Contract

EXHIBIT 99.2 [Letterhead of GnazzoThill, A Professional Corporation] March 26, 2003 TO THE PARTIES LISTED ON SCHEDULE A HERETO Re: Sequoia Mortgage Trust 2003-1 Ladies and Gentlemen: You have requested our supplemental opinion in connection with certain federal income tax matters related to the transfer on March 26, 2003 of Subsequent Mortgage Loans to Sequoia Mortgage Trust 2003-1 (the "Trust Fund") pursuant to (a) that certain Pooling and Servicing Agreement, dated as of February 1, 2003 (the "Pooling and Servicing Agreement"), among Sequoia Residential Funding, Inc. (the "Depositor"), HSBC Bank USA, as Trustee, and Wells Fargo Bank Minnesota, National Association, as Master Servicer and Securities Administrator and (b) that certain Mortgage Loan Purchase and Sale Agreement, dated as of February 1, 2003 (the "Mortgage Loan Purchase Agreement"), between RWT Holdings, Inc. and the Depositor. The $1,026,174,718 Sequoia Mortgage Trust 2003-1 Mortgage Pass-Through Certificates (the "Certificates") were issued pursuant to the Pooling and Servicing Agreement. Each capitalized term used but not defined herein has the meaning assigned thereto in the Pooling and Servicing Agreement. We have acted as special tax counsel to the Depositor in connection with the above transaction. In formulating our opinions, we have reviewed final copies, dated on or before the date hereof, of (i) the Prospectus for this transaction, (ii) the Pooling and Servicing Agreement and the forms of Certificates issued pursuant thereto, (iii) the Mortgage Loan Purchase Agreement, (iv) the Purchase Agreements and the Servicing Agreements, (v) the Acknowledgments, dated as of February 27, 2003, 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. 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. TO THE PARTIES LISTED ON SCHEDULE A HERETO March 26, 2003 Page 2 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 Pooling and Servicing Agreement (and, in particular, excluding from the assets of each of the Upper Tier REMIC and Lower Tier REMIC the Reserve Fund, the Capitalized Interest Account, the Pre-Funding Accounts, the Additional Collateral and the Cap Agreements) and (ii) compliance with the provisions of the Pooling and Servicing Agreement, the Mortgage Loan Purchase Agreement, the Purchase Agreements, the Servicing Agreements and the Acknowledgments, for federal income tax purposes: 1. the Trust Fund will continue to consist of two segregated asset pools, the Lower Tier REMIC and the Upper Tier REMIC, each of which qualifies as a REMIC within the meaning of Section 860D of the Code; 2. the Class 1A, Class 2A, 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 continue to represent "regular interests" in the Upper Tier REMIC, the Class A-R Certificate will continue to represent the sole "residual interest" in the Upper Tier REMIC and the Class LT-R Certificate will continue to 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; 3. the Reserve Fund will continue to be 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 4. the rights of the Certificate Owners with respect to the Reserve Fund and the Cap Agreements will continue to represent, for federal income tax purposes, contractual rights that are separate from their regular interests within the meaning of Treasury Regulations Section 1.860G-2(i). 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. We are furnishing this opinion to you solely in connection with the transfer of the Subsequent Mortgage Loans 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 Morgan Stanley & Co. Incorporated 1585 Broadway New York, NY 10036 Greenwich Capital Markets, Inc. 600 Steamboat Road Greenwich, CT 06830 Bear, Stearns & Co. Inc. 383 Madison Avenue New York, NY 10179 Merrill Lynch & Co. 4 World Financial Center, 10/F New York, NY 10080 Wells Fargo Bank Minnesota, National Association 6th and Marquette Minneapolis, MN 55479 HSBC Bank USA 452 Fifth Avenue New York, NY 10018