EMPLOYMENT AGREEMENT


     This Employment Agreement  ("Agreement"),  is entered into as of January 1,
1996, by and between INSIGNIA FINANCIAL GROUP, INC., a Delaware corporation with
an office at One Insignia  Financial  Plaza,  Post Office Box 1089,  Greenville,
South Carolina 29602 ("Company"), and JOHN K. LINES an individual with an office
at One  Insignia  Financial  Plaza,  Post  Office  Box 1089,  Greenville,  South
Carolina 29602 ("Executive").

                                   Background

     The Company  desires to assure  itself of the services of the Executive for
the period provided in this Agreement,  and the Executive is willing to serve in
the employ of the Company for such period upon the terms and conditions provided
in this Agreement.

                             Statement of Agreement

     In  consideration  of  the  foregoing  and  for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     Section 1.  Employment.  The Company hereby agrees to employ the Executive,
and the Executive  hereby accepts such  employment,  in each case upon the terms
and conditions set forth herein, for a period commencing on January 1, 1996, and
ending on June 30,  1997,  subject to earlier  termination  as set forth  herein
(such  period,  as it may be so  terminated,  being  referred  to  herein as the
"Employment Period").

     Section 2. Duties and Services.

          (a) Offices.  During the Employment  Period, the Executive shall serve
     as General Counsel and Secretary of the Company.  In the performance of his
     duties hereunder, the Executive shall report to and shall be responsible to
     the President of the Company's  Financial Services Division.  The Executive
     agrees to his  employment  as  described  in this  Section 2, and agrees to
     devote  substantially all of his time and efforts to the performance of his
     duties  hereunder  and to  Metropolitan  Asset  Enhancement,  L.P.  and its
     subsidiaries.  The  Executive  shall be available to travel as the needs of
     the business of the Company require.

          (b) Location of Office.  During the Employment Period, the Executive's
     office  shall be located in offices of the Company  located in  Greenville,
     South  Carolina.  The Company will provide the  Executive  with his current
     office, use of an executive secretary, and other support appropriate to his
     duties hereunder.  The Executive will relocate,  within a reasonable period
     of time, to any location in the continental United States where the


                                       
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     Company's  principal  executive  offices are relocated if there is at least
     one year remaining in the Employment Period,  and in connection  therewith,
     the  Company  shall pay for  relocation  expenses  incurred  in  connection
     therewith that are of the type customarily paid by the Company with respect
     to relocations of executives holding a similar executive position.

          (c)  Primary  Responsibilities.  During  the  Employment  Period,  the
     Executive  shall have such  responsibilities  as are assigned to him by the
     President of the Company's Financial Services Division.

     Section 3. Compensation.  As full compensation for his services  hereunder,
the  Company  shall  pay,  grant,  issue  or give,  as the  case may be,  to the
Executive the following:

          (a) Base Salary. Subject to the provisions of Sections 6 and 7, a base
     salary at the rate of $160,000 per annum ("Base Salary"), which Base Salary
     shall be paid to the Executive in accordance  with the customary  executive
     payroll  policy of the  Company as in effect  from time to time;  provided,
     however,  that the Base  Salary,  as in effect at any time and from time to
     time, may be increased by action of the Board of Directors.

          (b) Annual Bonus. An annual bonus ("Bonus"), the amount of which shall
     be determined by the Board of Directors of the Company,  acting in its sole
     discretion,  and shall be paid to the Executive, with respect to any fiscal
     year of the Company, before the expiration of sixty (60) days after the end
     of such fiscal year.

          (c)  Fringe  Benefit  Programs.  In  addition  to the  other  benefits
     provided to the  Executive  hereunder  and to the extent he  satisfies  the
     eligibility  requirements  thereof  and to the  extent  permitted  by  law,
     participation  in fringe benefit  programs  introduced  generally to senior
     corporation  officers  of the  Company or  generally  to  employees  of the
     Company,  including,  without limitation,  pension,  profit sharing,  stock
     purchase,  savings, bonus,  disability,  life insurance,  health insurance,
     hospitalization, dental, deferred compensation and other plans and policies
     authorized on the date hereof or in the future.

