EXHIBIT 10.2


 


November 28, 2012


 


RWT Holdings, Inc.


One Belvedere Place


Mill Valley, California 94941


 


Redwood Trust, Inc.


One Belvedere Place


Mill Valley, California 94941


          


Redwood Residential Acquisition Corporation


One Belvedere Place


Mill Valley, California 94941


 


Ladies and Gentlemen:


 


By this letter agreement (this “Letter
Agreement”), we are pleased to confirm the terms and conditions under which (i) Barclays Capital Inc. (together with our
subsidiaries and affiliates, “Barclays”) will act as sole lead underwriter for RWT Holdings, Inc. (the “Company”),
a wholly-owned subsidiary of Redwood Trust, Inc. (“Redwood Trust,” and together with the Company and their subsidiaries
and affiliates, “Redwood”) in connection with the proposed offering and sale (together, the “Offering”)
of certain classes of mortgage-backed securities (the “2013-1 Securities”) issued by Sequoia Mortgage Trust 2013-1
(the “Issuing Entity” and such issuance, the “Transaction”) and (ii) Barclays agrees to sell Redwood Residential
Acquisition Corporation (“RRAC”) certain mortgage loans on both a servicing retained and servicing released basis which
will be included in the Offering. The Issuing Entity is expected to issue (i) one or more classes of senior certificates entitled
to payments of both interest and principal that will be rated AAA or its equivalent by two of Moody’s Investors Service,
Inc., Fitch Ratings, Inc. or Standard &  Poor’s Ratings Services, a Standard & Poor’s Financial Services
LLC business (each, a “Rating Agency” and such 2013-1 Securities, “AAA P&I Senior Securities”), (ii)
one or more classes of senior certificates entitled to interest-only payments that will be rated AAA or its equivalent by two of
the Rating Agencies (“AAA IO Senior Securities”), (iii) one or more classes of subordinate certificates (the “Subordinate
Securities”) and (iv) one or more classes of REMIC residual certificates (the “Residual Securities”).


 



    	 



    	 



    

 


RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 2


 


 


1.          Mortgage Loans. The 2013-1
Securities are expected to be secured by a single pool of mortgage loans (the “Mortgage Loans”). For the purposes of
establishing specific purchase price percentages, the Mortgage Loans will consist of two portions, described as the “Redwood
Portion” under “Description of the Redwood Portion of the Mortgage Loans” as of the Statistical Calculation Date
and the “Barclays Portion” under “Description of the Barclays Portion of the Mortgage Loans” as of the
Statistical Calculation Date, each as specified on Annex A. A loan tape (the “Redwood Initial Tape”) containing information
regarding the Redwood Portion of the Mortgage Loans was furnished by Redwood to Barclays on November 27, 2012, and the final balance
constituting the Redwood Portion will be subject to the related Loan Balance Permitted Variance specified on Annex A from the balance
shown on the Redwood Initial Tape. A loan tape (the “Barclays Initial Tape”) containing information regarding the Barclays
Portion of the Mortgage Loans was furnished by Redwood to Barclays on November 26, 2012, and the final balance constituting the
Barclays Portion will be subject to the related Loan Balance Permitted Variance specified on Annex A from the balance shown on
the Barclays Initial Tape. The Redwood Portion and the Barclays Portion will be securitized together as collateral for the 2013-1
Securities.


 


Separately, pursuant to a mortgage loan
purchase agreement (the “MLPA”) and any related assignment, assumption and recognition agreement (the “AAR”),
RRAC shall purchase from Barclays Mortgage Loans with a combined unpaid principal balance of approximately $206,011,969 (the “Barclays
Portion”). Mortgage Loans with a combined unpaid principal balance of approximately $191,790,791 will be purchased by RRAC
on a servicing retained basis for the related Mortgage Loan Purchase Price Percentage specified on Annex A hereto and Mortgage
Loans with a combined unpaid principal balance of approximately $15,248,944 will be purchased by RRAC on a servicing released basis
for the related Mortgage Loan Purchase Price Percentage specified on Annex A hereto. Pursuant to the MLPA and the AAR, Barclays
shall not be required to make any representations and warranties to RRAC in respect of the Barclays Portion covering the period
from the date Barclays acquired such Mortgage Loans from a third party (the “Third-Party Seller”) to the Closing Date.
However, Barclays shall assign to RRAC all representations and warranties made by the Third-Party Seller to Barclays pursuant to
the mortgage loan purchase agreement between Barclays and such Third-Party Seller.


