Exhibit
8.1
[Letterhead
of Chapman and Cutler LLP]
November
23, 2007
Redwood
Trust, Inc.
One
Belvedere Place
Suite
300
Mill
Valley, CA 94941
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Re:
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Redwood
Trust, Inc.’s Direct Stock Purchase
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and
Dividend Reinvestment Plan
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Ladies
and Gentlemen:
We
have
acted as your special tax counsel and have assisted in the preparation
of the
tax summary for the Registration Statement on Form S-3, dated November
23, 2007,
(the “Registration
Statement”)
and
the Prospectus (the “Prospectus”),
which
forms a part of the Registration Statement, filed by Redwood Trust, Inc.
(the
“Company”)
with
the Securities and Exchange Commission (“SEC”)
on the
date hereof. You have requested our opinion regarding certain descriptions
of
material U.S. federal income tax consequences contained in the Prospectus
Supplement, dated November 23, 2007 (the “Prospectus
Supplement”),
related to the Company’s Direct Stock Purchase and Dividend Reinvestment Plan
(the “Plan”)
and
which, together with the Prospectus, will be used to offer the Company’s common
stock under the Plan.
Scope
of Review
Our
opinion is based on the Internal Revenue Code of 1986, as amended to the
date
hereof (the “Code”),
Treasury regulations issued thereunder, administrative rulings, judicial
decisions and other applicable authorities, all as in effect and available
on
the date hereof. We note that the statutory provisions, regulations, judicial
decisions 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. Any material change after the date hereof
of
any of the foregoing bases for our opinion could adversely affect our
conclusions.
In
formulating our opinions, we have reviewed:
(i)
the
Registration Statement and the Prospectus;
(ii)
the
Prospectus Supplement;
Redwood
Trust, Inc.
November
23, 2007
Page
-
2 -
(iii)
the
Company’s articles of incorporation and other organizational documents of the
Company and its subsidiaries, as amended and supplemented to the date
hereof;
(iv)
a
certificate from an officer of the Company upon which we have relied, confirming
various factual matters relevant to establishing the status of the Company
as a
real estate investment trust (“REIT”) under the Code and the Company’s
intentions regarding future methods of operation (the “Officer’s
Certificate”);
(iv)
the
opinion
of Venable,
LLP, dated the
date
hereof, with respect to certain matters
regarding Maryland corporate law; and
(v)
such
resolutions, certificate, records, and other documents provided by the Company
and/or its subsidiaries as we have deemed necessary or appropriate as a basis
for the opinions set forth below.
Assumptions
In
rendering our opinion, we have made the following assumptions:
(a)
the
records, reports and certifications of the Company provided to us as evidence
of
the Company’s compliance with the stock ownership, income, asset and
distribution requirements applicable to REITs under the Code are correct
and
complete in all material respects.
(b)
each
of
the Company and its subsidiaries has been and will continue to be organized,
capitalized and operated in the manner described to us, and as summarized
in the
Officer’s Certificate and other periodic reports filed with the
SEC.
(c)
the
Prospectus Supplement accurately describes the information provided regarding
the operation of the Plan.
(d) the
Prospectus accurately describes the information provided regarding the Company
and its common stock.
(e)
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,
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.
With
respect to these assumptions, it should be noted that (x) certain of the
representations set forth in the Officer’s Certificate are highly factual in
nature and reflect an intention with respect to the future conduct of the
business of the Company and its subsidiaries that may not be achievable if
there
are future changes in the circumstances of either and (y) statutes, regulations,
judicial decisions, and administrative interpretations are subject to change
at
any time and, in some circumstances, with retroactive effect. Any material
change after the date hereof of any of the foregoing bases for our opinions
could adversely affect our conclusions.
Redwood
Trust, Inc.
November
23, 2007
Page
- 3 -
Opinions
Subject
to the qualifications, assumptions and limitations set forth herein, we are
of
the opinion that, although the discussions set forth under the heading “36. What
about Taxes?” and the heading “Material U.S. Federal Income Tax Considerations”
in the Prospectus Supplement do not purport to discuss all possible U.S.
federal
income tax consequences of an investor’s participation in the Plan, such
discussions, taken together with that in the Prospectus, constitutes an accurate
summary of the U.S. federal income tax considerations that are likely to
be
material to an investor in the Company’s common stock under the Plan as of the
date hereof.
Limitations
Other
than as specifically stated above, we express no opinion on any issue relating
to the Company or its subsidiaries, or any investment in any other series
or
class of securities issued by them, or under any law other than U.S. federal
income tax laws.
We
impose
no limit on your disclosure of this opinion or the tax treatment of the Company,
its common stock or any person’s participation under the Plan. However, we are
furnishing this opinion to you solely in connection with the filing of the
Prospectus Supplement and it cannot be relied upon by any person or for any
other purpose without our express written permission.
We
hereby
consent to the filing of this opinion as an exhibit to the Prospectus
Supplement. In giving such consent, we do not hereby admit that we are in
the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or under the rules and regulations of the SEC
promulgated thereunder.
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Very
truly yours,
/s/
Chapman and Cutler LLP
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