Exhibit
8.1
[Letterhead
of Chapman and Cutler LLP]
July
2,
2008
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
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 (i) 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”)
and
(ii) the Prospectus Supplement, dated November 23, 2007 (the “First
Prospectus Supplement”),
related to the Company’s Direct Stock Purchase and Dividend Reinvestment Plan
(the “Plan”)
which,
together with the Prospectus, is used to offer the Company’s common stock under
the Plan. In connection with the filing of Prospectus Supplement No. 2, dated
July 2, 2008 (the “Second
Prospectus Supplement”),
which
amends the Plan to increase the number of shares of the Company’s common stock
available under the Plan, you have requested that we confirm our opinion
regarding the accuracy of certain descriptions of material U.S. federal income
tax consequences contained in the First Prospectus Supplement.
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.
Redwood
Trust, Inc.
July
2,
2008
Page
-
2 -
In
formulating our opinions, we have reviewed:
(i)
the
Registration Statement and the Prospectus;
(ii)
the
First
Prospectus Supplement;
(iii)
the
Second Prospectus Supplement;
(iv)
the
Company’s articles of incorporation and other organizational documents of the
Company and its subsidiaries, as amended and supplemented to the date
hereof;
(v)
the
opinion
of Venable,
LLP, dated the
date
hereof, with respect to certain matters
regarding Maryland corporate law; and
(vi)
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)
there
has
been no change in the status of the Company as a real estate investment trust
under Section 856 of the Code since the date of the First Prospectus
Supplement.
(b)
the
First
Prospectus Supplement and the Second Prospectus Supplement each accurately
describe the information provided regarding the operation of the
Plan.
(c)
the
Prospectus accurately describes the information provided regarding the Company
and its common stock.
(d)
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 the statutes, regulations,
judicial decisions, and administrative interpretations upon which our opinion
is
based 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.
July
2,
2008
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 First 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, continues to constitute
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
Second 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 Company's Form 8-K
dated July 2, 2008. 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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