 


Redwood may substitute up to an aggregate
of the Permitted Substitution Percentage specified on Annex A hereto (calculated by balance) of the Redwood Portion on the Redwood
Initial Tape so long as (a) there are no material differences between the attributes of the Mortgage Loans after substitution and
the attributes of the Redwood Portion reflected in the Redwood Initial Tape that would materially change the AAA P&I Senior
Securities credit enhancement level specified in Section 3 and (b) the Loan Balance Permitted Variance is maintained with respect
to the Redwood Portion after taking account of the related substitutions.


 


With the prior approval of RRAC, Barclays
may substitute up to an aggregate of the Permitted Substitution Percentage specified on Annex A hereto (calculated by balance)
of the Barclays Portion of the Barclays Initial Tape so long as (a) there are no material differences between the attributes of
the Barclays Portion after substitution and the attributes of the Mortgage Loans reflected in the Barclays Initial Tape that would
materially change the AAA P&I Senior Securities credit enhancement level specified in Section 3 and (b) the Loan Balance Permitted
Variance is maintained with respect to the Barclays Portion after taking account of the related substitutions


 


At its sole expense, Barclays shall conduct
a customary underwriter’s due diligence review of all of the Mortgage Loans and shall have the right, in its reasonable discretion,
to have certain loans removed from the final pool of Mortgage Loans based on its due diligence results.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 3


 


2.          Structure of the Transaction; Documentation.
The Transaction shall be structured in a manner substantially similar in all material respects, adjusted as appropriate for the
inclusion of hybrid loans, to previous securitization transactions of fixed rate pools executed by Redwood under the “Sequoia
Mortgage Trust” program (the “SEMT Program”) including, but not limited to, the same “shifting interest”
provisions and mechanics in the securitization transaction in the SEMT Program that closed in November 2012 (“SEMT 2012-6”).
In connection therewith, Redwood (in such capacity, the “Seller”) shall transfer the Mortgage Loans to either Sequoia
Mortgage Funding Corporation or Sequoia Residential Funding, Inc., which shall act as depositor (the “Depositor”) for
the Transaction. The transaction documents governing (i) the sale of the Mortgage Loans from the Seller to the Depositor, (ii)
the sale of the Mortgage Loans from the Depositor to the Issuing Entity or the trustee (the “Trustee”) of the Issuing
Entity and the issuance and terms of the 2013-1 Securities, (iii) the servicing and administration of the Mortgage Loans by each
servicer (each, a Servicer”) and supervision thereof by the master servicer (the “Master Servicer”), (iv) the
custody of the Mortgage Loan files by the custodian (the “Custodian”) and (v) the assignment of representations and
warranties (together, the “Basic Transaction Documents”), shall be substantially similar in all material respects to
the transaction documents executed in connection with the SEMT 2012-6 transaction.


 


3.          Ratings. It is a condition
to the consummation of the Transaction that at least two Rating Agencies selected by Redwood (the “Initial Rating Agencies”)
issue a AAA or equivalent rating in respect of the AAA P&I Senior Securities. The fees of the Initial Rating Agencies shall
be paid in accordance with Section 8 hereof. Notwithstanding any Rating Agency feedback in respect of an AAA or equivalent rating,
the Initial Credit Enhancement for the AAA P&I Senior Securities shall be specified on Annex A.


 


