EXHIBIT 8.1
January 4, 2001
Residential Asset Funding Corporation
301 South College Street
Charlotte, North Carolina 28288-0610
Re: Registration Statement 333-________
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Ladies and Gentlemen:
We have acted as special tax counsel to Residential Asset Funding
Corporation, a North Carolina corporation (the "Company"), in connection with
the Prospectus filed by the Company.
The term "Prospectus" means the prospectus included in the Registration
Statement. The term "Registration Statement" means (i) the Registration
Statement on Form S-3 (No. 333-_______), including the exhibits thereto and (ii)
any post-effective amendment filed and declared effective prior to the date of
issuance of the asset-backed securities registered thereby (the "Securities").
We have examined the question of whether the Securities will have the
tax treatment described in the Prospectus. Our analysis is based on the
provisions of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder as in effect on the date hereof and on
existing judicial and administrative interpretations thereof. These authorities
are subject to change and to differing interpretations, which could apply
retroactively. The opinion of special tax counsel is not binding on the courts
or the Internal Revenue Service (the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness or the sale of assets for federal income tax purposes is a question
of fact, the resolution of which is based primarily upon the economic substance
of the instruments and the transaction pursuant to which they are issued rather
than the form of the transaction or the manner in which the instruments are
labeled. The IRS and the courts have set forth various factors to be taken into
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Residential Asset Funding Corporation
January 4, 2001
Page 2
account in determining whether or not a transaction constitutes the issuance of
indebtedness or the sale of assets for federal income tax purposes, which we
have reviewed as they apply to the transactions described on the Prospectus.
Based on the foregoing, and such legal and factual investigations as we
have deemed appropriate, while no transaction closely comparable to that
contemplated has been the subject of any Treasury Regulation, revenue ruling or
judicial decision, and therefore the matter is subject to interpretation, we are
of the opinion that for federal income tax purposes:
(1) The Securities, assuming they are issued in accordance with
the Prospectus, will have the federal income tax treatment described in the
Prospectus.
(2) We hereby adopt and confirm the information appearing under
the caption "Material Federal Income Tax Consequences" in the Prospectus and
confirm that it represents our opinion with respect to the matters discussed
therein.
This opinion is furnished by us as counsel to the Registrant. We hereby
consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to Dewey Ballantine LLP in the Registration
Statement and the related prospectus under the heading "Legal Matters."
Very truly yours,
/s/ Dewey Ballantine LLP
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