<PAGE>
 
                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q

        { X }  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended   SEPTEMBER 30, 1997
                                               ------------------

                                       OR

        {   } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        
     For the transition period from  _____________ to _____________
                                        
                      Commission file number   1-08916
                                               -------

                      GREEN TREE FINANCIAL CORPORATION
   --------------------------------------------------------------------  
           (Exact name of registrant as specified in its charter)


               DELAWARE                              41-1807858
    -------------------------------    ----------------------------------- 
    (State or other jurisdiction of    (I.R.S. Employer Identification No.)
    incorporation or organization)


 1100 LANDMARK TOWERS, SAINT PAUL, MINNESOTA                     55102-1639
 --------------------------------------------------------------  ----------
   (Address of principal executive offices)                      (Zip code)

       Registrant's telephone number, including area code: (612) 293-3400
                                                           --------------

 _____________________________________________________________________________
            (Former name, former address and former fiscal year, 
                        if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                           YES     X       NO
                                ------         -------

AS OF OCTOBER 31, 1997, 136,182,544 SHARES OF COMMON STOCK OF GREEN TREE
FINANCIAL CORPORATION WERE OUTSTANDING.
<PAGE>
 
               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
                                   FORM 10-Q

                        QUARTER ENDED September 30, 1997

                                     INDEX
 
PART I -       FINANCIAL INFORMATION                                        PAGE
 
    Item 1.    Financial Statements                                            3
 
    Item 2.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                      10
 
PART II -      OTHER INFORMATION
 
    Item 1.    Legal Proceedings                                              15
 
    Item 2.    Changes in Securities and Use of Proceeds                      15
 
    Item 3.    Defaults upon Senior Securities                                15
 
    Item 4.    Submission of Matters to a Vote of Security Holders            15
 
    Item 5.    Other Information                                              15
 
    Item 6.    Exhibits and Reports on Form 8-K                               15
 
SIGNATURES                                                                    16
 
EXHIBIT INDEX                                                                 17

Certain information included in this Form 10-Q may include "forward-looking"
information, as defined in the Private Securities Litigation Reform Act of 1995
(the "Act").  Such forward-looking information may involve risks or
uncertainties which are described in the Cautionary Statements contained in the
Company's Form 8-K filed with the Securities and Exchange Commission on July 12,
1996.  Investors are specifically referred to the Cautionary Statements for a
discussion of factors which could affect the Company's operations and financial
performance.  Factors referenced in the Cautionary Statements include:
prevailing economic conditions; ability to access capital resources; short-term
interest rate fluctuations; the level of defaults and prepayments on loans made
by the Company; competition; and regulatory changes.  Any forward-looking
information is based upon management's reasonable estimate of future results or
trends.   The Company does not undertake, and the Act specifically relieves the
Company from, any obligation to update any forward-looking statements.

                                       2
<PAGE>
 
                         PART I - FINANCIAL INFORMATION
                         Item 1.  Financial Statements

               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                September 30, 1997      December 31, 1996
                                               --------------------    ------------------
                                                   (unaudited)         
<S>                                            <C>                     <C>

Assets:                                                                
  Cash and cash equivalents                       $  745,216,000        $  442,071,000
  Cash deposits, restricted                          196,313,000           171,484,000
  Other investments                                   18,254,000            11,925,000
  Interest only securities                         1,453,262,000         1,157,185,000
  Receivables:                                                      
     Lease                                           628,832,000           564,348,000
     Commercial finance                              495,291,000           212,920,000
     Consumer revolving credit                       131,510,000            40,803,000
     Other accounts receivable                       127,762,000            85,503,000
  Contracts and collateral                         1,014,890,000           453,008,000
  Servicing rights                                    79,061,000                    --
  Property, furniture and fixtures                   105,372,000            77,859,000
  Goodwill                                            56,926,000            58,950,000
  Other assets                                        18,831,000            21,988,000
                                               -----------------    ------------------
          Total assets                            $5,071,520,000        $3,298,044,000
                                               =================    ==================
                                                                    
Liabilities and Stockholders' Equity:                               
  Notes payable                                   $1,335,251,000        $  472,181,000
  Senior/Senior subordinated notes                   510,145,000           290,348,000
  Accounts payable and accrued liabilities           571,337,000           404,427,000
  Investor payable                                   486,244,000           346,272,000
  Income taxes, principally deferred                 689,611,000           539,362,000
                                               -----------------    ------------------
          Total liabilities                        3,592,588,000         2,052,590,000
                                                                    
  Common stock, $.01 par; authorized                                
     400,000,000 shares, issued 141,440,784                         
     shares (1997) and 139,782,706 shares                           
     (1996)                                            1,414,000             1,398,000
  Additional paid-in capital                         432,097,000           373,573,000
  Retained earnings                                1,212,880,000           926,695,000
  Net unrealized (loss) gain on securities                          
     available for sale                               (5,500,000)                   --
  Minimum pension liability adjustments               (2,299,000)           (2,299,000)
                                               -----------------    ------------------
                                                   1,638,592,000         1,299,367,000
  Less treasury stock, 5,298,256 shares (1997)                      
     and 2,051,000 shares (1996) at cost            (159,660,000)          (53,913,000)
                                               -----------------    ------------------
          Total stockholders' equity               1,478,932,000         1,245,454,000
                                               -----------------    ------------------
Total liabilities and stockholders' equity        $5,071,520,000        $3,298,044,000
                                               =================    ==================
</TABLE>

                  See notes to unaudited financial statements.