4.          Underwriting Arrangement. Barclays
shall act as sole lead underwriter (the “Underwriter”) for the Offering of each class of AAA P&I Senior Securities
and an interest only certificate, which will have the same interest priority as the AAA P&I Senior Securities and which may
be rated AAA or its equivalent by two Rating Agencies ( the “AAA IO Senior Securities,” and together with the AAA P&I
Senior Securities, the “Underwritten Senior Securities”); provided, that the aggregate interest on the Underwritten
Senior Securities does not exceed the Underwritten Senior Securities Interest Rate specified in Annex A. Promptly after execution
of this Letter Agreement, Barclays and Redwood shall cooperate and work in good faith to negotiate an underwriting agreement (when
executed and delivered by the parties, the “Underwriting Agreement”) in respect of the Underwritten Senior Securities
substantially similar in all material respects to the underwriting agreement executed in connection with the SEMT 2012-6 transaction.
Subject to Section 9 hereof in respect of an adjustment to the AAA Purchase Price Percentage for certain delays in the closing
of the Transaction, it is expected that Barclays shall purchase Underwritten Senior Securities in an aggregate principal amount
equal to the Underwritten Senior Securities Balance specified on Annex A, subject to the Underwritten Senior Securities Permitted
Variance specified on Annex A, for a purchase price equal to the product of (i) the AAA Purchase Price Percentage specified on
Annex A and (ii) the Underwritten Senior Securities Balance as of the date of the closing of the Transaction (the “Closing
Date”); provided, that at Redwood’s sole option, a variance of greater than the positive Underwritten Senior
Securities Permitted Variance in the principal amount of the AAA P&I Senior Securities shall be permitted solely to the extent
that Redwood purchases the AAA P&I Senior Securities in excess of such variance. The Underwritten Senior Securities Interest
Rate on the AAA P&I Senior Securities shall be specified on Annex A. Barclays shall be entitled to receive the additional fees
or discounts from Redwood in respect of the Underwritten Senior Securities as described under “Additional Fees or Discounts”
specified on Annex A.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 4


 


5.          Retention of Certain 2013-1 Securities
by Redwood. Redwood shall initially retain (i) (i) the Subordinate Securities and (ii) the Residual Securities (the “Redwood
Retained Securities”) issued by the Issuing Entity.


 


6.          Underwriting Fee for Subordinate
Securities. In the event that Redwood decides to offer any of the Subordinate Securities under the Underwriting Agreement (such
Subordinate Securities, the “Underwritten Subordinate Securities,” and together with the Underwritten Senior Securities,
the “Underwritten Securities”), Barclays shall receive an underwriting fee calculated as the product of (i) the Subordinate
Securities Underwriting Fee Percentage specified on Annex A and (ii) the unpaid principal balance of Underwritten Subordinate Securities
as of the Closing Date (the “Subordinate Securities Underwriting Fee”).


 


7.          Offering Documents. In connection
with the Offering and as described in greater particularity in the Underwriting Agreement, Redwood shall prepare (i) a preliminary
prospectus supplement and prospectus, (ii) a free writing prospectus relating to the ratings of each class of 2013-1 Securities
offered in the Offering and (iii) a final prospectus supplement and prospectus (together, the “Offering Documents”).
The Offering Documents shall contain disclosures regarding, but not limited to, (i) the characteristics of the Mortgage Loans,
(ii) the terms of the 2013-1 Securities and yield considerations with respect thereto, (iii) the Seller, the Depositor, Redwood
Trust, the Company, the Trustee, the Issuing Entity, the Servicers, the Custodian, the Master Servicer and the Underwriter, and
any material legal proceedings with respect to each such entity and the compensation arrangements (if any) for each such entity,
(iv) the tax status, ERISA eligibility and legal investment considerations in respect of the 2013-1 Securities, (v) the material
provisions of the Basic Transaction Documents and (vi) the pre-offering review of the Mortgage Loans, in each case substantially
similar in nature to the disclosures included in the offering materials for the SEMT 2012-6 transaction. The Offering Documents
shall be subject to the approval of Barclays in its commercially reasonable discretion. In connection with the Offering and as
described in greater particularity in the Underwriting Agreement, Barclays shall (a) prepare the term sheet and (b) generate all
collateral and yield tables, in each case based on information provided to Barclays by Redwood. In addition, Barclays shall obtain
comfort letters from the hired accounting firm in respect of the documents and/or information specified in (a) and (b), which shall
be addressed to both Barclays and Redwood. The Underwriting Agreement shall govern any required indemnification by Barclays or
Redwood in respect of the Offering Documents prepared by Redwood and the documents and/or information specified in (a) and (b)
prepared by Barclays and will be substantially similar in all material respects to the indemnification provisions included in the
SEMT 2012-6 transaction.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 5


 


8.          Payment of Certain Expenses.


 


(a) The payment of certain expenses in respect
of the Transaction shall be as described under “Expense Allocation” on Annex A.


 


(b) In the event that an unforeseen and
unavoidable circumstance arises that Barclays and Redwood mutually agree would prevent the completion of the Transaction, Barclays
and Redwood shall execute the Pair-off Payment specified on Annex A. If the calculation results in a negative amount, Redwood shall
make the Pair-off Payment to Barclays. If the calculation results in a positive amount, Barclays shall make the Pair-off Payment
to Redwood.


