancy Type

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

____________

Property Type

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

A-2

Loan Purpose

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total

Prepayment Penalty

Prepayment

Penalty (Years)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

Interest Only Period

Interest Only

Period (Months)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-

Zero

Weighted

Average

Credit Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

Loan Documentation

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

Mortgage Loan Type

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

A-3

Distribution of Seasoning

Months Elapsed Since Origination

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Prepayment Penalty Description

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Margin

Margin (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Initial Periodic Caps

Initial Periodic Cap (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Subsequent Periodic Cap

Subsequent Periodic Cap (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

A-4

Maximum Mortgage Rate

Maximum Mortgage

Rate (%)

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Next Note Rate Adjustment Date

Next Note Rate

Adjustment Date

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Originator Concentration

Originator

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

Servicer Concentration]

Servicer Concentration

Number of

Mortgage

Loans

Aggregate

Principal

Balance

Outstanding

Percent of

Aggregate

Principal

Balance

Outstanding

Weighted

Average

Mortgage Rate

Non-Zero Weighted

Average

Credit

Score

Average

Principal

Balance

Weighted

Average Original

LTV

Total:

____________

A-5

ANNEX B – GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

Except in certain limited circumstances, the globally offered Sequoia Mortgage Trust [_________], Collateralized Mortgage Bonds (the “Global Bonds”) will be available only in book-entry form. Investors in the Global Bonds may hold such Global Bonds through any of The Depository Trust Company (“DTC”), CEDEL or Euroclear. The Global Bonds will be tradeable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds.

Secondary market trading between investors holding Global Bonds through CEDEL and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional Eurobond practice (i.e., seven-calendar day settlement).

Secondary market trading between investors holding Global Bonds through DTC will be conducted according to the rules and procedures applicable to U.S. corporate debt obligations and prior collateralized mortgage bond issues.

Secondary cross-market trading between CEDEL or Euroclear and DTC Participants holding Global Bonds will be effected on a delivery-against-payment basis through the respective Depositaries of CEDEL and Euroclear (in such capacity) and as DTC Participants.

Non-U.S. holders (as described below) of Global Bonds will be subject to U.S. withholding taxes unless such holders meet certain requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their participants.

Initial Settlement

All Global Bonds will be held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors’ interests in the Global Bonds will be represented through financial institutions acting on their behalf as direct and indirect participants in DTC (each, a “DTC Participant”). As a result, CEDEL and Euroclear will hold positions on behalf of their participants through their respective Depositaries, which in turn will hold such positions in accounts as DTC Participants.

Investors electing to hold their Global Bonds through DTC will follow the settlement practices’ applicable to other collateralized mortgage bond issues. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date.

Investors electing to hold their Global Bonds through CEDEL or Euroclear accounts will follow the settlement procedures applicable to conventional Eurobonds, except that there will be no temporary global security and no “lock-up” or restricted period. Global Bonds will be credited to the securities custody accounts on the settlement date against payment in same-day funds.

Secondary Market Trading

Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date.

Trading Between DTC Participants. Secondary market trading between DTC Participants will be settled using the procedures applicable to prior collateralized mortgage bond issues in same-day funds.

Trading Between CEDEL and/or Euroclear Participants. Secondary market trading between CEDEL Participants or Euroclear Participants will be settled using the procedures applicable to conventional Eurobonds in same-day funds.

Trading Between DTC Seller and CEDEL or Euroclear Purchaser. When Global Bonds are to be transferred from the account of a DTC Participant to the account of a CEDEL Participant or a Euroclear Participant, the purchaser will send instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at least one business day prior to settlement. CEDEL or Euroclear will instruct the respective Depositary, as the case may be, to receive the Global Bonds against payment. Payment will include interest accrued on the Global Bonds from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depositary of the DTC Participant’s account against delivery of the Global Bonds. After settlement has been completed, the Global Bonds will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the CEDEL Participant’s or Euroclear Participant’s account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Bonds will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debt will be valued instead as of the actual settlement date.

B-1

CEDEL Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within CEDEL or Euroclear. Under this approach, they may take on credit exposure to CEDEL or Euroclear until the Global Bonds are credited to their accounts one day later.

As an alternative, if CEDEL or Euroclear has extended a line of credit to them, CEDEL Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon the finance settlement. Under this procedure, CEDEL Participants or Euroclear Participants purchasing Global Bonds would incur overdraft charges for one day, assuming they cleared the overdraft when the Global Bonds were credited to their accounts. However, interest on the Global Bonds would accrue from the value date. Therefore, in many cases the investment income on the Global Bonds earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each CEDEL Participant’s or Euroclear Participant’s particular cost of funds.

Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Bonds to the respective European Depository for the benefit of CEDEL Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants.

Trading Between CEDEL or Euroclear Seller and DTC Purchaser. Due to time zone differences in their favor, CEDEL Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Bonds are to be transferred by the respective clearing system, through the respective Depositary, to a DTC Participant. The seller will send instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at least one business day prior to settlement. In these cases CEDEL or Euroclear will instruct the respective Depositary, as appropriate, to deliver the Global Bonds to the DTC Participant’s account against payment. Payment will include interest accrued on the Global Bonds from and including the last coupon payment to and excluding the settlement date on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the CEDEL Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the CEDEL Participant’s or Euroclear Participant’s account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the CEDEL Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back-valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended valued date (i.e., the trade fails), receipt of the cash proceeds in the CEDEL Participant’s or Euroclear Participant’s account would instead be valued as of the actual settlement date.

Finally, day traders that use CEDEL or Euroclear and that purchase Global Bonds from DTC Participants for delivery to CEDEL Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem:

(a)

borrowing through CEDEL or Euroclear for one day (until the purchase side of the day trade is reflected in their CEDEL or Euroclear accounts) in accordance with the clearing system’s customary procedures;

(b)

borrowing the Global Bonds in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Bonds sufficient time to be reflected in their CEDEL or Euroclear account in order to settle the sale side of the trade; or

B-2

(c)

staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the CEDEL Participant or Euroclear Participant.

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

A holder that is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986 holding a book-entry Bond through Clearstream, Euroclear or DTC may be subject to U.S. withholding tax at a rate of 30% unless such holder provides certain documentation to the Trustee or to the U.S. entity required to withhold tax (the “U.S. withholding agent”) establishing an exemption from withholding. A holder that is not a United States person may be subject to 30% withholding unless:

I. the [_______], on behalf of the Trustee, or the U.S. withholding agent receives a statement —

(a)

from the holder on Internal Revenue Service (“IRS”) Form W-8BEN (or any successor form) that —

(i)

is signed by the Bondholder under penalty of perjury,

(ii)

certifies that such owner is not a United States person, and (iii) provides the name and address of the Bondholder, or

(b)

from a securities clearing organization, a bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business that —

(i)

is signed under penalties of perjury by an authorized representative of the financial institution,

(ii)

states that the financial institution has received an IRS Form W-8BEN (or any successor form) from the certificateholder or that another financial institution acting on behalf of the certificateholder has received such IRS Form W-8BEN (or any successor form),

(iii)

provides the name and address of the Bondholder, and

(iv)

attaches the IRS Form W-8BEN (or any successor form) provided by the Bondholder;

II.

the holder claims an exemption or reduced rate based on a treaty and provides a properly executed IRS Form W-8BEN (or any successor form) to the Issuing Entity Administrator or the U.S. withholding agent;

III.

the holder claims an exemption stating that the income is effectively connected to a U.S. trade or business and provides a properly executed IRS Form W-8ECI (or any successor form) to the [______] or the U.S. withholding agent; or

IV.

the holder is a “nonwithholding partnership” and provides a properly executed IRS Form W-8IMY (or any successor form) with all necessary attachments to the Trustee or the U.S. withholding agent. Certain pass-through entities that have entered into agreements with the Internal Revenue Service (for example “qualified intermediaries”) may be subject to different documentation requirements; and such holders are encouraged to consult with their tax advisors when purchasing the Bond.

A book-entry Bondholder holding through Clearstream or Euroclear provides the forms and statements referred to above by submitting them to the person through which he holds an interest in the book-entry Bond, which is the clearing agency, in the case of persons holding directly on the books of the clearing agency. Under certain circumstances a Form W-8BEN, if furnished with a taxpayer identification number, (“TIN”), will remain in effect until the status of the beneficial owner changes, or a change in circumstances makes any information on the form incorrect. A Form W-8BEN, if furnished without a TIN, and a Form W-8ECI will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect.

B-3

In addition, a book-entry Bondholder holding through Clearstream, Euroclear or DTC may be subject to backup withholding unless the holder:

I. provides a properly executed IRS Form W-8BEN, Form W-8ECI or Form W-8IMY(or any successor forms) if that person is not a United States person;

II. provides a properly executed IRS Form W-9 (or any substitute form) if that person is a United States person; or

III. is a corporation, within the meaning of Section 7701(a) of the Internal Revenue Code of 1986, or otherwise establishes that it is a recipient exempt from United States backup withholding.

This summary does not deal with all aspects of federal income tax withholding or backup withholding that may be relevant to investors that are not “United States persons” within the meaning of Section 7701(a)(30) of the Internal Revenue Code. Such investors are encouraged to consult their own tax advisors for specific tax advice concerning their holding and disposing of the book-entry Bond.

The term “United States person” means (1) a citizen or resident of the United States, (2) a corporation or partnership organized in or under the laws of the United States or any state or the District of Columbia (other than a partnership that is not treated as a United States person under any applicable Treasury regulations), (3) an estate the income of which is includible in gross income for United States tax purposes, regardless of its source, or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the issuing entity and one or more United States persons have authority to control all substantial decisions of the trust. Notwithstanding the preceding sentence, to the extent provided in regulations, certain trusts in existence on August 20, 1996 and treated as United States persons prior to such date that elect to continue to be so treated also will be considered United States persons.