                                       3
<PAGE>
 
               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                           Three Months Ended Sept. 30
                                                     --------------------------------------
                                                            1997                 1996
                                                     -----------------    -----------------
<S>                                                    <C>                  <C>
Revenues:
  Gain on contract sales                                  $202,441,000         $134,110,000
  Interest                                                  99,645,000           54,541,000
  Servicing                                                 28,564,000           19,172,000
  Commission and other                                      17,610,000           11,842,000
                                                     -----------------    -----------------
                                                           348,260,000          219,665,000
 
Expenses:
  Interest                                                  45,166,000           16,931,000
  Cost of servicing                                         20,915,000           13,861,000
  General and administrative                                90,530,000           50,941,000
                                                     -----------------    -----------------
                                                           156,611,000           81,733,000
                                                     -----------------    -----------------
 
Earnings before income taxes                               191,649,000          137,932,000
 
Income taxes                                                72,827,000           52,414,000
                                                     -----------------    -----------------
 
Net earnings                                              $118,822,000         $ 85,518,000
                                                     =================    =================
 
Earnings per common and common
  equivalent share                                                $.85                 $.61
                                                                  ====                 ====
 
Weighted average common and common
  equivalent shares outstanding                            140,448,115          140,805,663

</TABLE>

                  See notes to unaudited financial statements.

                                       4
<PAGE>
 
                GREEN TREE FINANCIAL CORPORATION AND SUBSIDARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                          Nine Months Ended Sept. 30
                                                     -----------------------------------
                                                          1997                1996
                                                     ---------------     ---------------
<S>                                                  <C>                 <C>
Revenues:                                                                
  Gain on contract sales                                $542,371,000        $347,220,000
  Interest                                               262,961,000         152,700,000
  Servicing                                               80,398,000          52,733,000
  Commission and other                                    46,830,000          31,232,000
                                                     ---------------     ---------------
                                                         932,560,000         583,885,000
                                                                         
Expenses:                                                                
  Interest                                               111,360,000          45,462,000
  Cost of servicing                                       61,081,000          38,198,000
  General and administrative                             246,058,000         133,609,000
                                                     ---------------     ---------------
                                                         418,499,000         217,269,000
                                                     ---------------     ---------------
                                                                         
Earnings before income taxes                             514,061,000         366,616,000
Income taxes                                             195,343,000         139,314,000
                                                     ---------------     ---------------
                                                                         
Net earnings                                            $318,718,000        $227,302,000
                                                     ===============     ===============
                                                                         
Earnings per common and common                                           
  equivalent share                                             $2.27               $1.62
                                                               =====               =====
                                                                         
Weighted average common and common                                       
  equivalent shares outstanding                          140,594,665         140,210,839

</TABLE>

                  See notes to unaudited financial statements.

                                       5
<PAGE>
 
               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                   Nine Months Ended Sept. 30
                                                         --------------------------------------------
                                                                  1997                     1996
                                                         -------------------      -------------------
<S>                                                        <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Servicing fees and net interest payments collected         $   264,117,000          $   164,672,000
  Net principal payments collected                               132,597,000               74,835,000
  Interest on contracts                                           91,246,000               38,187,000
  Interest on cash, investments and receivables                   77,436,000               51,582,000
  Commissions                                                     32,259,000               23,760,000
  Other                                                            6,953,000               (2,713,000)
                                                         -------------------      -------------------
                                                                 604,608,000              350,323,000
                                                         -------------------      -------------------
 
  Cash paid to employees and suppliers                          (293,753,000)            (188,448,000)
  Interest paid on debt                                         (103,919,000)             (37,209,000)
  Income taxes paid                                              (35,532,000)             (36,525,000)
                                                         -------------------      -------------------
                                                                (433,204,000)            (262,182,000)
                                                         -------------------      -------------------
NET CASH PROVIDED BY OPERATIONS                                  171,404,000               88,141,000
 
  Purchase of contracts and leases                            (7,959,058,000)          (5,379,042,000)
  Proceeds from sale of contracts                              7,167,967,000            5,766,855,000
  Principal collections on contracts and leases                  343,021,000              100,674,000
  Proceeds from sale of commercial finance and
     revolving credit loans                                      150,000,000              199,950,000
  Commercial and revolving credit loans disbursed             (3,268,256,000)          (2,016,754,000)
  Principal collections on commercial and revolving
     credit loans                                              2,827,293,000            1,666,704,000
  Net cash deposits                                              (24,829,000)             (18,271,000)
                                                         -------------------      -------------------
NET CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES                                          (592,458,000)             408,257,000
                                                         -------------------      -------------------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, furniture and fixtures                   (46,407,000)             (22,667,000)
  Net (purchases) sales of investments                            (6,329,000)               7,486,000
                                                         -------------------      -------------------
NET CASH USED FOR INVESTING ACTIVITIES                           (52,736,000)             (15,181,000)
                                                         -------------------      -------------------
</TABLE>

                                       6
<PAGE>
 
               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (continued)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                   Nine Months Ended Sept. 30
                                                         --------------------------------------------
                                                                  1997                     1996
                                                         -------------------      -------------------
<S>                                                        <C>                      <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on credit facilities                              7,402,625,000            4,447,278,000
  Repayments on credit facilities                             (6,539,554,000)          (4,529,492,000)
  Borrowings of long-term debt                                   220,000,000                       --
  Dividends paid                                                 (32,532,000)             (25,707,000)
  Common stock repurchased                                      (105,748,000)                      --
  Common stock issued                                              3,548,000                3,714,000
                                                         -------------------      -------------------
NET CASH PROVIDED BY (USED FOR)
  FINANCING ACTIVITIES                                           948,339,000             (104,207,000)
                                                         -------------------      -------------------
NET INCREASE IN CASH AND CASH
  EQUIVALENTS                                                    303,145,000              288,869,000
CASH AND CASH EQUIVALENTS BEGINNING
  OF PERIOD                                                      442,071,000              295,767,000
                                                         -------------------      -------------------
 
CASH AND CASH EQUIVALENTS END OF
  PERIOD                                                     $   745,216,000          $   584,636,000
                                                         ===================      ===================
 