 


9.          Closing of the Transaction; Delay
Penalty. Barclays and Redwood shall make all commercially reasonable efforts to close the Transaction on the Targeted Closing
Date specified on Annex A. If the Transaction does not close on the Targeted Closing Date, Barclays and Redwood shall make all
commercially reasonable efforts to close the Transaction as soon as practicable thereafter but not later than the Latest Permitted
Closing Date specified on Annex A.


 


To the extent that the Transaction does
not close on the Targeted Closing Date but closes on or before the Latest Permitted Closing Date and the failure to close on the
Targeted Closing Date is the result of a delay of or caused by Redwood or any Rating Agencies in connection with any Offering Document
or the Underwriting Agreement, the AAA Purchase Price Percentage shall be reduced by the Delay Penalty Percentage specified on
Annex A.


 


10.          Other.


 


(a)          Barclays’ participation in
the Transaction and the Offering shall be subject to the receipt by Barclays of all internal approvals.


 


(b)          Redwood (i) shall make available
to Barclays marketing materials substantially similar to the marketing materials used for the SEMT 2012-6 transaction; (ii) at
the request of Barclays, provide such information and documents as may be reasonably requested in order to enable Barclays to market
the Underwritten Securities and carry out the engagement contemplated by this Letter Agreement and the Underwriting Agreement;
and (iii) assist Barclays in carrying out its duties, functions and responsibilities pursuant hereto and provide reasonable access
to the appropriate senior officers, management, accountants, legal counsel and other parties and facilities.


 


(c)          In connection with the Transaction,
Redwood has contracted a diligence firm to perform a diligence review of the Mortgage Loans. Redwood agrees to make available the
loan-level files and loan-level diligence results of such firm to Barclays, in order to enable Barclays to conduct and complete
its customary due diligence review of the Mortgage Loans. Redwood recognizes and confirms that Barclays will be using information
in reports and other information provided by others, including, without limitation, information provided by or on behalf of Redwood
and the diligence firm contracted by Redwood, and that Barclays does not assume responsibility for and may rely, without independent
verification, on the accuracy and completeness of any such information.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 6


 


(d)          In connection with the structuring
of the Offering and engaging in the Transaction, Redwood also agrees to provide Barclays with (i) prompt notice of any material
development affecting Redwood or the occurrence of any event or other change known to Redwood and relating to Redwood that could
affect the Transaction or the Offering (including any marketing materials or Offering Documents) and (iii) any public financial
reports or such other information concerning the business and financial condition of Redwood as Barclays may from time to time
reasonably request.


 


(e)          Redwood agrees that it has not and,
unless Redwood and Barclays shall mutually agree in writing, Redwood agrees that it will not engage any other person to act as
a structurer, arranger, advisor, sole lead underwriter or placement agent in the Transaction for a period beginning on the date
of this Letter Agreement and ending upon the termination of this Letter Agreement.


 


(f)          The terms of this Letter Agreement
shall be subject to renegotiation by mutual consent of Redwood and Barclays. Any changes to the contents of Annex A as a result
of such renegotiation shall be reflected in a revised Annex A and attached hereto in substitution of any prior version of Annex
A.


 


11.          Confidentiality. Redwood agrees
that any documents or information received from Barclays, its affiliates or advisors in connection with this Letter Agreement,
the Underwriting Agreement and the transactions contemplated herein and therein may contain information that has been developed
by Barclays on a proprietary basis. Redwood agrees to treat confidentially all such information received hereunder and under the
Underwriting Agreement until one year from the date of termination hereof; provided, that nothing herein shall prevent Redwood
from disclosing any such information: (i) to purchasers or prospective purchasers of the Underwritten Securities to the extent
such information is material to an investment decision, (ii) to any Rating Agency in connection with the Transaction, (iii) pursuant
to the order of any court or administrative agency or in any pending legal or administrative proceeding, or to defend any claim
in any such proceeding, (iv) as required by law or regulation or upon the request or demand of any regulatory authority having
jurisdiction over Redwood or any of its affiliates (including any filings related to or regarding this Agreement so long as Redwood
has given prior written notice to and received the prior written consent of Barclays to any such filing), (v) to the extent that
such information becomes publicly available other than by reason of disclosure by Redwood or was or becomes available to Redwood
or its affiliates from a source which is not known by Redwood to be subject to a confidentiality obligation with respect thereto,
or (vi) to Redwood’s affiliates and its and their respective employees, legal counsel, independent auditors and other experts
or agents who need to know such information in connection with the Offering, the Transaction or any other services provided by
Redwood or its affiliates to Barclays and its affiliates, provided (a) that such persons are made aware of the proprietary nature
of such information and (b) that Redwood shall be responsible for any breach of this provision by such persons. Redwood understands
that portions of the non-public information may be subject to the Gramm-Leach-Bliley Act of 1999 (the “GLB”) and other
applicable privacy laws and regulations and agrees to maintain such information as required by the GLB and such other applicable
privacy laws and regulations for financial institutions notwithstanding the proviso to this paragraph (other than clauses (ii),
and (iii), (iv) and (v) of such proviso) or any termination of this Letter Agreement.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 7