B-4

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with any other information or to make any representations not contained in this prospectus supplement and the prospectus. This prospectus supplement and the prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby by anyone in any jurisdiction in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make any such offer or solicitation. We represent the accuracy of the information in this prospectus supplement and the accompanying prospectus only as of the dates on their respective covers.

$[_________] (Approximate)

[LOGO] SEQUOIA MORTGAGE TRUST OR

[LOGO] SEQUOIA ALTERNATIVE LOAN TRUST

[Collateralized-] [Mortgage-] [Asset-] Backed Bonds

[LOGO]

Sponsor and Seller

[LOGO]

Depositor

[LOGO]

Issuing Entity

PROSPECTUS SUPPLEMENT

[INSURER] [LOGO]

[UNDERWRITER(S)] [LOGO]

[Date of prospectus supplement]

Dealers will be required to deliver a prospectus supplement and prospectus when acting as underwriters of the bonds offered hereby and with respect to their unsold allotments or subscriptions. In addition, all dealers selling the bonds, whether or not participating in this offering, may be required to deliver a prospectus supplement and prospectus until ninety days after the date of this prospectus supplement.

Version 2

Subject to Completion, [____________], 200[_]

Prospectus Supplement

(To Prospectus dated [______________], 200[_])

$[_______] (Approximate)

[LOGO] Sequoia Mortgage Trust or [LOGO] Sequoia Alternative Loan Trust

[Collateralized-] [Mortgage-] [Asset-] Backed Bonds

[LOGO] RWT Holdings, Inc. [Sponsor and Seller]

[LOGO] [Depositor]

[LOGO] [Issuing Entity]

Consider carefully the risk factors beginning on page S-[__] of this prospectus supplement and on page [__] of the prospectus.

For a list of capitalized terms used in this prospectus supplement, see index

of defined terms on page [__] of the prospectus.

The bonds are redeemable only under circumstances described in this prospectus supplement.

The bonds represent obligations of the issuing entity only and do not represent an interest in or obligation of the trustee, the depositor or any of their affiliates.

This prospectus supplement may be used to offer and sell bonds only if accompanied by the prospectus.

The Issuing Entity will issue:

· [ ] class(es) of Senior Class [ ] Bonds;

· [ ] class(es) of Subordinated Class [ ] Bonds;

· [One or Two] classes of Residual [Certificates or Bonds].

The Bonds:

· Will be collateralized by primarily year [fixed adjustable] rate, mortgage loans secured by first liens on one- to four-family residential properties;

· Will have various forms of credit enhancement of the types described in this prospectus supplement, including [excess interest,] [overcollateralization,] [subordination,] [a bond insurance policy,] [and] [interest rate swap agreements].[Forms of credit enhancement to be provided as applicable.]

The senior bonds will be unconditionally and irrevocably guaranteed as to payment of insured payments, as defined in this prospectus supplement, pursuant to the terms of the financial guaranty insurance policy to be issued:

[INSURER] [LOGO]

[UNDERWRITER(S)] [LOGO]

The Issuing Entity will make a REMIC election for federal income tax purposes.

Important Notice About Information Presented in this Prospectus Supplement

and the Accompanying Prospectus

The information presented in this prospectus supplement is intended to enhance the general terms of the accompanying prospectus.

We do not claim that the information in this prospectus supplement and prospectus is accurate as of any date other than the dates stated on their respective covers.

This prospectus supplement and the accompanying prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933. Specifically, forward-looking statements, together with related qualifying language and assumptions, are found in the materials, including tables, under the headings “Risk Factors” and “Yield, Prepayment and Weighted Average Life” in this prospectus supplement and “Risk Factors” and “Yield and Prepayment Considerations” in the prospectus. Forward-looking statements are also found in other places throughout this prospectus supplement and the prospectus, and may be identified by accompanying language, including “expects,” “intends,” “anticipates,” “estimates” or analogous expressions, or by qualifying language or assumptions. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results or performance to differ materially from the forward-looking statements. These risks, uncertainties and other factors include, among others, general economic and business conditions, competition, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preference and various other matters, many of which are beyond the depositor's control. These forward-looking statements speak only as of the date of this prospectus supplement. The depositor expressly disclaims any obligation or undertaking to distribute any updates or revisions to any forward-looking statements to reflect changes in the depositor's expectations with regard to those statements or any change in events, conditions or circumstances on which any forward-looking statement is based.

For European Investors Only

(a)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

S-i

(b)

(c)

in any other circumstances which do not require the publication by the issuing entity of a prospectus pursuant to Article 3 of the Prospectus Directive.

S-ii

TABLE OF CONTENTS

Page No.

THE OFFERED BONDS	S-1
SUMMARY OF TERMS	S-2
Sponsor	S-2
Seller	S-2
Depositor	S-2
Issuing Entity	S-2
Bond Trustee	S-2
Owner Trustee	S-2
Issuing Entity Administrator	S-3
Master Servicer	S-3
Servicer	S-3
Originator	S-3
Custodian	S-3
Cut-Off Date	S-3
Closing Date	S-3
The Bonds	S-3
Payments of Interest	S-4
Payments of Principal	S-4
Priority of Payments	S-4
Limited Recourse	S-5
Credit Enhancement	S-5
Maturity Date	S-6
Fees and Expenses	S-6
The Mortgage Loans	S-6
[Pre-funding Feature	S-7
[Revolving Period	S-8
Mortgage Loan Representations and Warranties	S-8
Mortgage Loan Servicing	S-8
Optional Redemption of the Bonds	S-9
Acceleration of Maturity at Events of Default	S-9
Tax Status	S-9
ERISA Considerations	S-9
Legal Investment	S-9
Bond Rating	S-9
RISK FACTORS	S-10
The Current Turbulence in the Financial Markets and Economy May Adversely Affect the Performance and Market Value of Your Securities and These Conditions May Not Improve in the Near Future	S-10
Recent Trends in the Residential Mortgage Market May Adversely Affect the Performance and Market Value of Your Securities	S-10
[Risks Related to Mortgage Loans with Interest-Only Payments	S-11
[Special Default Risk of Second Lien Mortgage Loans	S-11
[Risks Related to Simultaneous Second Liens and Other Borrower Debt	S-11
Geographic Concentration of Mortgage Loans	S-12
Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds	S-12
Potential Inadequacy of Credit Enhancement	S-13
Unpredictability and Effect of Prepayments	S-14
Delay in Receipt of Liquidation Proceeds; Liquidation Proceeds May Be Less Than Mortgage Balance	S-15
Mortgage Loan Modification Programs and Future Legislative Action May Adversely Affect the Performance and Market Value of Your Securities	S-15
Risks Associated With New Laws Relating to Mortgage Loan Servicing	S-15
Violation of Various Federal, State and Local Laws May Result in Losses on the Mortgage Loans	S-16
Risks Associated With Potential New Laws Relating to Mortgage Loan Origination	S-16

S-iii

Page No.


Predatory Lending Laws/High Cost Loans	S-16
Bankruptcy or Insolvency Proceedings Could Delay or Reduce Payments on the Bonds	S-17
DESCRIPTION OF THE MORTGAGE POOL	S-17
General	S-17
[Seller’s Selection Procedures]	S-18
[The Fixed Rate Mortgage Loans	S-18
[Adjustable Mortgage Rates	S-18
[The Indices	S-19
[Primary Mortgage Insurance	S-19
Certain Characteristics of the Mortgage Loans	S-20
[Delinquency and Loss Information for the Pool Assets	S-20
[Conveyance of Subsequent Mortgage Loans	S-20
[Acquisition by the Issuing Entity of Additional Mortgage Loans	S-21
STATIC POOL INFORMATION	S-22
ADDITIONAL INFORMATION	S-23
THE ISSUING ENTITY	S-24
General	S-24
The Owner Trustee	S-24
The Ownership Certificate	S-24
DESCRIPTION OF THE BONDS	S-25
Book-Entry Bonds	S-25
Payments on Mortgage Loans; Accounts	S-26
Payments	S-26
Interest	S-27
Principal	S-28
Priority of Payments and Allocation of Shortfalls	S-29
Stated Maturity	S-30
Structuring Assumptions	S-30
Optional Purchase of Defaulted Loans	S-31
Weighted Average Lives of the Bonds	S-31
Decrement Tables	S-32
PERCENT OF INITIAL CLASS PRINCIPAL AMOUNTS OUTSTANDING	S-32
Redemption at the Option of the Residual Holder	S-32
Acceleration of Maturity at Events of Default under the Indenture	S-32
Controlling Class Under the Indenture	S-34
Credit Enhancement	S-34
Subordination	S-34
The Bond Insurance Policy	S-34
The Insurer	S-34
The Issuing Entity Administrator	S-34
The Bond Trustee	S-35
The Issuing Entity	S-35
The Custodian	S-36
FEES AND EXPENSES OF THE ISSUING ENTITY	S-36
MATERIAL LEGAL PROCEEDINGS	S-37
THE SPONSOR	S-37
THE DEPOSITOR	S-37
AFFILIATIONS AND RELATED TRANSACTIONS	S-38
THE ORIGINATOR(S)	S-38
THE MASTER SERVICER AND THE SERVICER	S-38
Master Servicer	S-38
Servicer	S-38
Delinquency and Foreclosure Experience.	S-39

S-iv

Page No.



