EXHIBIT 5.1

                           [Letterhead TOBIN & TOBIN]

                                  May 28, 2002

The Board of Directors
Redwood Trust, Inc
591 Redwood Highway
Suite 3100
Mill Valley, CA  94941

         Re:  Registration Statement on Form S-8 relative to the
              2002 Redwood Trust, Inc. Incentive Stock Plan

Ladies and Gentlemen

         We have acted as your counsel in connection with the registration under
the Securities Act of 1933, as amended (the "Securities Act") of the 2002
Redwood Trust, Inc. Incentive Stock Plan, by Redwood Trust, Inc., a Maryland
corporation (the "Company"), covering an aggregate of up to 400,000 shares of
the Company's common stock, par value $0.01 per share (the "Common Stock" or the
Shares").

         This opinion is delivered in accordance with the requirements of Items
601(b)(5) and (23) of Regulation S-K under the Securities Act.

         In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement on Form S-8, relating to the Shares, filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act on or about the date hereof (together with all exhibits thereto, the
"Registration Statement"), (ii) the Prospectus for the Shares, (iii) the Charter
of the Company, as amended, (iv) the Bylaws of the Company in effect as of the
date hereof, (v) resolutions of the Board of Directors of the Company relating
to the issuance and of the Shares and the filing and effectiveness
The Board of Directors
Redwood Trust, Inc.
May 28, 2002
Page 2




of the Registration Statement, adopted at a meeting on March 21, 2002, and (vi)
a specimen of the certificates representing the Shares. We have also examined
such other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinion set forth below.

         In our examination, 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 photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
oral or written statements and representations of officers and other
representatives of the Company and others.

         Members of our firm are admitted to the practice of law in the States
of California, Nevada, and New York, and we do not express any opinion as to the
laws of any other jurisdictions other than the corporate laws of the State of
Maryland and the laws of the United States to the extent specifically addressed
herein.

         Based upon and subject to the foregoing, we are of the opinion that,
upon the issuance, delivery and payment therefor in the manner contemplated by
the 2002 Redwood Trust, Inc. Incentive Stock Plan and the Resolutions, the
Common Stock sold pursuant to the terms of the 2002 Redwood Trust, Inc.
Incentive Stock Plan will be validly issued, fully paid and non-assessable.

         We consent to the filing of this opinion with the Commission as Exhibit
5.1 to Form S-8 and its incorporation by reference as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act or under the rules and regulations of the Commission that relate
to that section.

         Very truly yours,

         /s/ Tobin & Tobin




Tobin Opinion and Consent Exhibit 5.1 (ISP)