          (d)  Perquisites.  In addition to the other  benefits  provided to the
     Executive hereunder, and at the sole cost and expense of the Company except
     as otherwise provided herein:

               (i)  A  membership  at  The  Commerce  Club,  Greenville,   South
          Carolina; and

               (ii) Reasonable  consultations with financial and tax advisors or
          counselors, including annual income tax preparation.

          (e) Expense  Reimbursement.  Reimbursement  of the  Executive  for all
     out-of-pocket  expenses  incurred by him in connection with the performance
     of his duties hereunder,  including professional  activities and membership
     fees and dues relating to professional organizations of which the Executive
     currently is a member or is directed to be a member by the President of the
     Company's Financial Services Division, upon the


                                      
<PAGE>

     presentation of appropriate  documentation  therefor in accordance with the
     then regular procedures of the Company.

          (f) Vacations. Paid vacations and leaves-of-absence in accordance with
     the then regular  procedures  of the Company  governing  executives,  which
     policy  currently  provides  four (4) weeks of paid  vacation per year on a
     non-cumulative basis.

     Section 4. Representations,  Warranties and Covenants of the Executive. The
Executive represents and warrants to the Company as follows:

          (a) He is under no  contractual  or other  restriction  or  obligation
     which is inconsistent with the execution of this Agreement, the performance
     of his duties hereunder, or the other rights of the Company hereunder; and

          (b) He is under no physical or mental disability that would hinder his
     performance of duties under this Agreement.

     Section 5. Non-Competition.

          (a) In view of the unique and  valuable  services it is  expected  the
     Executive  will render to the  Company,  the  Executive's  knowledge of the
     customers,  trade secrets and other proprietary information relating to the
     business  of the  Company  and its  customers  and  suppliers,  and similar
     knowledge  regarding the Company it is expected the Executive  will obtain,
     the Executive agrees that during the Employment  Period and for a period of
     one (1) year thereafter, he will not compete with or be engaged in the same
     business as, or Participate In (as hereinafter  defined) any other business
     or  organization  which,  at the time of the  cessation  of the  Employment
     Period,  competes  with or is engaged in the same  business as the Company,
     with respect to any product or service  sold or activity  engaged in by the
     Company in any  geographical  area which at the time of such cessation such
     product  or  service is sold or  activity  is  engaged  in by the  Company;
     provided,  however,  that the  provisions  of this  Section  5 shall not be
     interpreted to preclude the  Executive,  at any time and from time to time,
     from (a) Participating In any other person or organization if approved by a
     majority of the independent  Directors of the Company, or (b) to the extent
     otherwise prohibited hereby,  owning not more than five (5%) percent of the
     outstanding  capital  stock  of  any  publicly-traded   person.  The  terms
     "Participate In" and "Participating In" shall mean "directly or indirectly,
     for his own  benefit  or for,  with or  through  any other  person,  own or
     owning, manage or managing,  operate or operating,  control or controlling,
     loan money to or lending money to, or participate in or  participating  in,
     as the case may be, the ownership, management,  operation, or control of or
     be  connected  or  being  connected,  as the case  may be,  as a  director,
     officer, employee,  partner,  consultant,  agent, independent contractor or
     otherwise with, or acquiesce or acquiescing, as the case may be, in the use
     of his name in". The Executive  will not directly or indirectly  employ any
     person  who,  at any  time up to such  cessation,  was an  employee  of the
     Company,  within a period of two (2) years  after  such  person  leaves the
     employ of the Company.

          (b) All confidential information which the Executive may now possess,


                                      
<PAGE>

     may obtain during or after the  Employment  Period,  or may create prior to
     the end of the Employment  Period or otherwise  relating to the business of
     the Company or any of its  subsidiaries or affiliates or of any customer or
     supplier  of  any of  them  shall  not  be  published,  disclosed  or  made
     accessible  by him  to  any  other  person,  either  during  or  after  the
     termination of his employment,  or used by him except during the Employment
     Period  in the  business  and  for  the  benefit  of the  Company  and  its
     subsidiaries  and  affiliates.  The  Executive  shall  return all  tangible
     evidence of such confidential information to the Company prior to or at the
     termination of his employment hereunder.