ADMINISTRATION OF THE ISSUING ENTITY	S-41
Servicing and Administrative Responsibilities	S-41
Issuing Entity Accounts	S-42
Example of Payments	S-42
THE AGREEMENTS	S-42
General	S-42
Assignment of the Mortgage Loans	S-42
Mortgage Loan Servicing	S-42
Administration	S-42
Reports to Bondholders	S-42
Voting Rights	S-42
Termination of the Issuing Entity	S-42
YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE	S-42
General	S-42
Overcollateralization	S-42
Subordination of the Subordinate Bonds	S-42
Weighted Average Life	S-42
USE OF PROCEEDS	S-42
MATERIAL FEDERAL INCOME TAX CONSEQUENCES	S-42
[General	S-42
Tax Treatment of the Bonds	S-42
Original Issue Discount	S-42
[The Cap Contract Components	S-42
Other Matters	S-42
ERISA MATTERS	S-42
General	S-42
Purchases of the Offered Bonds	S-42
METHOD OF DISTRIBUTION	S-42
LEGAL MATTERS	S-42
RATINGS	S-42
INDEX OF DEFINED TERMS	I-42
ANNEX A: CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS	A-42
ANNEX B: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES	B-42

S-v

THE OFFERED BONDS

The bonds consist of the classes of bonds listed in the table below, together with the Class [___], Class [__], and Class [__] Bonds (the “Offered Bonds”). Only the classes of bonds listed in the tables below are offered by this prospectus supplement. In addition to the bonds, the residual [certificates or bonds] will be issued but will not be offered by this prospectus supplement. [The residual bonds will provide limited credit support for the bonds as described in this prospectus supplement.]

Initial Certificate Ratings

Class

Initial Class Principal Amount(1)

Initial Interest Rate(2)

Interest Rate Formula

Principal Type

Interest Type

Moody’s

S&P

[Residual Certificates Class R-UT and Class R LT]

[Residual Bonds]

____________________________

(1) These balances are approximate and are subject to an increase or decrease of up to 5%, as described in this prospectus supplement.

(2) Reflects the interest rate as of the closing date.

(3) An annual rate equal to the weighted average of the net mortgage rates of the mortgage loans during the applicable period, as described in this

Prospectus Supplement.

(4) The designation “N/R” means that the specified rating agency will not rate the bonds of that class.

The offered bonds will also have the following characteristics:

Class

Record

Date(1)

Delay/Accrual

Period(2)

Interest Accrual Convention

Final Scheduled Payment

Date(3)

Expected Final Payment

Date(4)

Minimum Denomination or Percentage

Interest(5)

Incremental Denomination

CUSIP Number

S-1

SUMMARY OF TERMS

Sponsor

[RWT Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Redwood Trust, Inc.] (the “Sponsor”)

Seller

Depositor

[Sequoia Mortgage Funding Corporation] [or] [Sequoia Residential Funding, Inc.], a Delaware special purpose corporation and indirect wholly-owned subsidiary of Redwood Trust, Inc. (the “Depositor”). On the closing date, [Sequoia Mortgage Funding Corporation] [or] Sequoia Residential Funding, Inc.] will assign all of its interest in the mortgage loans to the issuing entity. The depositor’s address is One Belvedere Place, Suite [320] [or] [330], Mill Valley, California 94941, and its telephone number is (415) 389-7373.

Issuing Entity

Bond Trustee

[_______________________], a banking corporation organized under the laws of [_____________] (the “Bond Trustee”).

Owner Trustee

[_______________________], a banking corporation organized under the laws of the state of Delaware (the “Owner Trustee”).

S-2

Issuing Entity Administrator

Master Servicer

[_______________________] will act as master servicer for the mortgage loans (the “Master Servicer”).

Servicer

[_______________________] will be servicer of the mortgage loans [All Servicers that service 10% or more of the pool assets will be identified] (the “Servicer”).

Originator

[_______________________]originated the mortgage loans, directly or through its correspondents (the “Originator”). [All Originators of 10% or more of the pool assets will be identified.]

Custodian

[_______________________] (the “Custodian”) will maintain custody of the mortgage files relating to the mortgage loans, on behalf of the issuing entity.

Cut-Off Date

[____________, 200__] (the “Cut-Off Date”).

Closing Date

On or about [___________, 200__] (the “Closing Date”).

The Bonds

The classes of Sequoia Mortgage Trust [_______] Bonds, Series [_____], or Sequoia Alternative Loan Trust [____] Bonds, Series [____] (the “Bonds”), issued with the initial approximate characteristics set forth under “The Offered Bonds” in the table on page S-1.

The bonds will represent obligations of the issuing entity and will be secured by collateral consisting of [describe assets of the issuing entity].

S-3

Payments of Interest

[If the option to purchase the mortgage loans is not exercised by the holder of the ownership certificate on the first payment date following the month in which the total principal balance of the mortgage loans declines to less than [ ]% of their initial total principal balance as described under “—Optional Purchase of the Mortgage Loans” below, then with respect to the next payment date and each payment date thereafter, the interest rate calculation described in the paragraph above will be increased for each class of bonds, by substituting in clause (1) the applicable annual rate as described in the table on page S-[_____], subject in each case to the limitations described above.] [To be provided as applicable.]

[We refer you to “—Optional Purchase of the Mortgage Loans” below.]

For a complete description of the available funds rate and the priority of payment of interest, see “Description of the Bonds—Payments of Interest” in this prospectus supplement.

Payments of Principal

We refer you to “Description of the Bonds—Payments of Principal” in this prospectus supplement.

Priority of Payments

S-4

Any realized losses (the “Realized Losses”) on the mortgage loans not covered by any credit enhancement feature will be allocated first to the Investor Certificate, second to the subordinated bonds and third, in the event the insurer defaults on its obligations under the bond insurance policy, to the senior bonds.

We refer you to “Description of the Bonds — Priority of Payments and Allocation of Shortfall” in this prospectus supplement for more information.

Limited Recourse

Credit Enhancement

The Class [______] Bonds are more likely to experience losses than the Class [______] Bonds and the senior bonds; the Class [______] Bonds are more likely to experience losses than the senior bonds.

Subordination. The subordinated bonds [and the residual bonds] will provide credit enhancement for the senior bonds. [The residual bonds will provide credit enhancement for the subordinated bonds.]

The rights of holders of the subordinated bonds [and the residual bonds] to receive payments with respect to the mortgage loans will be subordinated to such rights of the holders of the senior bonds[, and the rights of the holder of the residual bonds,] will be further subordinated to such rights as the holders of the subordinated bonds.

S-5

[Third party providers of credit support for 10% or more of the pool assets to be provided as applicable.]

[Other forms of credit enhancement to be identified and described as applicable for each transaction.]

Maturity Date

Fees and Expenses

The Mortgage Loans

S-6

The mortgage loans will not be insured or guaranteed by any government agency.

The Depositor expects that the mortgage loans will have the following approximate characteristics as of the cut-off date:

Mortgage Pool Summary

	Range or Total	Weighted Average	Total Percentage
Number of Mortgage Loans
Total Principal Balance
Principal Balances
Mortgage Rates
Original Terms to Maturity (in months)
Remaining Terms to Maturity (in months)
Original Loan-to Value Ratios
Number of One-Year LIBOR Mortgage Loans
Number of One-Year CMT Mortgage Loans
Number of Interest Only Mortgage Loans
Geographic Concentration in Excess of 10.00% of the Total Scheduled Principal Balance:
· California
Maximum Single Zip Code Concentration
Credit Scores
Number of Mortgage Loans with Prepayment Penalties at Origination
Gross Margins
Maximum Mortgage Rates
Minimum Mortgage Rates
Months to Next Mortgage Rate Adjustment
Initial Caps
Periodic Caps

* The weighted average is based only on the mortgage loans having credit scores.

[Pre-funding Feature

On the closing date, the securities administrator will deposit up to approximately $[ ] of the net proceeds from the issuance of the notes, which represents approximately [ ]% of the mortgage loans as of the cut-off date, into a separate pre-funding account established for the mortgage pool, to acquire additional mortgage loans for the mortgage pool. During the pre-funding period (i.e., from the closing date to[ ]) amounts on deposit in the pre-funding account may be withdrawn by the securities administrator from time to time to purchase from the depositor additional mortgage loans meeting the same criteria applicable to the mortgage pool described in this prospectus supplement, provided certain other conditions are satisfied at the time of purchase. The seller has identified additional mortgage loans that are expected to have the characteristics described under “Description of the Mortgage Pool— Acquisition by the Issuing Entity of Additional Mortgage Loans.” Funds on deposit in the pre-funding account may only be applied to acquire additional mortgage loans for the mortgage pool.

If funds in the pre-funding account are not completely used for that purpose during the pre-funding period, the remaining funds in the pre-funding account will be paid as a principal prepayment to related noteholders in accordance with the principal payment priority provisions described in this prospectus supplement. This payment will be made on the [ ] payment date. The depositor anticipates that substantially all of the funds in the pre-funding account will be used to purchase additional mortgage loans prior to the close of the pre-funding period.

S-7

At the closing date, the depositor will also deposit approximately $[ ] in a capitalized interest account for use by the securities administrator as needed during the pre-funding period to ensure that all required interest payments are made on the notes.

[Revolving Period

On each payment date during the revolving period (i.e. from the closing date until [ ]), the depositor may direct the securities administrator to purchase from the depositor for inclusion in the trust fund additional mortgage loans[, up to an aggregate maximum purchase price of $[ ], which represents approximately [ ]% of the total principal balance of the mortgage loans as of the cut-off date]. If the depositor so directs, the securities administrator will deposit all or a portion of the amount of principal payable on the mortgage loans [and excess interest] that would otherwise be made to noteholders into a separate revolving account established for the mortgage pool, and will apply deposits in the revolving account to fund the purchase of such additional mortgage loans, provided certain other conditions are satisfied at the time of purchase. Funds on deposit in the revolving account may only be applied to acquire additional mortgage loans for the mortgage pool. The additional mortgage loans will have the same general characteristics as the mortgage pool described in this prospectus supplement.

See “DESCRIPTION OF THE MORTGAGE POOL; Acquisition by the Issuing Entity of Additional Mortgage Loans” in this prospectus supplement and “THE ISSUING ENTITIES AND THE ISSUING ENTITY ASSETS—Revolving Period” in the prospectus for a general description of the characteristics of any mortgage loans to be acquired by the issuing entity during the revolving period.]

