EXHIBIT 5.2

                          [PIPER & MARBURY LETTERHEAD]



                                January 23, 1997




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

                     Registration Statement on Form S-8/S-3

Ladies and Gentlemen:

         We have acted as special Maryland counsel to Redwood Trust, Inc., a
Maryland corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), of 1,649,486 shares of the
Common Stock, par value $.01 per share, of the Company (the "Shares") pursuant
to a Registration Statement of the Company on Form S-8/S-3 (the "Registration
Statement") filed with the Securities and Exchange Commission (the
"Commission"). The Shares (i) have been or may be issued pursuant to the
Company's Amended and Restated 1994 Executive and Non-Employee Director Stock
Option Plan (the "Plan") and (ii) once issued pursuant to options granted under
the Plan to certain selling stockholders named in the Registration Statement
(the "Selling Stockholders") may reoffered and resold by the Selling
Stockholders.

         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 issued and to be
issued pursuant to the Plan, a Certificate of the Secretary of the Company dated
January 23, 1997, 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 Certificate of the
Secretary and have not 
Redwood Trust, Inc.
January 23, 1997
Page 2

independently verified the matters stated therein. We assume that the Company
will have at the time of exercise of each option granted under the Plan at least
that number of authorized but unissued shares of Common Stock of the Company
equal to the number of shares then being exercised under such option.

         Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion and so advise you that
the Shares issued or to be issued by the Company pursuant to the Plan have been
duly and validly authorized and, to the extent issued are, or when issued and
delivered as contemplated in the Registration Statement and in accordance with
the Plan, will be, validly issued, fully paid, and non-assessable.

         The opinion expressed herein is solely for (i) the use of the Company
in connection with the Registration Statement, and (ii) the use of Tobin & Tobin
in giving their legality opinion to be filed as an exhibit to the Registration
Statement. This opinion may not be relied on by any other person or in any other
connection without our prior written approval. This opinion is limited to the
matters set forth herein, 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. In giving our
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.

                                                     Very truly yours,


                                                     /s/ Piper & Marbury L.L.P.