RECONCILIATION OF NET EARNINGS TO NET
  CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES:
  Net earnings                                               $   318,718,000          $   227,302,000
  Provision for income taxes                                     195,343,000              139,314,000
  Depreciation and amortization                                   25,867,000               15,491,000
  Interest only securities and servicing rights
     recorded, less net contract payments collected             (253,806,000)            (258,186,000)
  Amortization of deferred servicing revenue                              --              (19,482,000)
  Amortization of servicing rights                                 9,748,000                       --
  Accretion of yield on interest only securities                 (91,788,000)             (57,030,000)
  Net decrease in cash deposits                                  (24,829,000)             (18,271,000)
  Purchase of contracts and leases, net of sales and
     principal collections                                      (475,905,000)             488,487,000
  Commercial and revolving credit loans disbursed,
     net of sales and principal collections                     (290,963,000)            (150,100,000)
  Net selling expenses on sale of contracts                       45,838,000               39,523,000
  Increase in interest payable                                     7,386,000                6,037,000
  Income taxes paid                                              (35,532,000)             (36,525,000)
  Increase in cash paid to employees and suppliers                (8,054,000)             (29,917,000)
  Other                                                          (14,481,000)              61,614,000
                                                         -------------------      -------------------
 
NET CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES                                       $  (592,458,000)         $   408,257,000
                                                         ===================      ===================
</TABLE>
                  See notes to unaudited financial statements

                                       7
<PAGE>
 
               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS

A.  Basis of Presentation

The interim financial statements have been prepared by Green Tree Financial
Corporation ("the Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to quarterly
reports on Form 10-Q.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.  In the opinion of management, all adjustments which are of a
normal recurring nature and are necessary for a fair presentation have been
included.  However, results for interim periods are not necessarily indicative
of the results that may be expected for a full year.  It is suggested that these
financial statements be read in conjunction with the consolidated financial
statements and related notes and schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.

Certain reclassifications have been made to the December 31, 1996 financial
statements to conform to the classifications used in the September 30, 1997
financial statements.  These reclassifications had no effect on net earnings or
stockholders' equity as previously reported.

Effective January 1, 1997 the Company adopted Statement of Financial Accounting
Standards No. 125 ("SFAS 125"), Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.  The adoption of SFAS 125
did not have a material impact on the Company's financial position or results of
operations.

SFAS 125 requires prospective implementation as of January 1, 1997 and
retroactive application is not permitted.  However, certain reclassifications
have been made to prior financial statements to conform to the current period
presentation.  The previously classified excess servicing rights receivable has
been reclassified as interest only securities and is shown net of the Company's
previously classified allowance for losses on contracts sold.  Effective January
1, 1997 the portion of the Company's interest only securities that exceeded
contractually specified servicing fees is classified as interest only securities
and the remaining asset is classified as servicing rights.

Among other provisions, SFAS 125 uses a "financial components" approach relative
to the recognition of financial assets and liabilities resulting from the
transfer of financial assets.  Specifically, SFAS 125 requires that gain
recognition on the sale of financial assets be based on an allocated cost basis
method for the financial components sold.  SFAS 125 also provides guidance
relative to the classification and ongoing measurement of the financial
components retained in connection with financial asset sales.  Such components
are recorded at allocated cost.  The Company retains interest only securities
and servicing rights upon the sale of its financial contracts.

                                       8
<PAGE>
 
The Company classifies its interest only securities as available for sale and
carries these securities at fair value.  Accordingly, unrealized gains and
losses are reported on a net basis as a separate component of stockholders'
equity.

Servicing rights are carried at allocated cost and amortized in proportion to
and over the estimated period of net servicing income.  Servicing rights are
evaluated for impairment on an ongoing basis and, to the extent the recorded
amount exceeds the fair value of those servicing rights, a valuation allowance
is established through a charge to earnings.  Upon subsequent measurement of the
fair value of these servicing rights in future periods, if the fair value equals
or exceeds the carrying amount, any previously recorded valuation allowance
would be deemed unnecessary and, therefore, represent current period earnings
only to the extent of such previously recorded allowance.  No valuation
allowance with respect to the servicing rights was necessary at September 30, 
1997.

B.  Interest Only Securities

Interest only securities represent the right to receive certain cash flows which
exceed the amount of cash flows sold in the Company's securitized contract
sales.  Interest only securities generally represent the value of interest to be
collected on the underlying financial contracts of each securitization over the
sum of the interest to be paid to security classes sold, contractual servicing
fees and credit losses.


These cash flows are projected and discounted over the expected life of the
financial contracts using prepayment, default, loss, and interest rate
assumptions that the Company believes market participants would use for similar
financial instruments.

In connection with the gain on sale of contracts and recording interest only
securities retained for the nine-month period ended September 30, 1997 the
Company provided $307 million for projected net credit losses on a discounted
basis.  For the same period the Company incurred $175 million of net credit
losses.

The Company, along with other financial services companies, has experienced 
higher prepayment activity in its portfolio, particularly with respect to 
manufactured housing loans made in the higher interest rate environment of 
1994 and 1995. Since the end of the third quarter of 1997, the Company has 
undertaken a special review of prepayment rates for such loans and the 
assumptions utilized in its models to compute the value of its interest only 
securities. Preliminarily, the Company has determined that a write down of the
value of its interest only securities in an amount estimated to be in the 
range of $125 to $150 million will be made for the quarter ended December 31, 
1997. Depending on the final results of the review, the actual valuation 
adjustment may be greater or less than this amount. The valuation adjustment 
will result in a fourth quarter pre-tax reduction to earnings equal to the 
amount of the adjustment. The Company has also instituted programs to reduce 
the number of prepayments and loss severity, and the Company's management will
monitor the effect of these programs in connection with its quarterly review 
of the valuation of its interest only securities.

                                       9
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Green Tree Financial Corporation ("Green Tree" or the "Company") is a
diversified financial services company that provides financing for manufactured
housing, home equity, home improvements, consumer products, and equipment and
provides consumer and commercial revolving credit.  The Company's financing
products include both fixed term and revolving loans and leases.  The Company's
insurance agencies market physical damage and term mortgage life insurance and
other credit protection relating to the customers' contracts it services.

Results of Operations:

The following table shows the percentage change in revenues, expenses and
earnings for the three and nine-month periods ended September 30, 1997 as
compared to the same period of 1996.

