Exhibit 5.2

                          [PIPER & MARBURY LETTERHEAD]

                               December 16, 1996

Redwood Trust, Inc.
591 Redwood Highway, Suite 3100
Mill Valley, California 94941

Ladies and Gentlemen:

     We have acted as counsel to Redwood Trust, Inc., a Maryland corporation
(the "Company"), in connection with the registration under the Securities Act
of 1933, as amended, pursuant to a Registration Statement on Form S-3 of the
Company (the "Registration Statement") to be filed shortly with the Securities
and Exchange Commission, of shares of Common Stock, par value $.01 per share,
of the Company (the "Shares") having an aggregate purchase price of up to
$38,000,000 to be issued in connection with the Company's Dividend Reinvestment
and Stock Purchase Plan (the "Plan"). This opinion is being provided at your
request in connection with the filing of the Registration Statement.

     In this capacity, we have examined the Registration Statement, the Charter
and By-Laws of the Company, the Plan, the proceedings of the Board of Directors
of the Company relating to the issuance of the Shares to be issued pursuant to
the Plan, a Certificate of Officer of the Company dated December 13, 1996, and
such other statutes, certificates, instruments and documents relating to the
Company and matters of law as we have deemed necessary to the issuance of this
opinion. In such examination, we have assumed, without independent
investigation, the genuineness of all signatures, the legal capacity of all
individuals who have executed any of the aforesaid documents, the authenticity
of all documents submitted to us as originals, the conformity with originals of
all documents submitted to us as copies (and the authenticity of the originals
of such copies), and all public records reviewed are accurate and complete. As
to factual matters, we have relied on the foregoing Certificate of Officer and
have not independently verified the matters stated therein. We assume that the
Company will have available at the time
                                                   [PIPER & MARBURY LETTERHEAD]

Redwood Trust, Inc.
December 16, 1996
Page 2


of issuance of any of the shares under the Plan at least that number of
authorized but unissued shares of Common Stock of the Company free of all
preemptive rights equal to the number of shares then being issued.

     Based upon the foregoing, we are of the opinion and so advise you that
upon the issuance and delivery of the Shares in accordance with the terms set
forth in the Registration Statement, the Shares will have been duly and validly
authorized and will be legally issued and fully-paid and non-assessable.

     The opinion expressed in this letter is solely for the use of the Company
in connection with the Registration Statement. This opinion may not be relied
on by any other person or in any other connection without our prior written
approval. The opinion expressed in this letter is limited to the matters set
forth in this letter, and no other opinion should be inferred beyond the
matters expressly stated.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus included in the Registration Statement.

                                        Very truly yours,

                                        PIPER & MARBURY L.L.P.