          (c)  Since a breach  of the  provisions  of this  Section  5 could not
     adequately be compensated by money damages,  the Company shall be entitled,
     in  addition  to any other  right and  remedy  available  to it, to seek an
     injunction   restraining  such  breach.   The  Executive  agrees  that  the
     provisions of this Section 5 are  necessary  and  reasonable to protect the
     Company in the conduct of its  business.  If any  restriction  contained in
     this Section 5 shall be deemed to be invalid,  illegal or  unenforceable by
     reason of the extent, duration or geographical scope thereof, or otherwise,
     then the court  making  such  determination  shall have the right to reduce
     such extent,  duration,  geographical scope or other provisions hereof, and
     in its  reduced  form such  restriction  shall then be  enforceable  in the
     manner contemplated hereby.

     Section 6. Termination.

          (a) Definitions.

               (i) Death Termination  Event. As used herein,  "Death Termination
          Event" shall mean the death of the Executive.

               (ii) Disability  Termination  Event. As used herein,  "Disability
          Termination  Event" shall mean a  circumstance  where the Executive is
          physically or mentally  incapacitated  or disabled or otherwise unable
          to  fully  discharge  his  duties   hereunder  for  a  period  of  185
          consecutive days.

               (iii)  Estate.  As used  herein,  "Estate"  shall mean (A) in the
          event that the last will and  testament of the  Executive has not been
          probated at the time of  determination,  the estate of the  Executive,
          and (B) in the event that the last will and testament of the Executive
          has been  probated at the time of  determination,  the legatees of the
          Executor who are entitled under such will to the assets or payments at
          issue.

               (iv) Termination For Cause. As used herein, the term "Termination
          For  Cause"  shall  mean  the   termination  by  the  Company  of  the
          Executive's  employment  hereunder upon a good faith  determination by
          majority vote of the independent  members of the Board of Directors of
          the Company that  termination of this Agreement is necessary by reason
          of (A) the  conviction  of the  Executive  of a felony  under state or
          federal law, unless in any such case the Executive  performed such act
          in good faith and in a manner the Executive reasonably


                                       
<PAGE>

          believed to be in or not opposed to the best interests of the Company,
          (B) the  continued  material  breach  by the  Executive  of any of the
          material provisions of this Agreement for a period of thirty (30) days
          after  written  notice of such breach is delivered to the Executive by
          the Company,  (C) failure by the Executive to comply with any material
          directive of the Board of Directors of the Company,  (D) the taking by
          the  Executive  of any  action on behalf of the  Company  without  the
          possession by the Executive of the appropriate  authority to take such
          action,  (E) a violation of the  provisions  of Section 5 or 12 by the
          Executive,  (F) the taking by the  Executive of actions in conflict of
          interest with the Company,  given the  Executive's  positions with the
          Company and its subsidiaries and affiliates,  or (G) the usurpation of
          a corporate opportunity of the Company by the Executive.

               (vi)  Termination  Without  Cause.  As used herein,  "Termination
          Without  Cause"  shall  mean  any   termination  of  the   Executive's
          employment  hereunder  that is not a  Termination  For Cause,  a Death
          Termination Event or a Disability Termination Event.

          (b)  Death   Termination   Event.  Upon  the  occurrence  of  a  Death
     Termination  Event, this Agreement shall terminate  automatically  upon the
     date  that such  Death  Termination  Event  occurred  (subject  to the last
     sentence of this Section 6),  whereupon the Company  shall  continue to pay
     the  then-current  Base  Salary  to the  Estate  for a period  equal to the
     remaining term of the  Employment  Period  (determined  upon the assumption
     that the Employment Period will not be terminated prior to June 30, 1997).

          (c) Disability  Termination Event. Upon the occurrence of a Disability
     Termination  Event, this Agreement shall terminate  automatically  upon the
     date that such Disability  Termination  Event occurred (subject to the last
     sentence of this Section 6).

          (d)  Termination  For Cause.  The Executive and the Company agree that
     the Company  shall have the right to  effectuate  a  Termination  For Cause
     prior to June 30, 1997.  Upon the  occurrence of a  Termination  For Cause,
     this  Agreement  shall  terminate upon the date that such  Termination  For
     Cause occurs  (subject to the last  sentence of this Section 6),  whereupon
     the  Executive  shall be entitled to receive  the Base  Salary,  as then in
     effect, to and including the date that such Termination For Cause occurs.