<TABLE>
<CAPTION>
                                            Three-month                Nine-month
                                         period-to-period           period-to-period
                                        increase Sept. 30,         increase Sept. 30,
                                           1996 to 1997               1996 to 1997
                                     ----------------------     ----------------------
<S>                                    <C>                        <C>
Revenues:                                                     
  Gain on contract sales                      51.0%                      56.2%
  Interest                                    82.7                       72.2
  Service                                     49.0                       52.5
  Commission and other                        48.7                       49.9
Expenses:                                                     
  Interest                                   166.8                      145.0
  Cost of servicing                           50.9                       59.9
  General and administrative                  77.7                       84.2
Earnings before income taxes                  38.9                       40.2
Net earnings                                  38.9                       40.2
</TABLE>

Gain on contract sales increased 51.0% and 56.2% for the three and nine-month
periods ended September 30, 1997, respectively, over the same periods in 1996 as
a result of the increased dollar volume of contracts sold, higher interest rate
spreads on manufactured housing sales, and longer average terms on the contracts
sold.  For the quarter ended September 30, 1997, total contract sales increased
$536,373,000 or 23.2% over the same period in 1996.

                                       10
<PAGE>
 
The following table sets forth the Company's fixed term contract originations
and sales for the three and nine-month periods ended September 30, 1997 and
1996.  Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                     Three-month period ended             Nine-month period ended
                                            Sept. 30,                            Sept. 30,
                                --------------------------------     --------------------------------
                                      1997              1996               1997              1996
                                --------------    --------------     --------------    --------------
<S>                               <C>               <C>                <C>               <C>
Originations:
  Manufactured Housing              $1,603,084        $1,415,401         $4,111,419        $3,658,540
  Home Equity/ Home
     Improvement                       967,038           407,899          2,437,855           925,843
  Consumer                             286,385           269,857            769,449           691,847
  Commercial and Equipment             292,846            79,701            768,045           200,879
                                --------------    --------------     --------------    --------------
          Total                     $3,149,353        $2,172,858         $8,086,768        $5,477,109
                                ==============    ==============     ==============    ==============
 
Sales:
  Manufactured Housing              $1,599,997        $1,555,052         $3,969,983        $3,783,235
  Home Equity/Home
     Improvement                       749,925           394,065          2,016,778           805,351
  Consumer                             321,327           249,305            767,991           832,584
  Commercial and Equipment             178,672           115,130            459,319           384,029
                                --------------    --------------     --------------    --------------
          Total                     $2,849,921        $2,313,552         $7,214,071        $5,805,199
                                ==============    ==============     ==============    ==============
</TABLE>


The Company believes that its market share of contracts for financing new
manufactured housing increased in the first nine months of 1997 compared to the
same period in 1996.  During this same time period the manufactured housing
market experienced a decrease in new home shipments as compared to the prior
year.  The Company's dollar volume of new manufactured housing contract
originations rose 13% and 12% during the three and nine-month periods ended
September 30, 1997, respectively, over the same periods in 1996.  The number of
new contracts originated by the Company during the first nine months of 1997 has
grown from 1996 and the average contract size has also increased due to a trend
in the Company's manufactured home financing to more land-and-home contracts and
slight price increases by the manufactured housing manufacturers.  The dollar
volume of previously owned manufactured housing contract originations rose 34.3%
and 28.3% for the three and nine months, respectively, compared to the same
periods in 1996.

The dollar volume of home equity/home improvement contract originations rose
137% for the quarter and 163% for the nine-month period ended September 30, 1997
over the same periods of 1996 to $2,437,855,000.  Consumer originations rose 6%
and 11% for the three and nine-month periods ended September 30, 1997 compared
to the same periods in 1996 to $769,449,000.  Commercial and equipment fixed
term loan and lease originations increased 267% for the quarter and 282% for the
nine months ended at September 30, 1997 over the same periods in 1996 to
$768,045,000.  The overall growth in these originations resulted from new
manufactured housing dealer participation programs, expanding the number of
relationships with dealers, and the growth in the Company's home equity
originations network, as well as the addition of the equipment leasing business.

                                       11
<PAGE>
 
The following table reflects the composition of the Company's servicing
portfolio at September 30, 1997 and 1996.  Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                                        Sept. 30
                                         ------------------------------------
                                                1997                1996
                                         ----------------    ----------------
<S>                                        <C>                 <C>
Servicing Portfolio:
 
  Fixed term contracts                        $24,214,000         $16,996,000
  Commercial revolving credit                   1,464,000             958,000
  Consumer revolving credit                       247,000              25,000
                                         ----------------    ----------------
          Total                               $25,925,000         $17,979,000
                                         ================    ================
</TABLE>

Interest income is realized from interest only securities, commercial finance
and revolving credit receivables, contract and lease inventory, cash deposits,
and short-term investments.  Interest income grew 82.7% and 72.2% during the
three and nine-month periods ended September 30, 1997 compared to the same
periods in 1996 primarily from increased earnings on the Company's commercial
finance and lease receivables and the increase in interest only securities.  Due
to higher origination levels, contract inventory for the nine-months ended
September 30, 1997 was higher on average than the same period in 1996 which also
contributed to the increase in interest income.

The increase in servicing income of 49.0% and 52.5% during the three and nine-
month periods ended September 30, 1997, respectively, compared to the same
periods of 1996 resulted from the growth in the Company's average servicing
portfolio.  The Company's servicing income as a percentage of the serviced
portfolio increased as a result of the product mix of the portfolio changing to
products with higher servicing fees.

Commissions and other income, which includes commissions earned on new insurance
policies written and renewals on existing policies, grew 48.7% and 49.9% during
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996.  This growth is primarily a result of the
increase in net written insurance premiums as the Company's contract
originations and servicing portfolio continue to grow.

Interest expense increased 166.8% and 145.0% during the three and nine-month
periods ended September 30, 1997, as a result of higher interest rates and the
Company maintaining a higher level of borrowings to fund its loan originations,
commercial finance, revolving credit, and lease portfolio during the first nine
months of 1997 compared to 1996.

Green Tree's dollar amount of cost of servicing increased 50.9% for the quarter
and 59.9% for the nine-month period ended September 30, 1997, compared to the
same periods in 1996 as the Company's total average servicing portfolio grew
44.2%.  The Company's cost of servicing as a percentage of the serviced
portfolio increased as a result of the product mix change in the portfolio
towards products which require more servicing resources.

