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                                SECOND AMENDMENT
                                     TO THE
                                 SECOND AMENDED
                                       AND
                          RESTATED EMPLOYMENT AGREEMENT

         THIS SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this "Amendment"), dated as of October 7, 2002, is made by and among
Insignia Financial Group, Inc., a Delaware corporation (the "Parent Company"),
Insignia/ESG, Inc., a Delaware corporation (the "Company"), and Stephen B.
Siegel (the "Executive").

         WHEREAS, Insignia/ESG Holdings, Inc., the predecessor in interest to
the Parent Company, the Company and the Executive have entered into a Second
Amended and Restated Employment Agreement, made as of July 31, 1998, as amended
to date by the Amendment to Second Amended and Restated Employment Agreement,
made as of July 21, 2001, by and among the Parent Company, the Company and the
Executive (the "Employment Agreement"), pursuant to which the terms and
conditions of the Executive's employment are set forth; and

         WHEREAS, the Parent Company, the Company and the Executive now desire
to amend the Employment Agreement as hereinafter set forth;

         NOW, THEREFORE, the Parent Company, the Company and the Executive
hereby agree as follows:

         1. DEFINED TERMS. All capitalized terms used but not otherwise defined
         herein shall have the meanings ascribed thereto in the Employment
         Agreement.

         2. AMENDMENT TO SECTION 3(C). Effective on the date hereof, Section
         3(c) of the Employment Agreement is hereby amended to read in its
         entirety as follows:

                  "For each month prior to August, 2002, the Company shall
                  advance to the Executive an amount equal to $50,000 less
                  withholding permitted by Section 12 on the first day of each
                  month (such amounts including the related withholding are
                  referred to as the "Advances") against receipt of the Override
                  and Annual Bonus payable in respect of the calendar year in
                  which such Advances were paid. Not later than March 31
                  following the end of each fiscal year (or 90 days following
                  the termination of the Employment Period, if earlier), the
                  Compensation Committee shall deliver to the Executive a
                  calculation of the amount of Override payable to him pursuant
                  to Section 3(b) of this Agreement, the amount of the Annual
                  Bonus payable to him pursuant to Section 3(e) of this
                  Agreement for the preceding year (or portion thereof if the
                  Employment Period has terminated during such year) and the
                  amount of Additional Payments payable to him pursuant to
                  Section 3(d) of this Agreement for the preceding year. In the
                  event the Advances for any such period exceed the aggregate
                  amount of the Override and Annual Bonus the Executive shall
                  repay such excess to the Company within 15 days of receipt of
                  such calculation. Subject only to recoupment under Section
                  3(d) below, in the event the Override and Annual Bonus earned
                  for such period exceeds the Advances for such period, the
                  Company shall pay such excess less

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                  withholding to the Executive within 15 days of delivery of
                  such calculation."

         3. AMENDMENT TO SECTION 3(D). Effective on the date hereof, Section
         3(d) of the Employment Agreement is hereby amended by adding the
         following four sentences at the end thereof to read as follows:

                  "In addition, the Executive shall be entitled to receive an
                  additional 20% of the promotional and net commission amounts
                  received by Insignia/ESG after June 30, 2002, as such amounts
                  are described and referred to above in this Section 3(d) (the
                  "Additional Payments"); provided, however, that in no event
                  shall the amount of Additional Payments actually paid to the
                  Executive in any calendar month exceed $50,000. Any amount of
                  Additional Payments in respect of any calendar month to which
                  the Executive is entitled in excess of such monthly $50,000
                  maximum amount (the "Excess Additional Payments") (i) shall,
                  in respect of each calendar year, be carried back to any prior
                  month in any such calendar year (but only to months after
                  July, 2002, in the case of calendar year 2002) for which
                  $50,000 of Additional Payments was not actually paid to the
                  Executive until the earlier to occur of (a) the actual payment
                  of $50,000 of Additional Payments to the Executive in respect
                  of each such prior month in such calendar year, and (b) the
                  date of payment of the Annual Bonus amount for and in respect
                  of such calendar year, and (ii) any remaining Excess
                  Additional Payments shall be carried forward indefinitely and
                  paid to the Executive in any subsequent calendar months in
                  which less than $50,000 of Additional Payments are earned by
                  the Executive until $50,000 of Additional Payments are
                  actually paid to the Executive in respect of each such
                  subsequent calendar month (but, notwithstanding the above, any
                  such remaining Excess Additional Payments so carried forward
                  shall only be paid to the Executive if the Executive is
                  employed by the Company on the date of payment and upon any
                  termination of the Executive's employment such carry forward
                  amount shall be reduced to zero and eliminated without any
                  payment to the Executive). Notwithstanding the above or
                  anything to the contrary in Section 3(c) or otherwise, the
                  Additional Payments and Excess Additional Payments actually
                  paid to the Executive during any particular calendar year
                  shall (x) be recoupable from any Override and Annual Bonus
                  amounts, and from any other cash payments, other than Base
                  Salary, earned by or payable to the Executive in respect of
                  such calendar year and/or subsequent calendar years, including
                  without limitation severance payments or benefits (the
                  "Recoupable Amounts") or (y) be forfeited and repaid to the
                  Company by the Executive if (A) the Executive terminates or
                  resigns his employment or (B) the Company terminates the
                  Executive's employment for Cause, in either case, at any time
                  during any such calendar year. If the Recoupable Amounts in
                  (x) above in respect of any calendar year are insufficient to
                  fully recoup the amount of Additional Payments and Excess
                  Additional Payments actually paid in respect of such calendar
                  year or prior calendar years, the aggregate amount of such
                  unrecouped Additional Payments and Excess Additional Payments
                  shall be carried forward indefinitely to subsequent calendar
                  years and shall again be

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                  subject to such recoupment by the Company in any such
                  subsequent calendar years."

         4. AFFIRMATION. Except as set forth above, all other terms and
         provisions of the Employment Agreement, as in effect immediately prior
         to the date hereof, shall remain in full force and effect.

         5. COUNTERPARTS. This Amendment 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.

         IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.


                                       INSIGNIA FINANCIAL GROUP, INC.

                                       BY: /s/ Adam B. Gilbert
                                          --------------------------------------

                                       NAME:  Adam B. Gilbert
                                            ------------------------------------

                                       ITS: Executive Vice President
                                           -------------------------------------



                                       INSIGNIA/ESG, INC.

                                       BY: /s/ Adam B. Gilbert
                                          --------------------------------------

                                       NAME:  Adam B. Gilbert
                                            ------------------------------------

                                       ITS: Senior Vice President
                                           -------------------------------------



                                       /s/ Stephen B. Siegel
                                       -----------------------------------------
                                       Stephen B. Siegel