 


Barclays agrees to treat confidentially
all non-public information provided to it by or on behalf of Redwood hereunder until one year from the date of termination hereof;
provided, that nothing herein shall prevent Barclays from disclosing any such information: (i) to purchasers or prospective
purchasers of the Underwritten Securities to the extent such information is material to an investment decision, (ii) pursuant to
the order of any court or administrative agency or in any pending legal or administrative proceeding, or to defend any claim in
any such proceeding, (iii) as required by law or regulation or upon the request or demand of any regulatory authority having jurisdiction
over Barclays or any of its affiliates, (iv) to the extent that such information becomes publicly available other than by reason
of disclosure by Barclays or was or becomes available to Barclays or its affiliates from a source which is not known by Barclays
to be subject to a confidentiality obligation with respect thereto, or (v) to affiliates of Barclays and its and their respective
employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection with
the Offering, the Transaction or any other services provided by Barclays or its affiliates to the Redwood and its affiliates, provided
that such persons are made aware of the proprietary nature of such information. Barclays understands that portions of the non-public
information may be subject to the GLB and other applicable privacy laws and regulations and agrees to maintain such information
as required by the GLB and such other applicable privacy laws and regulations for financial institutions notwithstanding the proviso
to this paragraph (other than clauses (ii), (iii) and (v) of such proviso) or any termination of this Letter Agreement.


 


Notwithstanding any other provision in this
Letter Agreement, in connection with Section 1.6011-4 of the Treasury Regulations, the parties hereby agree that each party (and
each employee, representative, or other agent of such party) may disclose to any and all persons, without limitation of any kind,
the U.S. tax treatment and U.S. tax structure of the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such U.S. tax treatment and U.S. tax structure, other than any information
for which nondisclosure is reasonably necessary in order to comply with applicable securities laws.


 


12.          Governing Law. This
Letter Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements
made and to be performed therein, without reference to its conflict of law provisions (other than Section 5-1401 of the General
Obligations Law), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such
laws.


 



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RWT Holdings, Inc.


Redwood Trust, Inc.


November 28, 2012


Page 8


 


13.          No Advisory or Fiduciary Responsibility.
Redwood acknowledges and agrees that: (i) the transactions contemplated by this Letter Agreement and the Underwriting Agreement
are arm’s-length commercial transactions between Redwood, on the one hand, and Barclays, on the other hand, and Redwood is
capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated
by this Letter Agreement and the Underwriting Agreement; (ii) in connection with each transaction contemplated hereby and the process
leading to each such transaction Barclays is and has been acting solely as a principal and is not the financial advisor, agent
or fiduciary of Redwood or its affiliates, stockholders, creditors or employees or any other party; (iii) Barclays has not assumed
and will not assume an advisory, agency or fiduciary responsibility in favor of Redwood with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether Barclays has advised or is currently advising Redwood
on other matters) or any other obligation to Redwood except the obligations expressly set forth in this Letter Agreement and the
Underwriting Agreement; (iv) Barclays and its affiliates may be engaged in a broad range of transactions that involve interests
that differ from those of Redwood and that Barclays has no obligation to disclose any of such interests by virtue of any advisory,
agency or fiduciary relationship; and (v) Barclays has not provided any legal, accounting, regulatory or tax advice with respect
to the Offering and Redwood has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.