General and administrative expenses rose 77.7% and 84.2% for the three and nine-
month periods ended September 30, 1997.  As a percentage of total finance
volumes, these expenses have slightly increased compared to the same periods in
1996.  The dollar growth is due primarily to an increase in personnel and other
costs related to the continued expansion of the Company's new divisions as well
as the increased volume of contracts the Company originated during the first
nine months of 1997.

                                       12
<PAGE>
 
Capital Resources and Liquidity:

The Company's business requires continued access to the capital markets for the
purchase, warehousing and sale of contracts.  To satisfy these needs, the
Company employs a variety of capital resources.

Historically, the most important liquidity source for the Company has been its
ability to sell contracts in the secondary markets through loan securitizations.
During the third quarter of 1997 the Company completed four public
securitizations, two backed by manufactured housing loans, one by home equity
and/or home improvement loans and one by consumer and equipment loans.  Each
securitized sale employed a senior/subordinate structure with a portion of the
subordinate bonds enhanced by a corporate guarantee.  Additionally, the Company
completed a private securitization of its consumer revolving credit portfolio
during the quarter utilizing a revolving master trust structure.

Servicing fees and net interest payments collected, which has been the Company's
principal source of cash, increased during the nine-month period ended September
30, 1997 compared to the same period in 1996.  Contributing to this growth is an
increase in servicing revenue collected by the Company on its growing servicing
portfolio, and growth in the interest only securities from the Company's ongoing
securitizations.

Net principal payments collected were positive for the nine-month period ended
September 30, 1997 and 1996 as a result of an increase in the contract principal
payments collected by the Company but not yet remitted to the investors/owners
of the contracts.  These increases are a result of customer payoffs and the
growth of the Company's servicing portfolio of contracts which have been sold.

Interest on contracts increased significantly during the first nine months of
1997 compared to the same period in 1996 as a result of the Company having a
larger average outstanding contract portfolio.

Interest on cash, investments and receivables increased during the first nine
months of 1997 compared to the same period in 1996 primarily as a result of the
increase in commercial finance, lease, and revolving credit receivables.

Cash paid to employees and suppliers increased $105,305,000 in the first nine
months of 1997 compared to the same period in 1996.  This increase relates to
the growth in the Company's total general and administrative expenses and
servicing costs and the increase in the taxes paid in 1997 on the annual bonus
of the chief executive officer pursuant to the terms of an employment agreement.

Dividends paid by the Company increased 26.6% in the first nine months of 1997
compared to the same period in 1996 as the Company's quarterly average dividend
rate increased  16.7% over the 1996 quarterly average dividend rate for the
first nine months.

The Company has a $2,000,000,000 commercial paper program which is used
primarily for purposes of financing its contract inventory prior to the sale of
those receivables in the form of securitization.  This program is backed by both
committed bank facilities and master repurchase agreements with various
investment banking firms.  As of  September 30, 1997 the Company had issued and
outstanding $962 million in notes under this program.

                                       13
<PAGE>
 
During the second quarter, the Company established a financing conduit for its
equipment leasing business.  As of September 30, 1997, the principal balance of
the conduit was $359 million.   Other short-term debt outstanding at September
30, 1997 totaled $14 million.

The Company has a three-year unsecured revolving line of credit totaling
$750,000,000 which expires April 15, 1999, as well as a 364 day unsecured
revolving line of credit totaling $750,000,000.  As of September 30, 1997 the
Company had $15 million in borrowings outstanding under the three-year facility.
In addition, master repurchase agreements are in place with a variety of
investment banking firms totaling $2,800,000,000 which are subject to the
availability of eligible collateral.  There were no outstanding balances under
the master repurchase agreements as of September 30, 1997.

Recently Issued Accounting Standards

In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share." which the Company is required to adopt on December
31, 1997.  This adoption requires the Company to change the method currently
used to compute earnings per share and to restate prior periods.  The impact of
this simplified "Earnings Per Share" methodology is not expected to have a
material impact on earnings per share.

In June, 1997, The Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income", which the Company is required to adopt
effective December 31, 1997.  This adoption will have no financial impact to the
Company , but will require new disclosure information.  The Company's management
is currently reviewing the disclosure requirements.

In June, 1997, The Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information",
which the Company is required to adopt for the 1998 fiscal period.  This
adoption does not require that segment information be reported in interim
periods in the initial year, but that segment information is disclosed in the
following year for comparability purposes.  The segmentation disclosure
requirements are under review by the Company's management.

                                       14
<PAGE>
 
PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The nature of the Company's business is such that it is routinely a
         party or subject to items of pending or threatened litigation.
         Although the ultimate outcome of certain of these matters cannot be
         predicted, management believes, based upon information currently
         available and the advice of counsel, that the resolution of these
         routine legal matters will not result in any material adverse effect on
         its consolidated financial condition.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6. (a)  EXHIBITS

         11(a).  Computation of Primary Earnings Per Share.

         11(b).  Computation of Fully Diluted Earnings Per Share.
 
         12.     Computation of Ratio of Earnings to Fixed Charges.

         27.     Financial Data Schedule.

        (b)  REPORTS ON FORM 8-K

         None.

                                       15
<PAGE>
 
                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                              GREEN TREE FINANCIAL CORPORATION



DATE:  November 14, 1997  //s//   Edward L. Finn
                          ----------------------
                              Edward L. Finn
                              Executive Vice President and Chief
                               Financial Officer



DATE:  November 14, 1997  //s//  Joel H. Gottesman            
                          ------------------------                             
                              Joel H. Gottesman
                              Senior Vice President, General Counsel
                               and Secretary

                                       16
<PAGE>
 
                                 EXHIBIT INDEX


Exhibit Number        Exhibit
--------------        -------

11(a).                Computation of Primary Earnings Per Share.

11(b).                Computation of Fully Diluted Earnings Per Share.

