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                         INSIGNIA FINANCIAL GROUP, INC.
                         401(K) RETIREMENT SAVINGS PLAN

                                 AMENDMENT NO. 2

         Pursuant to Section 14.1, the Plan is hereby amended, effective January
1, 2002, as follows in good faith compliance with the requirements of EGTRRA and
is to be construed in accordance with EGTRRA and guidance issued thereunder.


     1.   Section 1.16 of the Plan is amended by deleting the first sentence of
          the fourth paragraph in its entirety and substituting in its place the
          following:

               "Compensation for any Plan Year shall not exceed $200,000
               multiplied by the Adjustment Factor."

     2.   Section 1.53 of the Plan is amended by inserting the following
          provision at the end of the fourth paragraph:

               "Any Employee within a class of employees defined in either an
               acquisition agreement or a property management agreement that
               requires prior service credit to be granted under this Plan for
               purposes of eligibility or vesting shall be credited with such
               service as provided in the relevant agreement. No such prior
               service should be granted in any case, however, if the granting
               of such credit would violate the tax-qualification requirements
               of Code Sections 401(a) and 401(k)."

     3.   Section 3.1(a) of the Plan is amended by deleting the first sentence
          thereof in its entirety and substituting in its place the following:

               "A Participant may elect on his application filed under Section
               2.3 to reduce his Compensation payable during a Plan Year while a
               Participant by not less than 1% and not more than 50%, in
               multiples of 1%, as elected by the Participant, and have that
               amount contributed to the Plan by an Employer as Deferred Cash
               Contributions in a manner to be determined by the Committee."

     4.   Section 3.1(b) of the Plan is amended by deleting the first sentence
          thereof in its entirety and substituting in its place the following:

               "In no event shall the Participant's reduction in Compensation
               and the corresponding Deferred Cash Contributions and similar
               contributions made on his behalf by an Employer in any calendar
               year exceed $11,000 as adjusted by the Secretary of the Treasury
               in accordance with Code Section 402(g)(5)."

     5.   Section 3.1 of the Plan is amended by adding the following subsection
          (e) at the end thereof:

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               "(e) All Participants who are eligible to make Deferred Cash
               Contributions under this Plan and who have attained age 50 before
               the close of the Plan Year shall be eligible to make catch-up
               contributions in accordance with, and subject to the limitations
               of, Section 414(v) of the Code. Such catch-up contributions shall
               not be taken into account for purposes of the provisions of the
               Plan implementing the required limitations of Sections 402(g) and
               415 of the Code. The Plan shall not be treated as failing to
               satisfy the provisions of the Plan implementing the requirements
               of Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b) or 416 of
               the Code, as applicable, by reason of the making of such catch-up
               contributions. Amounts contributed under this subsection shall
               not be eligible for Deferred Matching Contributions of any type."

     6.   Section 3.4(a) of the Plan is amended by inserting the following
          provision at the end of the first sentence:

               "Pursuant to the terms stated above, the Plan shall also accept
               Rollover Contributions from a qualified plan described in Section
               403(a) of the Code; an annuity contract described in Section
               403(b) of the Code; and a plan eligible under Section 457(b) of
               the Code. Rollover Contributions shall not include any amount
               contributed to a plan as an after-tax employee contribution."

     7.   Section 3.8(a) of the Plan is amended by deleting the current
          provision in its entirety and replacing it with the following:

               "The annual addition to a Participant's Account for any Plan
               Year, which shall be considered the "limitation year" for
               purposes of Section 415 of the Code, when added to the
               Participant's annual addition for that Plan Year under any other
               qualified defined contribution plan of an Employer shall not
               exceed an amount which is equal to the lesser of (i) $40,000, as
               adjusted for increases in the cost-of-living under Section 415(d)
               of the Code; or (ii) 100% of the Participant's aggregate
               remuneration, within the meaning of Section 415(c)(3) of the
               Code, for that Plan Year."

     8.   Section 7.2(c)(2) of the Plan is amended by deleting the current
          provision in its entirety and replacing it with the following:

               "the Participant shall be suspended from making Deferred Cash
               Contributions pursuant to Section 3.1 hereof and pre-tax elective
               or after-tax voluntary contributions to all other plans of an
               Employer and Affiliated Employers for a period of six months
               after receipt of the distribution; and"

     9.   Section 9.3(d) of the Plan is amended by adding the following
          provision at the end thereof:

               "For the purposes of this Section, the value of the Vested
               Portion of a Participant's Accounts will be determined without
               regard to that portion of the



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               account balance that is attributable to rollover contributions
               and earnings allocable thereto within the meaning of Sections
               402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of
               the Code."



         IN WITNESS WHEREOF, the Company has executed this plan amendment as of
January 1, 2002.


Dated:  ____________________                INSIGNIA FINANCIAL GROUP, INC.


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

                                            Title  Executive Vice-President
                                                 -------------------------------