          (e)  Termination  Without Cause.  Upon the occurrence of a Termination
     Without  Cause,  this  Agreement  shall  terminate  upon the date that such
     Termination  Without  Cause  occurs  (subject to the last  sentence of this
     Section  6),  whereupon  the  Company  shall  (A) in the  event  that  such
     Termination  Without  Cause  is not a Change  In  Control  Termination  (as
     defined in Section 7(b)),  continue to pay the then-current  Base Salary to
     the  Executive  until  June  30,  1997,  and  (B) in the  event  that  such
     Termination  Without Cause is a Change In Control  Termination,  pay to the
     Executive  the Farkas  Termination  Payment (as defined in Section 7(a)) in
     accordance with the provisions of Section 7.

     Notwithstanding  anything in this  Agreement to the contrary,  (i) Sections
3(e),  4, 6, 7, 8, 9, 10, 11,  12,  13, 14, 15, 16, 17 and 18 of this  Agreement
shall survive any termination of this Agreement or of the Executive's employment
hereunder until the


                                       
<PAGE>

expiration of the statute of limitations  applicable  hereto, and (ii) Section 5
of this  Agreement  shall survive any  termination  of this  Agreement or of the
Executive's  employment  hereunder  other than a Termination  Without Cause,  it
being  understood  and  agreed  by the  parties  hereto  that in the  event of a
Termination Without Cause, Section 5(a) of this Agreement shall be terminated in
its entirety as of the date of such Termination Without Cause.

     Section 7. Farkas Termination Event.

          (a) Definitions.

               (i) Code. As used herein, the term "Code" shall mean the Internal
          Revenue  Code  of  1986,   as  amended  on  the  date  hereof  and  as
          subsequently amended, modified or superseded.

               (ii) Farkas  Termination  Event. As used herein, the term "Farkas
          Termination  Event"  shall have the  meaning  ascribed to (A) the term
          "Change  in  Control"   pursuant  to  Section  7(a)  of  that  certain
          Employment  Agreement,  dated as of September 1, 1993,  by and between
          the Company and Andrew Lawrence  Farkas,  as amended from time to time
          (the "Farkas Employment Agreement"), (B) the term "Influence Change In
          Control" pursuant to Farkas Employment Agreement,  and/or (C) the term
          "Stock  Change In  Control"  pursuant  to  Section  7(a) of the Farkas
          Employment  Agreement.  A copy of the definitions of such terms in the
          Farkas  Employment  Agreement is attached  hereto as Schedule 1 and is
          hereby made a part hereof.

               (iii)  Farkas  Termination  Payment.  As used  herein,  the  term
          "Farkas  Termination  Payment",  as determined at any time, shall mean
          the Base  Salary  as in  effect  at such  time,  multiplied  by three;
          provided,  however,  that if at such time such payment, if made, would
          be subject to an excise tax pursuant to Section  4999 of the Code,  or
          any successor  law, rule or  regulation,  then such payment shall mean
          the Base Salary as in effect at such time,  multiplied by three,  plus
          an amount  sufficient  to pay such excise tax (taking into account the
          fact that such  additional  amount  may in and of itself be subject to
          such excise tax).

          (b)  Farkas  Termination  Event.  Upon  the  occurrence  of  a  Farkas
     Termination Event during the Employment Period, (i) this Agreement shall be
     terminated  as of the date of such Farkas  Termination  Event (a "Change In
     Control  Termination"),  (ii)  the  provisions  of  Section  6(e)  of  this
     Agreement  shall be in  effect  as of the date of such  Farkas  Termination
     Event,  and (iii) the Company shall pay to the  Executive,  in  immediately
     available  funds,  the  Farkas  Termination  Payment  on  the  date  of the
     occurrence of such Farkas  Termination  Event;  provided,  however,  that a
     Farkas  Termination  Event, and a Change In Control  Termination,  shall be
     deemed to have not occurred  hereunder in such event if, (x) in the case of
     the   disposition   of  the   properties   and  business  of  the  Company,
     substantially  as an entity,  by merger,  consolidation,  sale of assets or
     otherwise,  the purchaser or surviving  entity, as the case may be, and the
     Executive mutually agree to continue the Executive's  employment  hereunder
     for the remainder of the Employment Period at a Base


                                       
<PAGE>

     Salary equal to one hundred fifty (150%) percent of the  then-current  Base
     Salary,  or (y) in any other case,  the Company and the Executive  mutually
     agree to continue the Executive's employment hereunder for the remainder of
     the  Employment  Period at a Base Salary equal to one hundred  fifty (150%)
     percent of the then-current Base Salary.