 


Redwood acknowledges and agrees that Barclays
is acting solely in the capacity of an arm’s length contractual counterparty to Redwood with respect to the Offering and
the Transaction (including in connection with determining the terms of the Offering) and not as a financial advisor or a fiduciary
to, or an agent of, Redwood or any other person.  In addition, Barclays is not advising Redwood or any other person as
to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  Redwood shall consult with its
own advisors concerning such matters, and Barclays shall have no responsibility or liability to Redwood with respect thereto.  Any
review by Barclays of Redwood, the transactions contemplated by this Letter Agreement and the Underwriting Agreement (including
the Offering and the Transaction) or other matters relating to such transactions will be performed solely for the benefit of Barclays
and shall not be on behalf of Redwood.


 


14.          Termination. The Underwriting
Agreement shall supersede this Letter Agreement in any and all respects, except that the provisions of Sections 8 and 11 shall
survive the execution of the Underwriting Agreement. This Letter Agreement shall terminate upon written mutual consent of Barclays,
the Company and Redwood Trust at any time, including any extension agreed to pursuant to this Section 14. In the event that the
Transaction does not close on or before the Latest Permitted Closing Date, the obligations of Redwood and Barclays under this Letter
Agreement shall terminate unless Barclays and Redwood mutually agree in writing to extend this Letter Agreement, subject to any
additional terms and conditions agreed to at the time of such extension, except that the provisions of Sections 8 and 11 shall
survive the termination of this Letter Agreement. Redwood and Barclays acknowledge that the consummation of the Transaction contemplated
herein is subject to various conditions and limitations, and that the provisions of this Letter Agreement are preliminary and dependent
upon the satisfaction of such conditions and the occurrence of certain events.


 


[SIGNATURE PAGE FOLLOWS]


 



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If the foregoing correctly sets forth your
understanding of our agreement with respect to the matters set forth herein, please so indicate by signing two copies of this Letter
Agreement and returning one of those signed copies to the undersigned, whereupon this Letter Agreement will constitute our binding
agreement.


 


	 	Very truly yours,
	 	 
	 	BARCLAYS CAPITAL INC.
	 	 	 
	 	By: 	/s/ Adam Yarnold
	 	 	Name: Adam Yarnold
	 	 	Title: Barclays Capital Managing Director


 


	Accepted and agreed to as of	 
	the date first above written:	 
	 	 
	REDWOOD TRUST, INC.	 
	 	 	 
	By: 	/s/ John Isbrandtsen	 
	 	Name:  John Isbrandtsen	 
	 	Title:   Authorized Officer	 
	 	 	 
	RWT HOLDINGS, INC.	 
	 	 	 
	By:	/s/ John Isbrandtsen	 
	 	Name:  John Isbrandtsen	 
	 	Title:   Authorized Officer	 
	 	 	 
	REDWOOD RESIDENTIAL ACQUISITION CORPORATION	 
	 	 	 
	By:	/s/ John Isbrandtsen	 
	 	Name:  John Isbrandtsen	 
	 	Title:   Authorized Officer	 


 



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Annex A


 


	Statistical Calculation Date:	 	January 1, 2013.
	 	 	 
	Description of the Redwood Portion of the Mortgage Loans (the “Redwood Portion”):	 	Fixed rated and hybrid mortgage loans with an approximate unpaid principal balance of $225,133,960.
	 	 	 
	Description of the Barclays Portion of the Mortgage Loans (the “Barclays Portion”):	 	Fixed rated and hybrid mortgage loans with an approximate unpaid principal balance of $206,011,969, of which approximately $190,763,025 will be purchased by RRAC on a servicing retained basis and of which approximately $15,248,944 will be purchased by RRAC on a servicing released basis.
	 	 	 
	Servicing Transfer Date (if applicable):	 	February 1, 2013.
	 	 	 
	Loan Balance Permitted Variances:	 	
        For the Barclays Portion, plus or minus 5% of the Barclays Portion.

         

        For the Redwood Portion, plus or minus 5% of the Redwood Portion.

	 	 	 
	Permitted Substitution Percentages:	 	
        For the Barclays Portion, 10% of the Barclays Portion.

         

        For the Redwood Portion, 10% of the Redwood Portion.

	 	 	 
	Initial Credit Enhancement:	 	Not less than 6.5%.
	 	 	 
	Underwritten Senior Securities Balance:	 	Approximately $401,000,000.
	 	 	 