12.                   Computation of Ratio of Earnings to Fixed Charges.

27.                   Financial Data Schedule.

                                     17
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 49304}]
{"company-data": {"conformed-name": "GREEN TREE FINANCIAL CORP", "cik": "0000890175", "assigned-sic": "6189", "irs-number": "411807858", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-08916", "film-number": "97720155"}, "business-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "SAINT PAUL", "state": "MN", "zip": "55102-1639", "phone": "6122933400"}, "mail-address": {"street1": "1100 LANDMARK TOWERS", "street2": "345 ST PETER ST", "city": "SAINT PAUL", "state": "MN", "zip": "55102-1639"}, "former-company": {"former-conformed-name": "GREEN TREE ACCEPTANCE INC", "date-changed": "19600201"}}
UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q

        { X }  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended   SEPTEMBER 30, 1997
                                               ------------------

                                       OR

        {   } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        
     For the transition period from  _____________ to _____________
                                        
                      Commission file number   1-08916
                                               -------

                      GREEN TREE FINANCIAL CORPORATION
   --------------------------------------------------------------------  
           (Exact name of registrant as specified in its charter)

               DELAWARE                              41-1807858
    -------------------------------    ----------------------------------- 
    (State or other jurisdiction of    (I.R.S. Employer Identification No.)
    incorporation or organization)

 1100 LANDMARK TOWERS, SAINT PAUL, MINNESOTA                     55102-1639
 --------------------------------------------------------------  ----------
   (Address of principal executive offices)                      (Zip code)

       Registrant's telephone number, including area code: (612) 293-3400
                                                           --------------

 _____________________________________________________________________________
            (Former name, former address and former fiscal year, 
                        if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                           YES     X       NO
                                ------         -------

AS OF OCTOBER 31, 1997, 136,182,544 SHARES OF COMMON STOCK OF GREEN TREE
FINANCIAL CORPORATION WERE OUTSTANDING.
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
                                   FORM 10-Q

                        QUARTER ENDED September 30, 1997

                                     INDEX
 
PART I -       FINANCIAL INFORMATION                                        PAGE
 
    Item 1.    Financial Statements                                            3
 
    Item 2.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                      10
 
PART II -      OTHER INFORMATION
 
    Item 1.    Legal Proceedings                                              15
 
    Item 2.    Changes in Securities and Use of Proceeds                      15
 
    Item 3.    Defaults upon Senior Securities                                15
 
    Item 4.    Submission of Matters to a Vote of Security Holders            15
 
    Item 5.    Other Information                                              15
 
    Item 6.    Exhibits and Reports on Form 8-K                               15
 
SIGNATURES                                                                    16
 
EXHIBIT INDEX                                                                 17

Certain information included in this Form 10-Q may include "forward-looking"
information, as defined in the Private Securities Litigation Reform Act of 1995
(the "Act").  Such forward-looking information may involve risks or
uncertainties which are described in the Cautionary Statements contained in the
Company's Form 8-K filed with the Securities and Exchange Commission on July 12,
1996.  Investors are specifically referred to the Cautionary Statements for a
discussion of factors which could affect the Company's operations and financial
performance.  Factors referenced in the Cautionary Statements include:
prevailing economic conditions; ability to access capital resources; short-term
interest rate fluctuations; the level of defaults and prepayments on loans made
by the Company; competition; and regulatory changes.  Any forward-looking
information is based upon management's reasonable estimate of future results or
trends.   The Company does not undertake, and the Act specifically relieves the
Company from, any obligation to update any forward-looking statements.

                                       2
PART I - FINANCIAL INFORMATION
                         Item 1.  Financial Statements

               GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
September 30, 1997      December 31, 1996
                                               --------------------    ------------------
                                                   (unaudited)
Assets:                                                                
  Cash and cash equivalents                       $  745,216,000        $  442,071,000
  Cash deposits, restricted                          196,313,000           171,484,000
  Other investments                                   18,254,000            11,925,000
  Interest only securities                         1,453,262,000         1,157,185,000
  Receivables:                                                      
     Lease                                           628,832,000           564,348,000
     Commercial finance                              495,291,000           212,920,000
     Consumer revolving credit                       131,510,000            40,803,000
     Other accounts receivable                       127,762,000            85,503,000
  Contracts and collateral                         1,014,890,000           453,008,000
  Servicing rights                                    79,061,000                    --
  Property, furniture and fixtures                   105,372,000            77,859,000
  Goodwill                                            56,926,000            58,950,000
  Other assets                                        18,831,000            21,988,000
                                               -----------------    ------------------
          Total assets                            $5,071,520,000        $3,298,044,000
                                               =================    ==================
                                                                    
Liabilities and Stockholders' Equity:                               
  Notes payable                                   $1,335,251,000        $  472,181,000
  Senior/Senior subordinated notes                   510,145,000           290,348,000
  Accounts payable and accrued liabilities           571,337,000           404,427,000
  Investor payable                                   486,244,000           346,272,000
  Income taxes, principally deferred                 689,611,000           539,362,000
                                               -----------------    ------------------
          Total liabilities                        3,592,588,000         2,052,590,000
                                                                    
  Common stock, $.01 par; authorized                                
     400,000,000 shares, issued 141,440,784                         
     shares (1997) and 139,782,706 shares                           
     (1996)                                            1,414,000             1,398,000
  Additional paid-in capital                         432,097,000           373,573,000
  Retained earnings                                1,212,880,000           926,695,000
  Net unrealized (loss) gain on securities                          
     available for sale                               (5,500,000)                   --
  Minimum pension liability adjustments               (2,299,000)           (2,299,000)
                                               -----------------    ------------------
                                                   1,638,592,000         1,299,367,000
  Less treasury stock, 5,298,256 shares (1997)                      
     and 2,051,000 shares (1996) at cost            (159,660,000)          (53,913,000)
                                               -----------------    ------------------
          Total stockholders' equity               1,478,932,000         1,245,454,000
                                               -----------------    ------------------
Total liabilities and stockholders' equity        $5,071,520,000        $3,298,044,000
                                               =================    ==================
See notes to unaudited financial statements.