     Section 8.  Indemnification.  The Company  has  indemnified  the  Executive
pursuant to the terms of an Indemnification  Agreement which was executed by the
Company and the  Executive  and delivered by the Company to the Executive and by
the Executive to the Company as of May 25, 1995.

     Section 9.  Withholding.  The Company  shall be  entitled to withhold  from
amounts  payable to the Executive  hereunder  such amounts as may be required by
applicable law to be so withheld.

     Section  10.  Survival.  The  covenants,  agreements,  representations  and
warranties  contained in or made  pursuant to this  Agreement  shall survive the
termination of this Agreement,  irrespective of any investigation  made by or on
behalf of any party hereto. All confidential information which the Executive may
now possess,  may obtain during or after the  Employment  Period,  or may create
prior to the end of the Employment Period or otherwise  relating to the business
of the Company or any of its  subsidiaries  or  affiliates or of any customer or
supplier of any of them shall not be published,  disclosed or made accessible by
him to  any  other  person,  either  during  or  after  the  termination  of his
employment,  or used by him except during the Employment  Period in the business
and for the benefit of the  Company and its  subsidiaries  and  affiliates.  The
Executive shall return all tangible evidence of such confidential information to
the Company prior to or at the termination of his employment hereunder.

     Section   11.   Modification.   This   Agreement   sets  forth  the  entire
understanding  of the parties  hereto with respect to the subject matter hereof,
supersedes all existing  agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.

     Section  12.  Notices.  Any  notice  or  other  communication  required  or
permitted  to be given  hereunder  shall be in  writing  and  shall be mailed by
certified mail,  return receipt  requested,  or delivered against receipt to the
party to whom it is to be given,  at the  address of such party set forth in the
preamble to this  Agreement  (or to such other  address as such party shall have
furnished  in writing in  accordance  with the  provisions  of this  Section 2).
Notice to the Estate  shall be  sufficient  if  addressed  to the  Executive  as
provided  in this  Section  13.  Any  notice  or  other  communication  given by
certified  mail  shall be  deemed  given at the time of  certification  thereof,
except for a notice  changing a party's  address  which shall be deemed given at
the time of receipt thereof.

     Section 13. Waiver. Any waiver by either party of a breach of any provision
of this  Agreement  shall not  operate  as a waiver of any other  breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict  adherence to any term of this Agreement on one
or more occasions  shall not be considered a waiver or deprive that party of the
right  thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing.
<PAGE>

     Section 14. Binding Effect.  The Executive's  rights and obligations  under
this  Agreement  shall not be  transferrable  by assignment  or otherwise,  such
rights  shall not be subject to  commutation,  encumbrance  or the claims of the
Executive's creditors, and any attempt to do any of the foregoing shall be void.
The provisions of this Agreement  shall be binding upon and inure to the benefit
of the  Executive  and his  heirs  and  personal  representatives,  and shall be
binding upon and inure to the benefit of the Company and its successors.

     Section  15.  Headings.  The  headings  in this  Agreement  are  solely for
convenience of reference,  and shall be given no effect in the  construction  or
interpretation of this Agreement.

     Section 16.  Counterparts.  This Agreement may be executed in any number of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     Section  17.  Governing  Law.  This  Agreement  shall  be  governed  by and
construed in accordance  with the laws of the State of South  Carolina,  without
reference to the conflict of law provisions thereof.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.

                                    INSIGNIA FINANCIAL GROUP, INC.



                                    By:  /s/ Frank M. Garrison
                                    --------------------------
                                    Name:  Frank M. Garrison
                                    Its:   Executive Managing Director



                                    /s/ John K. Lines
                                    -----------------
                                    John K. Lines