Mortgage Loan Representations and Warranties

The seller has made or assigned certain representations and warranties concerning the mortgage loans to the depositor under the mortgage loan purchase agreement. The depositor’s rights to these representations and warranties will be assigned to the issuing entity under the sale and servicing agreement and pledged by the issuing entity to the bond trustee under the indenture for the benefit of bondholders.

Mortgage Loan Servicing

The mortgage loans will be serviced by [_________________] under the applicable servicing agreement.

S-8

Optional Redemption of the Bonds

Acceleration of Maturity at Events of Default

Tax Status

For federal income tax purposes, the trust fund, will comprise one or more, “real estate mortgage investment conduits” or “REMIC”, organized in a [tiered] REMIC structure. The [Class A-1 Bonds and Class B-1 Bonds] will represent beneficial ownership of REMIC regular interests in the [upper tier] REMIC identified in the pooling and servicing agreement.

The Class R Bonds will represent the beneficial ownership of the sole class of residual interest in [each][the] REMIC.

ERISA Considerations

A fiduciary of any employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended, or section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), should carefully review with its legal advisors whether the purchase or holding of Class A Bonds could give rise to a transaction prohibited or not otherwise permissible under applicable law.

Legal Investment

The Class [ ] Bonds will [not] constitute “mortgage related securities” under the Secondary Mortgage Market Enhancement Act of 1984 or SMMEA.

There may be other restrictions on the ability of certain types of investors to purchase the bonds that prospective investors should also consider:

Bond Rating

These ratings are not recommendations to buy, sell or hold these bonds. A rating may be changed or withdrawn at any time by the assigning rating agency.

The ratings do not address the possibility that, as a result of principal prepayments, the yield on your bonds may be lower than anticipated.

The ratings do not address the payment of any basis risk shortfalls with respect to the offered bonds.

S-9

RISK FACTORS

The Current Turbulence in the Financial Markets and Economy May Adversely Affect the Performance and Market Value of Your Securities and These Conditions May Not Improve in the Near Future

Recent Trends in the Residential Mortgage Market May Adversely Affect the Performance and Market Value of Your Securities

S-10

[Risks Related to Mortgage Loans with Interest-Only Payments

The interest-only mortgage loans may present special default and prepayment risks, particularly for bonds purchased at a discount.

[Special Default Risk of Second Lien Mortgage Loans

[Risks Related to Simultaneous Second Liens and Other Borrower Debt

S-11

We refer you to “Risk Factors — Risks Related to Simultaneous Second Liens and Other Borrower Debt” in the accompanying prospectus.]

Geographic Concentration of Mortgage Loans

Mortgage Loan Interest Rates May Limit Interest Rates on the Bonds

A variety of factors could limit the interest rates and adversely affect the yields to maturity on the variable rate securities. Some of these factors are described below.

S-12

Potential Inadequacy of Credit Enhancement

after the total principal amount of the subordinate bonds has been reduced to zero, losses on the mortgage loans may reduce the principal amounts (or notional amounts) of the senior bonds.

S-13

[In addition, one or more loan-level primary mortgage insurance policies may be acquired on behalf of the trust from primary mortgage insurance providers, providing the initial insurance coverage specified in this prospectus supplement for those first lien mortgage loans with original loan-to-value ratios greater than 80%. ]

Unpredictability and Effect of Prepayments

S-14

A prepayment of a mortgage loan will usually result in a payment of principal on the bonds:

The prepayment experience of the mortgage loans to be included in the trust may differ significantly from that of other first and second lien residential mortgage loans.

We refer you to “Yield, Prepayment and Weighted Average Life” in this prospectus supplement and “Yield and Prepayment Considerations” the accompanying prospectus for a description of factors that may influence the rate and timing of prepayments on the mortgage loans.

Delay in Receipt of Liquidation Proceeds; Liquidation Proceeds May Be Less Than Mortgage Balance

Mortgage Loan Modification Programs and Future Legislative Action May Adversely Affect the Performance and Market Value of Your Securities

Risks Associated With New Laws Relating to Mortgage Loan Servicing

S-15

Violation of Various Federal, State and Local Laws May Result in Losses on the Mortgage Loans

Mortgage loans are also subject to various federal laws, including:

the federal Truth-in-Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to borrowers regarding the terms of their mortgage loans;

the Fair Credit Reporting Act, which regulates the use and reporting of information related to the borrower’s credit experience.

The seller of the mortgage loans represents in the mortgage loan sale agreement described in this prospectus supplement that each mortgage loan was originated in compliance with applicable federal, state and local laws and regulations. In the event of a breach of this representation, the seller will be obligated to cure the breach or repurchase or replace the affected mortgage loan in the manner described in this prospectus supplement and under “The Agreements— _______] ” in this prospectus supplement.

Risks Associated With Potential New Laws Relating to Mortgage Loan Origination

Predatory Lending Laws/High Cost Loans

S-16

Bankruptcy or Insolvency Proceedings Could Delay or Reduce Payments on the Bonds

DESCRIPTION OF THE MORTGAGE POOL

General

The Mortgage Loans are [_______] rate Mortgage Loans. Interest on the Mortgage Loans accrues on the basis of [______].

S-17

[Approximately [____]%,[____]%,[____]% and [____]% of the mortgage loans are secured by mortgaged properties located in the states of [____], respectively.]

[Disclose if any state or geographic region has a 10% or greater concentration.]

The Seller will represent and warrant that no Mortgage Loan is a “high cost” or “covered” loan under federal, state or local predatory lending laws.

[Seller’s Selection Procedures]

[Insert Description] [and] [Insert amount of expenses incurred by Depositor in connection with the selection and acquisition of the pool assets payable from the offering proceeds.]

[The Fixed Rate Mortgage Loans

The “Fixed Rate Mortgage Loans” consist of approximately [____] fixed rate Mortgage Loans, with an aggregate principal balance as of the cut-off date of approximately $[____]. The Fixed Rate Mortgage Loans had individual principal balances at origination of at least $[____] but not more than $[____], with an average principal balance at origination of approximately $[____]. Approximately[____]% of the Fixed Rate Mortgage Loans have terms to maturity from the date of origination of not more than thirty years. The Fixed Rate Mortgage Loans have a weighted average remaining term to calculated maturity of approximately [____] months as of the cut-off date. Approximately [____]% of the Fixed Rate Mortgage Loans are balloon Mortgage Loans. Approximately [____]% of the Fixed Rate Mortgage Loans have been modified.]

[To be provided as applicable.]

[Adjustable Mortgage Rates

As of the cut-off date, [________]% of the Mortgage Loans will provide for semi-annual adjustment of the related Mortgage Rate based on the six-month LIBOR index and [______]% of the Mortgage Loans will provide for monthly adjustment of the related Mortgage Rate based on the one-month LIBOR index, each as described under “—The Indices” below. With respect to each Mortgage Loan, there will be corresponding adjustments to the monthly payment amount, in each case on each Adjustment Date applicable thereto; provided that the first such adjustment for all of the Mortgage Loans will occur, in the case of approximately [_______]% of the Mortgage Loans, after an initial period of approximately six months following origination, in the case of approximately [_______]% of the Mortgage Loans, after an initial period of approximately three years following origination, in the case of approximately [_____]% of the Mortgage Loans, after an initial period of approximately five years following origination and, in the case of approximately _______ [_____]% of the Mortgage Loans, after an initial period of approximately seven years following origination On each Adjustment Date for a Mortgage Loan, the Mortgage Rate will be adjusted to equal the sum, rounded generally to the next highest or nearest multiple of 1/8%, of the related Index and the related Gross Margin, provided that the Mortgage Rate on each such Mortgage Loan will not increase or decrease by more than the related Periodic Cap (ranging from [____]% to [____]%) (the “Periodic Cap”) as specified in the related mortgage note on any related Adjustment Date and will not exceed the related Maximum Rate over the life of such Mortgage Loan or be less than the Minimum Rate. Effective with the first monthly payment due on each Mortgage Loan after each related Adjustment Date after the interest-only period, if any, has concluded, the monthly payment amount will be adjusted to an amount that will amortize fully the outstanding principal balance of the related Mortgage Loan over its remaining term, and pay interest at the Mortgage Rate as so adjusted. Due to the application of the Periodic Caps and Maximum Rates, the Mortgage Rate on each such Mortgage Loan, as adjusted on any related Adjustment Date, may be less than the sum of the related Index and the related Gross Margin, rounded as described herein. We refer you to “—The Indices” below.

S-18

The Mortgage Loans do not permit the related borrower to convert the adjustable Mortgage Rate to a fixed Mortgage Rate.]

[To be provided as applicable.] [May vary in accordance with structure of transaction.]

[The Indices

[To be provided as applicable.]

[Primary Mortgage Insurance

These primary mortgage insurance policies provide limited protection against losses on defaulted 80+ loan-to-value loans and such protection is subject to various limitations and exclusions including, for example, losses resulting from fraud. As a result, coverage may be denied or limited on some 80+ loan-to-value loans. In addition, because the amount of coverage depends on the Loan-to-Value Ratio at the inception of the policy, a decline in the value of a Mortgaged Property will not result in increased coverage, and the Trust may still suffer a loss on a Mortgage Loan covered by a primary mortgage insurance policy The providers of the primary mortgage insurance policies may also affect the timing and conduct of foreclosure proceedings and other servicing decisions regarding defaulted Mortgage Loans covered by the related primary mortgage insurance policy. The Servicer is responsible for paying the premiums under the LPMI Policies. We refer you to “Insurance — Primary Mortgage Insurance Policies” in the prospectus.]

[To be provided as applicable.]

S-19

Certain Characteristics of the Mortgage Loans

[Delinquency and Loss Information for the Pool Assets

Delinquency and loss information for the mortgage pool, including statistical information regarding delinquencies and losses, will be included.]

