<PAGE>


                                 THIRD AMENDMENT


         THIS THIRD AMENDMENT (the "Amendment") to the Credit Agreement referred
to below is entered into as of the 25th day of August, 2000, by and among
INSIGNIA FINANCIAL GROUP, INC. (FORMERLY KNOWN AS "INSIGNIA/ESG HOLDINGS,
INC."), a corporation organized under the laws of Delaware (the "Borrower"), THE
LENDERS SIGNATORY HERETO (collectively, the "Lenders"), FIRST UNION NATIONAL
BANK, as Administrative Agent, and LEHMAN COMMERCIAL PAPER INC., as Syndication
Agent (collectively, the "Agents").


                              STATEMENT OF PURPOSE

         The Borrower, the Lenders and the Agents are parties to a certain
Credit Agreement dated as of October 22, 1998, as heretofore amended by the
First Amendment dated March 19, 1999 and by the Second Amendment dated July 21,
1999 (as so amended, the "Credit Agreement"), pursuant to which the Lenders have
agreed to make, and have made, certain Extensions of Credit to the Borrower.

         The Borrower has requested the Lenders to amend the Credit Agreement in
the respects provided in this Amendment.

         NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto hereby agree as follows:

         I.       AMENDMENT OF CREDIT AGREEMENT.

                  (a) Section 1.1 of the Credit Agreement is hereby amended by
         deleting the definition of "Debt" in its entirety and inserting the
         following in lieu thereof:

                           "Debt" means, with respect to the Borrower and its
                  Subsidiaries at any date and without duplication, the sum of
                  the following calculated in accordance with GAAP: (a) all Debt
                  for Money Borrowed, (b) all obligations to pay the deferred
                  purchase price of property or services of any such Person,
                  except trade payables arising in the ordinary course of
                  business not more than ninety (90) days past due, (c) all Debt
                  of any Person secured by a Lien on any asset of the Borrower
                  and its Restricted Subsidiaries, (d) all Contingent
                  Obligations of any such Person with respect to Debt, (e) Debt
                  in the form of earn-out obligations to be paid in cash to the
                  extent such earn-out obligations have been incurred and are
                  required to be included on a Consolidated balance sheet of the
                  Borrower and its Restricted Subsidiaries prepared in
                  accordance with GAAP and (f) all net obligations incurred by
                  any such Person pursuant to Hedging Agreements.
                  Notwithstanding the foregoing, there shall be excluded from
                  the definition of Debt: (a) all obligations for the deferred
                  purchase price of property to the extent the obligation of the
                  Borrower or any of its

<PAGE>

                  Subsidiaries is secured by cash deposits access to which is
                  restricted to the seller of such property, or any third party
                  guarantor, or any of their respective successors and assigns;
                  (b) Debt incurred in connection with any arbitrage loan
                  facility between the Borrower and any Lender or any other
                  commercial bank organized under, or which has a branch or
                  agency licensed under, the laws of (i) the United States or
                  any state thereof, (ii) the United Kingdom of Great Britain
                  and Northern Ireland or (iii) any participating member state
                  of the European Union (as so described in any legislative
                  measure of the Council of European Union) in an amount not to
                  exceed $50,000,000, to the extent the obligation of the
                  Borrower to repay advances under such loan facility is fully
                  collateralized at all times by cash or Cash Equivalents funded
                  with the proceeds of such loan facility; and (c) guarantee
                  obligations of the Borrower of up to $10,000,000 on account of
                  Debt of First Ohio Mortgage Corporation, Inc. or any other
                  Unrestricted Subsidiary with respect to lines of credit, the
                  proceeds of which are used solely to fund mortgage loans.

                  (b) Section 10.4(e) of the Credit Agreement is hereby amended
         by deleting such section in its entirety and inserting the following in
         lieu thereof:

                           (e) investments in or loans to Unrestricted
                  Subsidiaries, provided that the aggregate amount of such loans
                  and investments, together with all Contingent Obligations of
                  the Borrower and its Restricted Subsidiaries on account of
                  Debt of Unrestricted Subsidiaries, shall at no time exceed an
                  amount equal to (i) twenty percent (20%) of the Consolidated
                  Net Worth of the Borrower and its Subsidiaries plus (ii) Five
                  Million Dollars ($5,000,000).

                  (c) Section 10.7(c) of the Credit Agreement is hereby amended
         by deleting the word "common" from the third line thereof and inserting
         in lieu thereof the word "capital."


         II. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Agents and the Lenders that:

                  (a) The execution and delivery of this Amendment by the
         Borrower and the performance of the Credit Agreement, as amended and
         modified by this Amendment, and the other Loan Documents, do not and
         will not violate any law, rule or regulation, or constitute a breach of
         the Articles of Incorporation, Bylaws or corporate resolutions of the
         Borrower or any agreement to which the Borrower is a party or by which
         its assets are bound. The Credit Agreement, as amended and modified by
         this Amendment, and the other Loan Documents, constitute legal, valid
         and binding obligations of the Borrower, enforceable in accordance with
         their respective terms.

