EX-99.2 4 f84863exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 [Letterhead of GnazzoThill, A Professional Corporation] September 26, 2002 TO THE PARTIES LISTED ON SCHEDULE A HERETO Re: Sequoia Mortgage Trust 10 Ladies and Gentlemen: You have requested our opinion in connection with certain federal income tax matters related to Sequoia Mortgage Trust 10 (the "Trust Fund") and the $1,041,600,100 Sequoia Mortgage Trust 10 Mortgage Pass-Through Certificates issued with respect thereto (the "Certificates"). The Trust Fund was established by Sequoia Residential Funding, Inc. (the "Depositor") pursuant to the Trust Agreement, dated as of September 1, 2002 (the "Trust Agreement"), among the Depositor and Wells Fargo Bank Minnesota, National Association, as Trustee. The Certificates are being issued pursuant to the Trust Agreement. Reference is hereby made to the Depositor's Universal Shelf Registration Statement on Form S-3 (Registration Statement No. 333-90772), including a prospectus (the "Prospectus"), filed with the Securities and Exchange Commission under the Securities Act of 1933 on June 26, 2002, along with the Prospectus Supplement, dated September 24, 2002 (the "Prospectus Supplement"). Each capitalized term used but not defined herein has the meaning assigned thereto in the Trust Agreement. We have acted as special tax counsel to the Depositor in connection with the above transaction and have assisted in the preparation of the federal income tax summaries set forth in the Prospectus and the Prospectus Supplement used in connection with the issuance of the Certificates. In formulating our opinions, we have reviewed copies of (i) the Prospectus and Prospectus Supplement, (ii) the Trust Agreement and the forms of Certificates distributed as exhibits thereto, (iii) the Mortgage Loan Purchase and Sale Agreement and the Additional Collateral Servicing Agreement, (iv) the Purchase Agreement, (v) the Acknowledgments, dated as of September 26, 2002, assigning rights under the Purchase Agreements and the Servicing Agreements, and (vi) such resolutions, certificates, records, and other documents provided by the Depositor as we have deemed necessary or appropriate as a basis for the opinions set forth below. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals or finals, the conformity to original documents of all documents submitted to us as certified, conformed or other copies, and the authenticity of the originals of such copies. In rendering our opinions, we have assumed that the transactions described in or contemplated by the foregoing documents have been and will be consummated in accordance with the terms of such operative documents, and that such documents accurately reflect the material facts of such transactions. Our opinion is also based on the Internal Revenue Code of 1986, as amended, administrative rulings, judicial decisions, Treasury regulations and other applicable authorities. The statutory provisions, regulations, and interpretations on which our opinion is based are subject to change, possibly retroactively. TO THE PARTIES LISTED ON SCHEDULE A HERETO September 26, 2002 Page 2 In addition, there can be no complete assurance that the Internal Revenue Service will not take positions contrary to the conclusions stated in our opinion. Based on the foregoing, we are of the opinion that, assuming (i) the making of a timely election to treat the Trust Fund as consisting of an Upper Tier REMIC and a Lower Tier REMIC, each comprised of the assets and interests specified in the Trust Agreement (and, in particular, excluding from the assets of each of the Upper Tier REMIC and Lower Tier REMIC the Basis Risk Reserve Fund and the Additional Collateral) and (ii) compliance with the provisions of the Trust Agreement, the Purchase Agreement, the Mortgage Loan Purchase and Sale Agreement, the Additional Collateral Servicing Agreement and the Acknowledgments, for federal income tax purposes: 1. the statements in the Prospectus under the heading "Federal Income Tax Consequences", as supplemented or modified by the statements in the Prospectus Supplement under the heading "Federal Income Tax Consequences," to the extent that they constitute matters of law or legal conclusions with respect to Federal income tax matters, are correct in all material respects; 2. the Trust Fund will consist of two segregated asset pools, the Lower Tier REMIC and the Upper Tier REMIC, each of which will qualify as a REMIC within the meaning of Section 860D of the Code; 3. the Class 1A, Class 2A-1, Class 2A-2, Class X-1A, Class X-1B, Class X-2, Class X-B, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates will represent "regular interests" in the Upper Tier REMIC, the Class A-R Certificate will represent the sole "residual interest" in the Upper Tier REMIC and the Class LTR Certificate will represent the sole "residual interest" in the Lower Tier REMIC, each within the meaning of Section 860G of the Code as in effect on the date hereof; 4. the Basis Risk Reserve Fund is an "outside reserve fund" that is beneficially owned by the Class X-1A, Class X-1B, Class X-2 and Class X-B Certificate Owners; and 5. the rights of the Class 1A, Class 2A-1, Class 2A-2, Class B-1, Class B-2 and Class B-3 Certificate Owners with respect to the Basis Risk Reserve Fund represent, for federal income tax purposes, contractual rights that are separate from their regular interests within the meaning of Treasury Regulations Section 1.860G-2(i). Other than as expressly stated above, we express no opinion on any issue relating to the Depositor, the Trust Fund, or to any other securities issued by them, or under any law other than the federal income tax laws. TO THE PARTIES LISTED ON SCHEDULE A HERETO September 26, 2002 Page 3 We are furnishing this opinion to you solely in connection with the initial sale of the Certificates and it is not to be relied upon, used, circulated, quoted or otherwise referred to for any other purpose without our express written permission. Very truly yours, /s/ GnazzoThill, A Professional Corporation SCHEDULE A Redwood Trust, Inc. 591 Redwood Highway Suite 3100 Mill Valley, CA 94941 Sequoia Residential Funding, Inc. 591 Redwood Highway Suite 3160 Mill Valley, CA 94941 Merrill Lynch & Co. 4 World Financial Center, 10/F New York, NY 10080 Greenwich Capital Markets, Inc. 600 Steamboat Road Greenwich, CT 06830 Wells Fargo Bank Minnesota, National Association 6th and Marquette Minneapolis, MN 55479