[Conveyance of Subsequent Mortgage Loans

As of the cut-off date, the mortgage loans expected to be conveyed as the subsequent mortgage loans by the Seller are expected to have the following characteristics:

Number of Subsequent Mortgage Loans

Total Scheduled Principal Balance

Mortgage Rates:
Weighted Average
Range

Weighted Average Remaining Term to Maturity (in months)

Original Loan-to-Value Ratios:
Weighted Average
Range

Scheduled Principal Balances:
Average
Range

The subsequent mortgage loans conveyed on the subsequent transfer date are selected in a manner reasonably believed not to be adverse to the interests of the Bondholders;

S-20

The conveyance of the subsequent mortgage loans on the subsequent transfer date will not result in a reduction or withdrawal of any ratings assigned to the Offered Bonds;

[No subsequent mortgage loan conveyed on the subsequent transfer date may be more than one monthly payment delinquent in payment;]

Each subsequent mortgage loan will have been underwritten substantially in accordance with the applicable originator’s underwriting guidelines;

No subsequent mortgage loan may have a remaining term to maturity exceeding [____] months;

[No subsequent mortgage loan may have a Loan-to-Value Ratio greater than [125]%;]

[Acquisition by the Issuing Entity of Additional Mortgage Loans

On the first Payment Date and until [___________], 200[__] (the “Revolving Period”), the Depositor may direct the Issuing Entity Administrator on behalf of the Trust to apply all or a portion of the payments that would otherwise be made to Bondholders in respect of principal [and excess interest] to purchase from the Depositor for inclusion in the Trust Fund additional mortgage loans (“Additional Mortgage Loans”) of the same general character as the Mortgage Loans included in the Trust Fund on the Closing Date. If the Depositor so directs, the Issuing Entity Administrator on behalf of the Trust will deposit all or a portion of the amount of principal payable on the Mortgage Loans [and excess interest] that would otherwise be made to Bondholders into an eligible account (the “Revolving Account”), and will apply deposits in the Revolving Account to fund the purchase of Additional Mortgage Loans, provided certain other conditions are satisfied at the time of purchase. Funds on deposit in the Revolving Account may only be applied to acquire Additional Mortgage Loans for the Mortgage Pool.

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Pursuant to the Sale and Servicing Agreement, the conveyance of Additional Mortgage Loans to the Issuing Entity Administrator on behalf of the Trust may be made on any Business Day during the Revolving Period, subject to certain conditions set forth in the Sale and Servicing Agreement being satisfied, including, among others that:

The Additional Mortgage Loans are selected in a manner reasonably believed not to be adverse to the interests of the Bondholders;

[The Bond Trustee receives an Officer’s Certificate confirming the satisfaction of each condition precedent specified in the Sale and Servicing Agreement and opinions of counsel with respect to certain corporate, bankruptcy and tax matters relating to the transfer of Additional Mortgage Loans in the forms substantially similar to those delivered on the Closing Date;]

The conveyance of the Additional Mortgage Loans will not result in a reduction or withdrawal of any ratings assigned to the Offered Bonds;

[No Additional Mortgage Loan may be more than one monthly payment delinquent in payment at the time of conveyance to the Trust];

Each Additional Mortgage Loan will have been underwritten substantially in accordance with the applicable originator’s underwriting guidelines;

No Additional Mortgage Loan may have a remaining term to maturity exceeding [ ] months;

[No Additional Mortgage Loan may have a Loan-to-Value Ratio greater than 100%;]

[Additional transfer requirements and termination triggers to be described, as applicable.]]

Any amounts remaining in the Revolving Account at the end of the Revolving Period will be distributed [priority of payment to be provided, as applicable].

STATIC POOL INFORMATION

Static pool information with respect to the sponsor’s prior securitized pools during the period from [specify date] to [specify date], presented by pool, is available online at http://www.sequoia-reports.com. Access to this web address is unrestricted and free of charge. Information available at this web address is deemed to be part of this prospectus supplement, except to the extent provided under "Static Pool Information" in the accompanying prospectus. [A reference to any third-party static pool information is to be provided, as applicable.]

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ADDITIONAL INFORMATION

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THE ISSUING ENTITY

General

The issuing entity is a statutory trust established under the laws of the State of Delaware by an amended and restated deposit trust agreement, dated as of [_________], 200[__] . The issuing entity was formed for the sole purpose of issuing the bonds and the residual [certificates or bonds]. The depositor is the settlor and sole beneficiary of the issuing entity and [_____________] is the owner trustee of the issuing entity. The depositor is a limited purpose finance corporation the capital stock of which is wholly owned by [_________________] Redwood Trust, Inc., a Maryland corporation (“Redwood Trust”). Redwood Trust will be the manager of the issuing entity pursuant to a management agreement (the “Management Agreement”) entered into with the issuing entity. None of the depositor, Redwood Trust, [_______________] or any of their respective affiliates has guaranteed or is otherwise obligated with respect to payment of the bonds and no person or entity other than the issuing entity is obligated to pay the bonds, except as specifically set forth in this prospectus supplement with regard to the bond insurance policy.

The Indenture prohibits the Issuing Entity from incurring any indebtedness other than the bonds, or assuming or guaranteeing the indebtedness of any other person.

The Owner Trustee

[__________] (the “Owner Trustee”) will act not in its individual capacity but solely as the Owner Trustee under the Trust Agreement. [________] is a [___________] and its principal offices are located at [_____________]. The on going fees of the Owner Trustee will be paid by the Master Servicer. The Owner Trustee will be entitled to reimbursement for expenses and certain other amounts (including its fees to the extent not paid by the Master Servicer and certain indemnification amounts) prior to payment of any amounts to Bondholders.

[Disclosure regarding the Owner Trustee’s experience serving as a trustee in the securitization of similar asset types to be provided for each transaction.]

The Ownership Certificate

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DESCRIPTION OF THE BONDS

General

The Bonds [and the Residual Certificates] will be issued pursuant to the Indenture. Set forth below are summaries of the specific terms and provisions pursuant to which the Bonds [and the Residual Certificates] will be issued. The following summaries are subject to, and are qualified in their entirety by reference to, the provisions of the Indenture. When particular provisions or terms used in the Indenture are referred to, the actual provisions (including definitions of terms) are incorporated by reference.

The Sequoia Mortgage Trust [____], Collateralized Mortgage Bonds (the “Bonds”), will consist of the Class A-1 Bonds (the “Senior Bonds”) and the Class B-1 Bonds (the “Subordinated Bonds”) [and the Residual Bonds (the “Residual Bonds”)]. [The Issuing Entity will also issue the Class R-UT Certificate and Class R-LT Certificate (the Class R-UT Certificate and the Class R-LT Certificate, collectively, the “Residual Certificates”)] as described herein. The Senior Bonds and the Subordinated Bonds are collectively referred to herein as the “Offered Bonds.” Only the Bonds are offered hereby. The Classes of Bonds will have the respective Bond Interest Rates described on the cover hereof.

The “Class Principal Amount” of (a) the Senior Bonds (the “Senior Class Principal Amount”) as of any Payment Date is the Original Senior Class Principal Amount reduced by all amounts previously distributed to holders of the Senior Bonds as payments of principal, (b) the Subordinated Bonds (the “Subordinated Class Principal Amount”) as of any Payment Date is the lesser of (i) the aggregate of the Stated Principal Balances of the Mortgage Loans, less the Senior Class Principal Amount immediately prior to such date, and (ii) the Original Subordinated Class Principal Amount reduced by all amounts previously distributed to holders of the Subordinated Bonds as payments of principal [and (c) the Residual Bonds (the “Residual Class Principal Amount”) as of any Payment Date is the lesser of: (i) the aggregate of the Stated Principal Balances of the Mortgage Loans less the Senior and Subordinated Class Principal Amount immediately prior to such date, and (ii) the Original Residual Class Principal Amount reduced by all amounts previously distributed to holders of the Residual Bonds as payments of principal]. The Senior Bonds will have an original Senior Class Principal Amount of $[________] (the “Original Senior Class Principal Amount”) and the Subordinated Bonds will have an original Subordinated Class Principal Amount of $[________] (the “Original Subordinated Class Principal Amount”) [and the Residual Bonds will have an original Residual Class Principal Amount of $[_____] (the “Original Residual Class Principal Amount”].

Book-Entry Bonds

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Because of time zone differences, credits of securities received in CEDEL or Euroclear as a result of a transaction with a Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or Euroclear as a result of sales of securities by or through a CEDEL Participant (as defined herein) or Euroclear Participant (as defined herein) to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant CEDEL or Euroclear cash account only as of the business day following settlement in DTC. For information relating to tax documentation procedures relating to the Bonds, see “ MATERIAL FEDERAL INCOME TAX CONSEQUENCES — Withholding with Respect to Certain Foreign Investors” and “— Backup Withholding” in the prospectus and “GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES — Certain U.S. Federal Income Tax Documentation Requirements” in Annex B hereto, which Annex B is attached to this prospectus supplement and is incorporated by reference herein.

Payments on Mortgage Loans; Accounts

On or prior to the Closing Date, the Master Servicer will establish and maintain or cause to be established and maintained a separate account or accounts for the collection of payments on the Mortgage Loans (the “Collection Account”). On or prior to the Closing Date, the Bond Trustee will establish an account (the “Payment Account”), which will be maintained with the Bond Trustee in trust for the benefit of the Bondholders. On or prior to the business day immediately preceding each Payment Date, the Master Servicer will withdraw from the Collection Account the Bond Payment Amount for such Payment Date, to the extent of Available Funds on deposit therein, and will deposit such amount in the Payment Account Payment Account. The “Bond Payment Amount” for any Payment Date will equal the sum of (i) the Senior Interest Payment Amount, (ii) the Senior Principal Payment Amount, (iii) the Subordinated Interest Payment Amount and (iv) the Subordinated Principal Payment Amount [, (v) the Residual Interest Payment Amount, and (vi) the Residual Principal Payment Amount] (as each such term is defined herein). Funds credited to the Bond Account or the Payment Account Payment Account may be invested at the direction of the Depositor for the benefit and at the risk of the Depositor in Permitted Investments, as defined in the Master Servicing Agreement, that are scheduled to mature on or prior to the business day preceding the next Payment Date.