                  (b) The representations and warranties of the Borrower and its
         Subsidiaries contained in Article VI of the Credit Agreement and in the
         other Loan Documents are true and correct in all material respects on
         and as of the date of this Amendment with the same


                                       2
<PAGE>

         effect as if made on and as of such date, except to the extent that
         such representations and warranties expressly relate to an earlier date
         (in which case such representations and warranties were true and
         correct in all material respects on and as of such earlier date).

                  (c)      No Default or Event of Default exists.


         III.     GENERAL PROVISIONS.

         (a) Limited Amendment. Except as otherwise provided herein, the Credit
Agreement and each other Loan Document shall continue to be, and shall remain,
in full force and effect. This Amendment shall not be deemed (i) to be a waiver
of, or consent to, or a modification or amendment of, any other term or
condition of the Credit Agreement or of any other term or condition of the other
Loan Documents or (ii) to prejudice any other right or rights which the Agents
or any Lender may now have or may have in the future under or in connection with
the Credit Agreement or the other Loan Documents or any of the instruments or
agreements referred to therein, as the same may be amended or modified from time
to time.

         (b) Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

         (c) Definitions. All capitalized terms used and not defined herein
shall have the meanings given thereto in the Credit Agreement.

         (d) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         (e) Expenses. All expenses incurred in connection with the preparation
and negotiation of this Amendment and with the fulfillment of the requirements
hereunder shall be borne by the Borrower. If any documentary or recording tax
should be assessed or the affixing of any stamps be required by local, state or
federal governments, the Borrower shall pay the tax and cost of such stamps.

         (f) Conflicting Terms. In the event of any conflict or inconsistency
between the terms of this Amendment and the Credit Agreement and the other Loan
Documents, this Amendment shall control.

         (g) Cross-References. All references in the Credit Agreement, or in any
other Loan Document, to the terms "Credit Agreement" or "Agreement" or other
similar reference shall be deemed to refer to the Credit Agreement as amended or
modified by this Amendment. In addition, all notices, requests, certificates and
other instruments executed and delivered after the execution and delivery of
this Amendment may refer to the Credit Agreement without making specific
reference to this Amendment, but nevertheless all such references shall include
this amendment of the Credit Agreement unless the context otherwise requires.



                                       3
<PAGE>

         (h) Successors and Assigns. Whenever in this Amendment any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party and all covenants, provisions and
agreements by or on behalf of the Borrower which are contained in this Amendment
shall inure to the benefit of the successors and assigns of the Agents and
Lenders.





















                                       4
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.


<TABLE>
<CAPTION>
<S>                                   <C>
                                               INSIGNIA FINANCIAL GROUP, INC.
                                      (formerly known as Insignia/ESG Holdings, Inc.)


                                      By:      /s/ James A. Aston
                                               -----------------------------------------
                                               Name:    James A. Aston
                                               Title:   Chief Financial Officer



                                      FIRST UNION NATIONAL BANK, as
                                      Administrative Agent and Lender

                                      By:      /s/ Sarah T. Warren
                                               -----------------------------------------
                                               Name:    Sarah T. Warren
                                               Title:   Vice President


                                      LEHMAN  COMMERCIAL PAPER INC., as Syndication Agent
                                      and Lender


                                      By:
                                               Name:
                                               Title:



                                      BANK AUSTRIA CREDITANSTALT
                                      CORPORATE FINANCE, INC.


                                      By:
                                               Name:
                                               Title:



                                       5
<PAGE>



                                      THE BANK OF NEW YORK


                                      By:      /s/ Anthony I. Verzi
                                               -----------------------------------------
                                               Name:    Anthony I. Verzi
                                               Title:   Vice President


                                      BARCLAYS BANK PLC


                                      By:      /s/ Matthew Tuck
                                               -----------------------------------------
                                               Name:    Matthew Tuck
                                               Title:   Associate Director and VP



                                      LASALLE BANK NATIONAL
ASSOCIATION


                                      By:      /s/ Michael J. Harris
                                               -----------------------------------------
                                               Name:    Michael J. Harris
                                               Title:   Vice President



                                      NATIONAL CITY BANK


                                      By:      /s/ Andrew J. Walshaw
                                               -----------------------------------------
                                               Name:    Andrew J. Walshaw
                                               Title:   Vice President



                                      BANK OF AMERICA, N.A.


                                      By:      /s/ Matthew S. Cardone
                                               -----------------------------------------
                                               Name:    Matthew S. Cardone
                                               Title:   Vice President
</TABLE>


                                       6