                                       3
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
Three Months Ended Sept. 30
                                                     --------------------------------------
                                                            1997                 1996
                                                     -----------------    -----------------
Revenues:
  Gain on contract sales                                  $202,441,000         $134,110,000
  Interest                                                  99,645,000           54,541,000
  Servicing                                                 28,564,000           19,172,000
  Commission and other                                      17,610,000           11,842,000
                                                     -----------------    -----------------
                                                           348,260,000          219,665,000
 
Expenses:
  Interest                                                  45,166,000           16,931,000
  Cost of servicing                                         20,915,000           13,861,000
  General and administrative                                90,530,000           50,941,000
                                                     -----------------    -----------------
                                                           156,611,000           81,733,000
                                                     -----------------    -----------------
 
Earnings before income taxes                               191,649,000          137,932,000
 
Income taxes                                                72,827,000           52,414,000
                                                     -----------------    -----------------
 
Net earnings                                              $118,822,000         $ 85,518,000
                                                     =================    =================
 
Earnings per common and common
  equivalent share                                                $.85                 $.61
                                                                  ====                 ====
 
Weighted average common and common
  equivalent shares outstanding                            140,448,115          140,805,663
See notes to unaudited financial statements.

                                       4
GREEN TREE FINANCIAL CORPORATION AND SUBSIDARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
Nine Months Ended Sept. 30
                                                     -----------------------------------
                                                          1997                1996
                                                     ---------------     ---------------
Revenues:                                                                
  Gain on contract sales                                $542,371,000        $347,220,000
  Interest                                               262,961,000         152,700,000
  Servicing                                               80,398,000          52,733,000
  Commission and other                                    46,830,000          31,232,000
                                                     ---------------     ---------------
                                                         932,560,000         583,885,000
                                                                         
Expenses:                                                                
  Interest                                               111,360,000          45,462,000
  Cost of servicing                                       61,081,000          38,198,000
  General and administrative                             246,058,000         133,609,000
                                                     ---------------     ---------------
                                                         418,499,000         217,269,000
                                                     ---------------     ---------------
                                                                         
Earnings before income taxes                             514,061,000         366,616,000
Income taxes                                             195,343,000         139,314,000
                                                     ---------------     ---------------
                                                                         
Net earnings                                            $318,718,000        $227,302,000
                                                     ===============     ===============
                                                                         
Earnings per common and common                                           
  equivalent share                                             $2.27               $1.62
                                                               =====               =====
                                                                         
Weighted average common and common                                       
  equivalent shares outstanding                          140,594,665         140,210,839
See notes to unaudited financial statements.

                                       5
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
Nine Months Ended Sept. 30
                                                         --------------------------------------------
                                                                  1997                     1996
                                                         -------------------      -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Servicing fees and net interest payments collected         $   264,117,000          $   164,672,000
  Net principal payments collected                               132,597,000               74,835,000
  Interest on contracts                                           91,246,000               38,187,000
  Interest on cash, investments and receivables                   77,436,000               51,582,000
  Commissions                                                     32,259,000               23,760,000
  Other                                                            6,953,000               (2,713,000)
                                                         -------------------      -------------------
                                                                 604,608,000              350,323,000
                                                         -------------------      -------------------
 
  Cash paid to employees and suppliers                          (293,753,000)            (188,448,000)
  Interest paid on debt                                         (103,919,000)             (37,209,000)
  Income taxes paid                                              (35,532,000)             (36,525,000)
                                                         -------------------      -------------------
                                                                (433,204,000)            (262,182,000)
                                                         -------------------      -------------------
NET CASH PROVIDED BY OPERATIONS                                  171,404,000               88,141,000
 
  Purchase of contracts and leases                            (7,959,058,000)          (5,379,042,000)
  Proceeds from sale of contracts                              7,167,967,000            5,766,855,000
  Principal collections on contracts and leases                  343,021,000              100,674,000
  Proceeds from sale of commercial finance and
     revolving credit loans                                      150,000,000              199,950,000
  Commercial and revolving credit loans disbursed             (3,268,256,000)          (2,016,754,000)
  Principal collections on commercial and revolving
     credit loans                                              2,827,293,000            1,666,704,000
  Net cash deposits                                              (24,829,000)             (18,271,000)
                                                         -------------------      -------------------
NET CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES                                          (592,458,000)             408,257,000
                                                         -------------------      -------------------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, furniture and fixtures                   (46,407,000)             (22,667,000)
  Net (purchases) sales of investments                            (6,329,000)               7,486,000
                                                         -------------------      -------------------
NET CASH USED FOR INVESTING ACTIVITIES                           (52,736,000)             (15,181,000)
                                                         -------------------      -------------------
6
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (continued)
                                  (unaudited)
Nine Months Ended Sept. 30
                                                         --------------------------------------------
                                                                  1997                     1996
                                                         -------------------      -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on credit facilities                              7,402,625,000            4,447,278,000
  Repayments on credit facilities                             (6,539,554,000)          (4,529,492,000)
  Borrowings of long-term debt                                   220,000,000                       --
  Dividends paid                                                 (32,532,000)             (25,707,000)
  Common stock repurchased                                      (105,748,000)                      --
  Common stock issued                                              3,548,000                3,714,000
                                                         -------------------      -------------------
NET CASH PROVIDED BY (USED FOR)
  FINANCING ACTIVITIES                                           948,339,000             (104,207,000)
                                                         -------------------      -------------------
NET INCREASE IN CASH AND CASH
  EQUIVALENTS                                                    303,145,000              288,869,000
CASH AND CASH EQUIVALENTS BEGINNING
  OF PERIOD                                                      442,071,000              295,767,000
                                                         -------------------      -------------------
 
CASH AND CASH EQUIVALENTS END OF
  PERIOD                                                     $   745,216,000          $   584,636,000
                                                         ===================      ===================
 