Payments

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As more fully described herein, payments will be made on each Payment Date from Available Funds in the following order of priority: (i) to interest on the Senior Bonds; (ii) to principal of the Senior Bonds; (iii) to interest on the Subordinated Bonds; (iv) to principal of the Subordinated Bonds; [(v) to interest on the Residual Bonds; (vi) to principal of the Residual Bonds; and] [(vii) to the holder of the Residual Certificates], all remaining Available Funds, subject to certain limitations set forth herein under “— Principal.”

On each Payment Date after the Subordinated Class Principal Amount and the Residual Class Principal Amount have been reduced to zero, the amount, if any, by which the Senior Interest Payment Amount and the Senior Principal Payment Amount exceed the Available Funds, shall be paid by the Insurer to the Senior Bondholders pursuant to the Bond Insurance Policy.

Interest

The Bond Interest Rate for each Class of Bonds for each Payment Date (each, a “Bond Interest Rate”) is described on the cover hereof. On each Payment Date, to the extent of funds available therefor, each Class of Bonds will be entitled to receive an amount allocable to interest as described below (as to each such Class, as applicable, the “Interest Payment Amount”) with respect to the related Interest Accrual Period. With respect to each Payment Date, the “Interest Accrual Period” for each Class of Bonds will be the [calendar month] preceding the month of such Payment Date.

The Interest Payment Amount for the Senior Bonds (the “Senior Interest Payment Amount”) will be equal to the sum of (i) interest at the Senior Bond Interest Rate on the Senior Class Principal Amount, and (ii) the sum of the amounts, if any, by which the amount described in clause (i) above on each prior Payment Date exceeded the amount actually distributed as interest on such prior Payment Dates and not subsequently distributed. The Interest Payment Amount for the Subordinated Bonds (the “Subordinated Interest Payment Amount”) will be equal to the sum of (i) interest at the Subordinated Bond Interest Rate (the “Subordinated Bond Interest Rate”) on the Subordinated Class Principal Amount, (ii) interest at the Subordinated Bond Interest Rate on any Subordinated Principal Carryover Shortfall, (iii) the sum of the amounts, if any, by which the sum of the amounts described in clauses (i) and (ii) above on each prior Payment Date exceeded the amount actually distributed as interest on such prior Payment Dates and not subsequently distributed (the “Subordinated Interest Carryover Shortfall”) and (iv) interest at the Subordinated Bond Interest Rate on any Subordinated Interest Carryover Shortfall (to the extent permitted by applicable law). [The Interest Payment Amount for the Residual Bonds (the “Residual Interest Payment Amount”) will be equal to sum of (i) interest at the Residual Bond Interest Rate on the Residual Class Principal Amount, (ii) interest at the Residual Bond Interest Rate on any Residual Principal Carryover Shortfall, (iii) the sum of the amounts, if any, by which the sum of the amounts described in clauses (i) and (ii) above on each prior Payment Date exceeded the amount actually distributed as interest on such prior Payment Dates and not subsequently distributed (the “Residual Interest Carryover Shortfall”) and (iv) interest at the Residual Bond Interest Rate on any Residual Interest Carryover Shortfall (to the extent permitted by applicable law).] The Senior Bonds will not be entitled to interest on any Senior Interest Payment Amount not paid when due prior to such time as the Bonds are declared immediately due and payable upon the occurrence of an Event of Default as described herein under “— Priority of Payments and Allocation of Shortfalls.”

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The interest payable on any Payment Date as described above, but not the entitlement thereto, for the Subordinated Bonds, and in the event of a default of the Insurer under the Bond Insurance Policy, the Senior Bonds, will be reduced by their respective proportionate amounts of “Net Interest Shortfalls” for such Payment Date, if any, based on the amount of interest each Class of Bonds would otherwise be entitled to receive on such Payment Date before taking into account any reduction in such amounts resulting from such Net Interest Shortfalls. With respect to any Payment Date, the “Net Interest Shortfall” is equal to the amount by which the sum of (i) the amount of interest which would otherwise have been received with respect to any Mortgage Loan that was the subject of a Relief Act Reduction and (ii) any Prepayment Interest Shortfalls, in each case during the calendar month preceding the month of such Payment Date, exceeds the sum of (i) the Master Servicing Fee for such period and (ii) the amounts otherwise payable on such Payment Date to the holder of the Residual Bond as described in clauses “fifth”, “sixth” and “seventh” under “— Priority of Payments and Allocation of Shortfalls” below. A “Relief Act Reduction” is a reduction in the amount of monthly interest payment on a Mortgage Loan pursuant to the Servicemembers Civil Relief Act. A “Prepayment Interest Shortfall” is the amount by which interest paid by a borrower in connection with a prepayment of principal on a Mortgage Loan is less than one month’s interest at the related Mortgage Rate on the Stated Principal Balance of such Mortgage Loan.

Accrued interest to be paid on any Payment Date will be calculated, in the case of each Class of Bonds, on the basis of the related Class Principal Amount or Invested Amount, as applicable, immediately prior to such Payment Date. Interest will be calculated and payable on the basis of a 360-day year divided into twelve 30-day months.

Principal

General. All payments and other amounts received in respect of principal of the Mortgage Loans will be allocated among the Senior Bonds, the Subordinated Bonds [and the Residual Bonds].

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The “Senior Percentage” for any Payment Date is the percentage equivalent of a fraction the numerator of which is the Senior Class Principal Amount immediately prior to such date and the denominator of which is the sum of (i) the Senior Class Principal Amount, (ii) the Subordinated Class Principal Amount and [(iii) the Residual Class Principal Amount], in each case immediately prior to such date. The “Subordinated Percentage” for any Payment Date is the percentage equivalent of a fraction the numerator of which is the Subordinated Class Principal Amount immediately prior to such date and the denominator of which is the sum of (i) the Senior Class Principal Amount, (ii) the Subordinated Class Principal Amount [and (iii) the Residual Class Principal Amount], in each case immediately prior to such date.

[Residual Principal Payment Amount. On each Payment Date, to the extent of Available Funds therefor, the Residual Principal Payment Amount shall be distributed as set forth in the Priority of Payments and Allocation of Shortfalls.]

Priority of Payments and Allocation of Shortfalls

Prior to the declaration that the Bonds are due and payable, on any Payment Date Available Funds will be applied in the following order of priority:

first, to the Senior Interest Payment Amount;

second, to the Senior Principal Payment Amount;

third, to the Subordinated Interest Payment Amount;

fourth, to the Subordinated Principal Payment Amount;

fifth, to the Residual Bond Interest Payment Amount;

sixth, to the Residual Bond Principal Amount Payment; and

seventh, to the holder of the Residual Certificate, the balance of any Available Funds remaining in the Bond Account.

[To the extent helpful to the understanding of the securities, a graphic illustration of the flow of funds, payment priorities and allocations will be inserted here.]

If a Realized Loss results in the Stated Principal Balances of the Mortgage Loans declining in an amount greater than the sum of (i) the payments of principal on the Senior Bonds, (ii) the payments of principal on the Subordinated Bonds and [(iii) the payments of principal on the Residual Bonds], the Senior Percentage, the Subordinated Percentage [and the Residual Percentage] may shift (as a result of their methods of computation as described above under “— Principal”) such that funds available in the Payment Account Payment Account for payments of principal on each future Payment Date may be allocated in a higher ratio to the Senior Bonds as a result of such shortfall. This shift of the Senior Percentage, the Subordinated Percentage [and the Residual Percentage] may cause the Senior Bonds to amortize more rapidly, and the Subordinated Bonds [and the Residual Bonds] to amortize more slowly, than would otherwise have been the case in the absence of such shortfalls. An investor should consider the risk that, in the case of any Bond purchased at a discount, a slower than anticipated rate of principal payments on the Mortgage Loans could result in an actual yield to such investor that is lower than the anticipated yield and, in the case of any Bond purchased at a premium, a faster than anticipated rate of principal payments on the Mortgage Loans could result in an actual yield to such investor that is lower than the anticipated yield. In addition, an investor in the Bonds should consider the risk that there can be no assurance that investors in the Bonds will be able to reinvest the payments thereon at yields equaling or exceeding the yields on such Bonds. It is possible that yields on any such reinvestments will be lower, and may be significantly lower, than the yields on the Bonds. In general, a “Realized Loss” means, with respect to a Liquidated Mortgage Loan, the amount by which the remaining unpaid principal balance of the related Mortgage Loan exceeds the amount of Liquidation Proceeds applied to the principal balance of the related Mortgage Loan. A “Liquidated Mortgage Loan” is a defaulted Mortgage Loan as to which the Master Servicer has determined that all recoverable liquidation and insurance proceeds have been received.