	Underwritten Senior Securities Balance Permitted Variance:	 	Plus or minus 5%.
	 	 	 
	AAA P&I Senior Securities and AAA IO Senior Securities Purchase Price Percentage of the Redwood Portion:	 	
        The sum of:

         


(a)   3.2
        times the final coupon of the AAA IO Senior Security, and

         


(b)   103.656%,
        which shall increase by 0.0625% if the final AAA credit enhancement is between 7.5 and 8.0.

         


To the extent that the final AAA credit enhancement
        exceeds 8%, the parties hereto agree to renegotiate the terms of this Letter Agreement in good faith.



 



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	AAA P&I Senior Securities and AAA IO Securities Purchase Price Percentage of the Barclays Portion	 	
        104.185%, which shall increase by 0.291 to
        1 for any increase in AAA credit enhancement in excess of 7.25% and which shall decrease by 0.291 to 1 for any decrease in AAA
        credit enhancement from 7.25%.

         


To the extent that the final AAA credit enhancement
        exceeds 8%, the parties hereto agree to renegotiate the terms of this Letter Agreement in good faith.

         

	Mortgage Loan Purchase Price Percentages for Barclays Portion:	 	
        102.25% for Mortgage Loans purchased on a
        servicing retained basis.

         

        102.625% for Mortgage Loans purchased on a
        servicing released basis.

         

	
        Underwritten Senior Securities Interest Rate:

         
	 	3.0%.
	
        Additional
        Fees or Discounts:

         
	 	None.
	
        Subordinate Securities Underwriting Fee Percentage:

         
	 	0.25%.


 



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	Expense Allocation:	 	
        Redwood shall pay all expenses in connection
        with the Transaction and the Offering other than (a) the fees and expenses of legal counsel to Barclays and (b) the expenses of
        any underwriter’s due diligence conducted by Barclays on the Mortgage Loans (but not including any due diligence costs associated
        with Barclays’ purchase of any Mortgage Loan). The expenses for which Redwood shall be responsible shall not include any
        fee or discount to Barclays in respect of the Underwritten Senior Securities but shall include, but not be limited to: (i) any
        Subordinate Securities Underwriting Fees, if applicable; (ii) fees and expenses of Redwood’s counsel and auditors in connection
        with the Transaction; (iii) the fees of the Rating Agencies; (iv) the fees and expenses of any accounting firm that is engaged
        to deliver comfort letters in respect of the Offering Documents, any static pool information, any term sheet or other marketing
        materials; (v) the fees and expenses of the Trustee, the Issuing Entity, the Servicers, the Custodian, the Master Servicer and
        their respective counsel and auditors in connection with the Transaction; (vi) the cost of delivering the Underwritten Securities
        to the Underwriter; (vii) expenses of preparing, printing, filing and reproducing the Offering Documents, the SEC registration
        statement relating to the 2013-1 Securities, the Basic Transaction Documents and the 2013-1 Securities; (viii) all transfer taxes,
        if any, with respect to the sale and delivery of the Underwritten Securities to the Underwriter; (ix) any expenses for the qualification
        of the Underwritten Securities under “blue sky” or state securities laws, including filing fees and the fees and disbursements
        of counsel to the Underwriter in connection therewith and with the preparation of any “blue sky” survey; and (x) all
        other costs and expenses incidental to the Offering or the Transaction that are not otherwise specifically provided for herein.

         

	Targeted Closing Date:	 	
        Barclays and Redwood shall make all
commercially reasonable efforts to close the Transaction on January 15, 2013.


 

	Latest Permitted Closing Date:	 	
        January 24, 2013.

         




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	Delay Penalty Percentage:	 	
        0.078125% for each five business day period
        for which the closing of the Transaction does not occur, pro rated for the actual number of business days from and including January
        15, 2013 to but excluding the Closing Date of the Transaction.

         

	Pair-off Payment:	 	
        An amount equal to the product of (i) $209,000,000
        and (ii) a fraction, (a) the numerator of which is the product of (I) 0.65 and (II) the difference resulting from the subtraction
        of the Current Value from 105.15625 and (b) the denominator of which is 100. For the purposes of this calculation, “Current
        Value” shall equal the price, as reported on Bloomberg on the date such Pair-off Payment is executed, for the Fannie Mae
        30 year Mortgage Pass-Through Certificates at a coupon of 3.0% per annum, TBA for the current front month.

         



  



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