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                         INSIGNIA FINANCIAL GROUP, INC.

                             STOCK OPTION AGREEMENT

     STOCK OPTION AGREEMENT, dated as of July 24, 2002 (this "Agreement"), by
and between Insignia Financial Group, Inc. (the "Company") and Geoffrey P.
Wharton (the "Executive").

                              Preliminary Statement

     The purpose of this Agreement is to evidence the grant of an option to
purchase common stock of the Company to the Executive, who is a key employee of
the Company. The general purpose of the grant is to promote the interests of the
Company and its stockholders by inducing the Executive's entering into an
employment agreement with the Company.

     The Board of Directors and the Compensation Committee of the Board of
Directors of the Company (the "Committee") have authorized the granting to the
Executive of a non-qualified option (the "Option") to purchase the number of
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), set forth below. The Committee shall have the authority to administer
and interpret the terms of this Agreement.

     Accordingly, the parties hereto agree as follows:

     1.  Grant of Option.  Subject in all respects to the terms and conditions
set forth herein, the Executive is hereby granted a non-qualified option to
purchase from the Company up to 150,000 shares of Common Stock at a price per
share of $10.00 (the "Exercise Price"). This Agreement shall be numbered and
registered on the books of the Company.

     2.  Exercise.  (a)  The Option shall become exercisable in five annual
installments of 30,000 shares each on the twenty-third day of July (the "Vesting
Date") in each year commencing July 23, 2003, and continuing through July 23,
2007, provided that no such installment shall vest unless the Executive
continues to be employed by the Company on the applicable Vesting Date.

         (b) There shall be no proportionate or partial vesting in the periods
prior to each Vesting Date. Notwithstanding the foregoing, if there is a Change
in Control Event (as defined below) during the first three years of this
Agreement (the "Three Year Period") and (x) the Executive thereafter remains an
employee of the Company pursuant to his employment agreement through the end of
the Three Year Period or (y) Executive's employment is thereafter (during the
Three Year Period) terminated as a result of a Termination Without Cause (as
defined in the Executive's employment agreement), all then unvested portions of
the Option shall become fully vested and exercisable. In the event of a Death
Termination Event, a Disability Termination Event or a Termination Without Cause
(each as defined in the Executive's employment agreement), the Option will
continue to vest as though the Executive were still employed by the Company. A
"Change in

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Control Event" shall occur if Andrew L. Farkas ceases to be the Chairman and/or
Chief Executive Officer of the direct or indirect parent of the Company or of
the Company itself.

         (c) The Executive may exercise the Option in whole or in part at any
time and from time to time prior to the expiration of the Option as provided
herein by serving written notice of such exercise on the Committee accompanied
by payment in full of the aggregate Exercise Price. The Company will not be
under obligation to deliver to the Executive any Common Stock unless and until
all legal matters in connection with the issuance and delivery of the Common
Stock have been approved by the Company's counsel. Payment of the aggregate
Exercise Price shall be made in a manner acceptable to the Committee, in its
sole discretion, and payment shall generally be made in cash or in shares of
Common Stock which the Executive has owned for at least six months (and for
which the Executive has good title free and clear of any liens and encumbrances)
based on the fair market value of the Common Stock on the payment date as
determined by the Committee (or any combination thereof) against delivery of the
shares of Common Stock.

         (d) The Company shall not be required to issue fractional shares of
Common Stock on the exercise of the Option. If any fractional share of Common
Stock would, except for this provision, be issuable upon the exercise of the
Option, the Company shall pay an amount in cash equal to the current fair market
value of such fractional share of Common Stock.

     3.  Option Term.  (a)Unless terminated earlier as provided below, the
Option shall expire five years and six months after the grant of the option.

         (b) In the event of the termination of the Executive's employment with
the Company because of the Executive's voluntary termination, the Option shall
remain exercisable until the earlier of (i) thirty (30) days from the date of
such termination or (ii) the expiration of the stated term of the Option.

         (c) In the event of the termination of the Executive's employment with
the Company because of the Executive's Termination For Cause (as defined in the
Executive's employment agreement) or in the event of the Executive's voluntary
termination within ninety (90) days after an event that would be grounds for a
Termination For Cause, the Executive's entire Option (whether or not vested)
shall be forfeited and canceled in its entirety upon such termination.

     4.  Reservation of Shares.  The Company shall at all times reserve a number
of authorized but unissued shares of Common Stock equal to the maximum number of
shares of Common Stock that may be subject to the Option.

     5.  Restriction on Transfer of Option.  The Option is not transferable
other than by will or under the applicable laws of descent and distribution.
During the lifetime of the Executive, the Option may be exercised only by the
Executive or the Executive's guardian or legal representative. In addition, the
Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate


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the Option or in the event of any levy upon the Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, the
Option shall immediately become null and void.

     6.  Rights as a Stockholder.  The Executive shall have no rights as a
stockholder with respect to any shares of Common Stock covered by the Option
until the Executive shall have become the holder of record of the shares of
Common Stock, and no adjustments shall be made for dividends in cash or other
property, distributions or other rights in respect of any such shares of Common
Stock.

     7.  No Obligation to Continue Employment.  This Agreement does not
guarantee that the Company will employ the Executive for any specific time
period, nor does it modify in any respect the Company's right to terminate or
modify the Executive's employment or compensation.

     8.  Effectiveness of the Agreement.  This Agreement is effective as of the
date first set forth above.

     9.  Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the state of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

     10.  Notices.  Any notice or communication given hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, or
by United States mail, to the appropriate party at the address set forth below
(or such other address as the party shall from time to time specify):

         If to the Company, to:

              Insignia Financial Group, Inc.
              200 Park Avenue
              New York, New York 10166
              Attn:  General Counsel

          If to the Executive, to:

              the address indicated after his signature at the end of
              this Agreement.


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

                                       INSIGNIA FINANCIAL GROUP, INC.



                                       By: /s/ Adam B. Gilbert
                                          -----------------------------
                                               EVP


                                       EXECUTIVE


                                       By: /s/ Geoffrey P. Wharton
                                          -----------------------------
                                       Name: Geoffrey P. Wharton



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