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Under the Indenture, an Event of Default will not occur solely due to the occurrence of Shortfalls that affect only the Subordinated Bonds [and/or the Residual Bonds] until all the Senior Bonds have been paid in full and then only if Shortfalls on the Subordinated Bonds have not been paid. In addition, an Event of Default by reason of any Shortfalls that affect the Senior Bonds will occur on any Payment Date only when the Pool Principal Balance is less than the principal amount of the Senior Bonds outstanding after application of all available amounts on deposit in the Payment Account on such Payment Date. Nevertheless, at any time following an Event of Default arising from a Shortfall affecting the Senior Bonds, the holders of outstanding Bonds, whether Senior Bonds or Subordinated Bonds [or Residual Bonds], representing more than 50% in principal amount of all Bonds then outstanding, may declare the Bonds due and payable or take any other action pursuant to the terms of the Indenture. Until the Bonds have been declared due and payable following an Event of Default, the holders of the Subordinated Bonds [or the Residual Bonds] may not request the Bond Trustee to take any action, other than the application of available funds in the Payment Account to pay principal and interest as provided herein, and may not otherwise cause any action to be taken to enforce the obligation of the Issuing Entity to pay principal and interest on the Subordinated Bonds. Additionally, prior to the Bonds being declared due and payable following an Event of Default, the Senior Bonds will not accrue interest in any form on the interest component of any Shortfall attributable to the Senior Bonds. Should an Event of Default occur, payments will be allocated on each Payment Date in accordance with the priorities described herein under “— Principal”, which would otherwise be applicable on such Payment Date had an Event of Default not occurred.

If Available Funds are insufficient to make payments on the Senior Bonds, Senior Bondholders will be dependent upon the ability of the Insurer to meet its obligations under the Bond Insurance Policy. For any Payment Date, the amount of Available Funds will be dependent in part upon whether any Realized Losses have been incurred on the Mortgage Loans during the most recent Prepayment Period. Realized Losses on the Mortgage Loans will be allocated first to the [Residual Bonds], second to the Subordinated Bonds and third, in the event the Insurer defaults on its obligations under the Bond Insurance Policy, to the Senior Bonds.

Stated Maturity

Structuring Assumptions

Unless otherwise specified, the information in the tables in this Prospectus Supplement has been prepared on the basis of the following assumed characteristics of the Mortgage Loans and the following additional assumptions (collectively, the “Structuring Assumptions”): (i) the Mortgage Loan Pool consists of one Mortgage Loan with the following characteristics:

Principal Balance	Mortgage Rate	Net Mortgage Rate	Original Term in Maturity (in Months)	Remaining Term to Maturity (in months)
$	%	%

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(ii) the Mortgage Loans prepay at the specified constant Prepayment Assumptions, (iii) no defaults in the payment by Mortgagors of principal of and interest on the Mortgage Loans are experienced, (iv) scheduled payments on the Mortgage Loans are received on the first day of each month commencing in the calendar month following the Closing Date and are computed prior to giving effect to prepayments received on the last day of the prior month, (v) prepayments are allocated as described herein without giving effect to loss and delinquency tests, (vi) there are no Net Interest Shortfalls and prepayments represent prepayments in full of individual Mortgage Loans and are received on the last day of each month, commencing in the calendar month of the Closing Date, (vii) the scheduled monthly payment for each Mortgage Loan has been calculated based on the assumed mortgage loan characteristics described in item (i) above such that each such mortgage loan will amortize in amounts sufficient to repay the principal balance of such assumed mortgage loan by its remaining term to maturity, (viii) the initial Class Principal Amount, as applicable, of each Class of Bonds, is as set forth on the cover page hereof and under “SUMMARY — Securities Other than the Bonds” herein, (ix) interest accrues on each Class of Bonds at the applicable interest rate described on the cover hereof or described herein, (x) payments in respect of the Bonds are received in cash on the th day of each month commencing in the calendar month following the Closing Date, (xi) the closing date of the sale of the Bonds is [__________, 200__], (xii) Redwood Trust is not required to purchase or substitute for any Mortgage Loan and (xiii) [the Master Servicer or the Depositor does not exercise any option to purchase any Mortgage Loans described herein under “— Optional Purchase of Defaulted Loans”] and the Issuing Entity does not exercise any option to redeem the Bonds as described herein under “— Redemption at the Option of the Issuing Entity.” While it is assumed that each of the Mortgage Loans prepays at the specified constant Prepayment Assumptions, this is not likely to be the case. Moreover, discrepancies exist between the characteristics of the actual Mortgage Loans which will be delivered to the Bond Trustee and characteristics of the Mortgage Loans assumed in preparing the tables herein.

Optional Purchase of Defaulted Loans

Weighted Average Lives of the Bonds

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The interaction of the foregoing factors may have different effects on the Senior Bonds and the Subordinated Bonds [and the Residual Bonds] and the effects on any Class may vary at different times during the life of such Class. Accordingly, no assurance can be given as to the weighted average life of any Class of Bonds. Further, to the extent the prices of the Bonds represent discounts or premiums to their respective original Class Principal Amounts, variability in the weighted average lives of such Classes of Bonds will result in variability in the related yields to maturity. For an example of how the weighted average lives of the Classes of Bonds may be affected at various constant Prepayment Assumptions, see the Decrement Tables below.

Decrement Tables

PERCENT OF INITIAL CLASS PRINCIPAL AMOUNTS OUTSTANDING

[DECREMENT TABLES]

Redemption at the Option of the Residual Holder

The Bonds may be redeemed in whole, but not in part, at the Residual Holder’s option, on any Payment Date on or after the earlier of (a) years after the initial issuance of the Bonds and (b) the Payment Date on which the sum of (i) the Senior Class Principal Amount (ii) the Subordinated Class Principal Amount [and (iii) the Residual Class Principal Amount], after giving effect to payments to be made on such Payment Date, [____]% or less of the aggregate of the Stated Principal Balances of the Mortgage Loans as of the cut-off date, at a redemption price equal to 100% of the unpaid principal amount of such Bonds (including, in the case of the Subordinated Bonds, any unpaid Subordinated Principal Carryover Shortfall), plus accrued and unpaid interest at the applicable Bond Interest Rate through the month preceding the month in which such optional redemption date occurs. The Bonds are not otherwise subject to call or redemption at the option of the Residential Holder nor are they subject to special redemption.

Acceleration of Maturity at Events of Default under the Indenture

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“Event of Default”, wherever used herein, means, with respect to Bonds issued under the Indenture, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

[(1) if the Issuer shall:

(A) default in the payment when and as due of any installment of principal of or interest on any Bond, or

(B) default in the payment of the Redemption Price of any Bond which has been called for optional redemption pursuant to the Indenture;

(2) if the Issuer shall breach, or default in the due observance, of any one or more of the covenants set forth in the Indenture;

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Controlling Class Under the Indenture

For the purposes described in the prospectus under the headings “The Indenture — Modification of Indenture,” “— Events of Default” and “Rights Upon Event of Default,” the “Controlling Class” shall be the Class A-1 Bondholders or, if the Class A-1 Bonds are no longer outstanding, the Class B-1 Bondholders.

Credit Enhancement

Credit enhancement for the Senior Bonds will be provided by the Subordinated Bonds, [by the Residual Bonds] and by the Bond Insurance Policy (as defined herein). [Credit enhancement for the Subordinated Bonds will be provided by the Residual Bonds.]

Subordination

The rights of holders of the Subordinated Bonds [and the Residual Bonds] to receive payments with respect to the Mortgage Loans will be subordinated to such rights of the holders of the Senior Bonds [and the rights of the holders of the Residual Bonds] will be subordinated to such rights of the holders of the Subordinated Bonds, in each case only to the extent described herein.

The subordination of the Subordinated Bonds and the [Residual Bonds] to the Senior Bonds [and the further subordination of the Residual Bonds to the Subordinated Bonds] are each intended to increase the likelihood of timely receipt by the holders of Bonds with higher relative payment priority of the maximum amount to which they are entitled on any Payment Date and to provide such holders protection against losses resulting from defaults on Mortgage Loans to the extent described herein. [However, the amount of protection afforded the Subordinated Bondholders by subordination of the Residual Bonds may be exhausted and Shortfalls in payments on the Subordinated Bonds could result. Any losses realized on the Mortgage Loans in excess of the protection afforded by the Residual Bonds will result in losses on the Subordinated Bonds.]

The Bond Insurance Policy

[description of bond insurance policy]

The Insurer

[description of insurer]

[Third party providers of credit support for 10% or more of the pool assets to be provided as applicable.]

[Other forms of credit enhancement to be identified and described as applicable for each transaction.]

[Information regarding significant credit enhancement providers, including financial information of each such credit enhancement provider as required by Item 1114(b), to be provided as applicable.]

The Issuing Entity Administrator

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[Disclosure regarding the Issuing Entity Administrator’s experience serving as such in the securitization of similar asset types to be provided.]

[Disclosure regarding the Issuing Entity Administrator’s experience serving as an issuing entity administrator in the securitization of similar asset types to be provided for each transaction.]

The Bond Trustee

[___________________] will be the Bond Trustee under the Indenture. The Bond Trustee’s on going fees for its services will be paid by the Master Servicer. The Bond Trustee will be entitled to reimbursement from the Trust for expenses and certain other amounts prior to payment of any amounts to Bondholders. The Bond Trustee's Corporate Trust Office is located at [___________________], or any other address that the Bond Trustee may designate from time to time by notice to the Bondholders, the Owner Trustee, the Depositor, the Issuing Entity Administrator, the Master Servicer and the Servicer.

[Disclosure regarding the Bond Trustee’s experience serving as a trustee or bond trustee in the securitization of similar asset types to be provided for each transaction.]

The Issuing Entity

On the closing date, and until the termination of the issuing entity pursuant to the indenture, [Sequoia Mortgage Loan Trust [______________]] [or] [Sequoia Alternative Loan Trust [___]] (the “issuing entity”) will be a [statutory trust formed under the laws of the State of Delaware] [or] [common law trust formed under the laws of the State of New York]. The issuing entity will be created under the indenture by the depositor for the sole purpose of issuing the bonds and the residual [certificates or bonds] and its assets will consist of the trust fund.

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The Custodian

[Disclosure regarding the Custodian’s experience serving as a custodian in the securitization of similar asset types to be provided for each transaction.]

FEES AND EXPENSES OF THE ISSUING ENTITY

In consideration of their duties on behalf of the trust fund, the servicer, the master servicer, the issuing entity administrator, the bond trustee, the owner trustee and the custodian(s) will receive from the assets of the issuing entity certain fees as set forth in the following table:

Fee Payable to:	Frequency of Payment:	Amount of Fee:	How and When Fee Is Payable:

Servicer	[Monthly]	A monthly fee paid to the servicer, from amounts that would otherwise be distributed to bondholders in respect of interest, calculated on the outstanding principal balance of each mortgage loan, at the applicable servicing fee rate, plus, all income earned on amounts on deposit in the custodial account.	[Withdrawn from the custodial account in respect of each mortgage loan before distribution of any amounts to bondholders.]

Master Servicer	[Monthly]	All investment earnings on amounts on deposit in the collection account.	[Retained by the master servicer from the collection account before distribution of any amounts to bondholders.]

Issuing Entity Administrator	[Monthly]	A monthly fee paid to the issuing entity administrator, from the master servicing fee.	[Paid by the master servicer from the master servicing fee.]

Bond Trustee	[Monthly]	A fixed annual fee of $[__________].	[Paid by the master servicer from the master servicing fee pursuant to a separate agreement between the trustee and the master servicer.]

Owner Trustee	[Monthly]	A fixed annual fee of $[________].	[Payable from investment earnings on amounts on deposit in the Collection Account.]

Custodian(s)	[Monthly]	A monthly fee paid to each custodian, from the master servicing fee.	[Paid by the master servicer from the master servicing fee.]

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[Expenses of the servicer, the master servicer, the issuing entity administrator, the bond trustee, the owner trustee and the custodian(s) will be reimbursed before payments are made on the bonds.]

[May vary in accordance with the structure of the transaction.]

MATERIAL LEGAL PROCEEDINGS

THE SPONSOR

As of [_____________, 200_], RWT Holdings has sponsored the securitization of approximately $[____] billion of residential mortgage loans ($[_______] in 200[_], $[_______] in 200[_], $[______] in 200[_], $[_______] in 200[_] and $[_________] in 200[_]). RWT Holdings buys residential mortgage loans under several loan purchase agreements from mortgage loan originators or sellers nationwide that meet its seller/servicer eligibility requirements. We refer you to "Loan Program—Qualifications of Sellers" in the prospectus for a general description of the characteristics used to determine eligibility of collateral sellers. Prior to acquiring the mortgage loans, RWT Holdings conducts a review of the related mortgage loan seller and of the mortgage loans. RWT Holdings has developed a quality control program to monitor the quality of loan underwriting at the time of acquisition and on an ongoing basis. All loans purchased will be subject to this quality control program. RWT Holdings in certain cases submits a sample of mortgage loans to a third party nationally recognized underwriting review for a compliance check of underwriting and review of income, asset and appraisal information. None of the Sponsor’s prior securitizations have defaulted and RWT Holdings has not experienced an early amortization triggering event in any of its prior securitizations.

THE DEPOSITOR

[Sequoia Mortgage Funding Corporation] [or] [Sequoia Residential Funding, Inc.], a Delaware corporation and indirect wholly-owned subsidiary of Redwood Trust, Inc., was organized in September 1999 and is headquartered in Mill Valley, California. The depositor has been engaged since the end of 2001 in the securitization of mortgage loans of the types described in the accompanying prospectus. Since 2002, Sequoia Residential Funding, Inc. has been the depositor on 30 securitization deals that have issued approximately $[____] billion of residential mortgage loans ($[__________] in 200[_], $[_________] in 200[_], $[___________] in 200[_], $[________] in 200[_]and $[__________] worth of residential mortgage-backed securities.

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AFFILIATIONS AND RELATED TRANSACTIONS

THE ORIGINATOR(S)

[_______________________] originated the mortgage loans, directly or through its correspondents. [All Originator(s) of 10% or more of the pool assets to be identified.]

THE MASTER SERVICER AND THE SERVICER

Master Servicer

Servicer

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[Insert description of all affiliated and unaffiliated Servicer[s] or Subservicer[s] that service 10% or more of the pool assets, or of any other material servicer identified]

Delinquency and Foreclosure Experience.

[To be inserted for each Servicer as applicable.]

[The following tables set forth the delinquency and foreclosure experience of first and second lien adjustable rate residential mortgage loans originated by and serviced by [Servicer] on behalf of securitization trusts and third parties for whom [Servicer] is servicing similar mortgage loan products, as of the certain dates indicated, each date having a separate table of data. There can be no assurance, and no representation is made, that the delinquency and foreclosure experience with respect to the Mortgage Loans will be similar to that reflected in the tables below, nor is any representation made as to the rate at which losses may be experienced on liquidation of defaulted Mortgage Loans. In addition, because the delinquency and foreclosure experience of the mortgage loans in the tables below only reflects such experience as of the end of the previous [ ] calendar quarters, such data may not be reflective of the delinquency and foreclosure experience of the mortgage loans to be expected over an extended period of time. Accordingly, the information should not be considered to reflect the credit quality of the Mortgage Loans, or as a basis for assessing the likelihood, amount or severity of losses on the Mortgage Loans.

Delinquencies and Foreclosures(1)

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[____]	$[____]	[____]%	[____]%
Period of Delinquency(2)
30 to 59 days	[____]	[____]	[____]%	[____]%
60 to 89 days	[____]	[____]	[____]%	[____]%
90 days or more	[____]	[____]	[____]%	[____]%
Foreclosures/ Bankruptcies(3)	[____]	[____]	[____]%	[____]%
Real Estate Owned	[____]	[____]	[____]%	[____]%
Total Portfolio	[____]	[____]	[____]%	[____]%

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	As of [____________________________]
	Numb er of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[____]	$[____]	[____]%	[____]%
Period of Delinquency(2)		[____]
30 to 59 days	[____]	[____]	[____]%	[____]%
60 to 89 days	[____]	[____]	[____]%	[____]%
90 days or more	[____]	[____]	[____]%	[____]%
Foreclosures/ Bankruptcies(3)	[____]	[____]	[____]%	[____]%
Real Estate Owned	[____]	[____]	[____]%	[____]%
Total Portfolio	[____]	[____]	[____]%	[____]%

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[____]	$[____]	[____]%	[____]%
Period of Delinquency(2)
30 to 59 days	[____]	[____]	[____]%	[____]%
60 to 89 days	[____]	[____]	[____]%	[____]%
90 days or more	[____]	[____]	[____]%	[____]%
Foreclosures/ Bankruptcies(3)	[____]	[____]	[____]%	[____]%
Real Estate Owned	[____]	[____]	[____]%	[____]%
Total Portfolio	[____]	[____]	[____]%	[____]%

	As of [____________________________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[____]	$[ ]	[____]%	[____]%
Period of Delinquency(2)
30 to 59 days	[____]	[____]	[____]%	[____]%
60 to 89 days	[____]	[____]	[____]%	[____]%
90 days or more	[____]	[____]	[____]%	[____]%
Foreclosures/ Bankruptcies(3)	[____]	[____]	[____]%	[____]%
Real Estate Owned	[____]	[____]	[____]%	[____]%
Total Portfolio	[____]	[____]	[____]%	[____]%

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	As of [_____________]
	Number of Loans	Principal Balance	Percent by Principal Balance	Percent by Number of Loans

Current Loans	[____]	$[____]	[____]%	[____]%
Period of Delinquency(2)
30 to 59 days	[____]	[____]	[____]%	[____]%
60 to 89 days	[____]	[____]	[____]%	[____]%
90 days or more	[____]	[____]	[____]%	[____]%
Foreclosures/ Bankruptcies(3)	[____]	[____]	[____]%	[____]%
Real Estate Owned	[____]	[____]	[____]%	[____]%
Total Portfolio	[____]	[____]	[____]%	[____]%

_____________

(1)	These tables show mortgage loans which were delinquent or for which foreclosure proceedings had been instituted as of the date indicated.

(2)	No mortgage loan is included in this table as delinquent until it is 30 days past due.

(3)	Exclusive of the number of loans and principal balance shown in the period of delinquency.

ADMINISTRATION OF THE ISSUING ENTITY

Servicing and Administrative Responsibilities

making Monthly Advances with respect to delinquent payments of principal and interest on the Mortgage Loans;

making Servicing Advances in respect of reasonable and customary “out of pocket” costs and expenses;

providing monthly loan-level reports to the [Servicer] and the Master Servicer;

maintaining certain insurance policies relating to the Mortgage Loans; and

initiating foreclosure proceedings.]

We refer you to “Mortgage Loan Servicing” below.

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verifying that the Subservicer’s reporting and remitting are mathematically accurate and are being performed in accordance with the terms of the Sale and Servicing Agreement;

verifying that the Servicing Account reconciliations are being performed according to Uniform Single Attestation Program for Mortgage Bankers guidelines;

monitoring the Delinquency Rate and identifying any substantial increases or decreases on a monthly basis; and

performing the servicing functions with respect to Mortgage Loans described under “Subservicer” above in the event that the Subservicer fails to perform such functions.

We refer you to “Mortgage Loan Servicing” below.]

Master Servicer. Performing the master servicing functions in accordance with the provisions of the Sale and Servicing Agreement, including but not limited to:

[[monitoring the Servicer’s performance and enforcing the Servicer’s obligations under the Sale and Servicing Agreement;]

upon the occurrence of a Servicer event of default under the Sale and Servicing Agreement, at its discretion, terminating the Servicer;

upon the termination of the Servicer under the Sale and Servicing Agreement, appointing a successor servicer or succeeding as Servicer; and

We refer you to “Mortgage Loan Servicing” below.

[acting as Bond Registrar and Paying Agent;

receiving monthly remittances from the Master Servicer for deposit in the Bond Payment Account;

performing the calculation of accrual of original issue discount and the amortization of premium on the Securities;

preparing and making available on its website a payment statement to Securityholders based on information received from the Servicer and the Master Servicer; and

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preparing and filing periodic reports with the Securities and Exchange Commission on behalf of the Trust with respect to the Bonds.]