RECONCILIATION OF NET EARNINGS TO NET
  CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES:
  Net earnings                                               $   318,718,000          $   227,302,000
  Provision for income taxes                                     195,343,000              139,314,000
  Depreciation and amortization                                   25,867,000               15,491,000
  Interest only securities and servicing rights
     recorded, less net contract payments collected             (253,806,000)            (258,186,000)
  Amortization of deferred servicing revenue                              --              (19,482,000)
  Amortization of servicing rights                                 9,748,000                       --
  Accretion of yield on interest only securities                 (91,788,000)             (57,030,000)
  Net decrease in cash deposits                                  (24,829,000)             (18,271,000)
  Purchase of contracts and leases, net of sales and
     principal collections                                      (475,905,000)             488,487,000
  Commercial and revolving credit loans disbursed,
     net of sales and principal collections                     (290,963,000)            (150,100,000)
  Net selling expenses on sale of contracts                       45,838,000               39,523,000
  Increase in interest payable                                     7,386,000                6,037,000
  Income taxes paid                                              (35,532,000)             (36,525,000)
  Increase in cash paid to employees and suppliers                (8,054,000)             (29,917,000)
  Other                                                          (14,481,000)              61,614,000
                                                         -------------------      -------------------
 
NET CASH (USED FOR) PROVIDED BY
  OPERATING ACTIVITIES                                       $  (592,458,000)         $   408,257,000
                                                         ===================      ===================
See notes to unaudited financial statements

                                       7
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS

A.  Basis of Presentation

The interim financial statements have been prepared by Green Tree Financial
Corporation ("the Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to quarterly
reports on Form 10-Q.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.  In the opinion of management, all adjustments which are of a
normal recurring nature and are necessary for a fair presentation have been
included.  However, results for interim periods are not necessarily indicative
of the results that may be expected for a full year.  It is suggested that these
financial statements be read in conjunction with the consolidated financial
statements and related notes and schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.

Certain reclassifications have been made to the December 31, 1996 financial
statements to conform to the classifications used in the September 30, 1997
financial statements.  These reclassifications had no effect on net earnings or
stockholders' equity as previously reported.

Effective January 1, 1997 the Company adopted Statement of Financial Accounting
Standards No. 125 ("SFAS 125"), Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.  The adoption of SFAS 125
did not have a material impact on the Company's financial position or results of
operations.

SFAS 125 requires prospective implementation as of January 1, 1997 and
retroactive application is not permitted.  However, certain reclassifications
have been made to prior financial statements to conform to the current period
presentation.  The previously classified excess servicing rights receivable has
been reclassified as interest only securities and is shown net of the Company's
previously classified allowance for losses on contracts sold.  Effective January
1, 1997 the portion of the Company's interest only securities that exceeded
contractually specified servicing fees is classified as interest only securities
and the remaining asset is classified as servicing rights.

Among other provisions, SFAS 125 uses a "financial components" approach relative
to the recognition of financial assets and liabilities resulting from the
transfer of financial assets.  Specifically, SFAS 125 requires that gain
recognition on the sale of financial assets be based on an allocated cost basis
method for the financial components sold.  SFAS 125 also provides guidance
relative to the classification and ongoing measurement of the financial
components retained in connection with financial asset sales.  Such components
are recorded at allocated cost.  The Company retains interest only securities
and servicing rights upon the sale of its financial contracts.

                                       8
The Company classifies its interest only securities as available for sale and
carries these securities at fair value.  Accordingly, unrealized gains and
losses are reported on a net basis as a separate component of stockholders'
equity.

Servicing rights are carried at allocated cost and amortized in proportion to
and over the estimated period of net servicing income.  Servicing rights are
evaluated for impairment on an ongoing basis and, to the extent the recorded
amount exceeds the fair value of those servicing rights, a valuation allowance
is established through a charge to earnings.  Upon subsequent measurement of the
fair value of these servicing rights in future periods, if the fair value equals
or exceeds the carrying amount, any previously recorded valuation allowance
would be deemed unnecessary and, therefore, represent current period earnings
only to the extent of such previously recorded allowance.  No valuation
allowance with respect to the servicing rights was necessary at September 30, 
1997.

B.  Interest Only Securities

Interest only securities represent the right to receive certain cash flows which
exceed the amount of cash flows sold in the Company's securitized contract
sales.  Interest only securities generally represent the value of interest to be
collected on the underlying financial contracts of each securitization over the
sum of the interest to be paid to security classes sold, contractual servicing
fees and credit losses.

These cash flows are projected and discounted over the expected life of the
financial contracts using prepayment, default, loss, and interest rate
assumptions that the Company believes market participants would use for similar
financial instruments.

In connection with the gain on sale of contracts and recording interest only
securities retained for the nine-month period ended September 30, 1997 the
Company provided $307 million for projected net credit losses on a discounted
basis.  For the same period the Company incurred $175 million of net credit
losses.

The Company, along with other financial services companies, has experienced 
higher prepayment activity in its portfolio, particularly with respect to 
manufactured housing loans made in the higher interest rate environment of 
1994 and 1995. Since the end of the third quarter of 1997, the Company has 
undertaken a special review of prepayment rates for such loans and the 
assumptions utilized in its models to compute the value of its interest only 
securities. Preliminarily, the Company has determined that a write down of the
value of its interest only securities in an amount estimated to be in the 
range of $125 to $150 million will be made for the quarter ended December 31, 
1997. Depending on the final results of the review, the actual valuation 
adjustment may be greater or less than this amount. The valuation adjustment 
will result in a fourth quarter pre-tax reduction to earnings equal to the 
amount of the adjustment. The Company has also instituted programs to reduce 
the number of prepayments and loss severity, and the Company's management will
monitor the effect of these programs in connection with its quarterly review 
of the valuation of its interest only securities.

                                       9
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Green Tree Financial Corporation ("Green Tree" or the "Company") is a
diversified financial services company that provides financing for manufactured
housing, home equity, home improvements, consumer products, and equipment and
provides consumer and commercial revolving credit.  The Company's financing
products include both fixed term and revolving loans and leases.  The Company's
insurance agencies market physical damage and term mortgage life insurance and
other credit protection relating to the customers' contracts it services.

Results of Operations:

The following table shows the percentage change in revenues, expenses and
earnings for the three and nine-month periods ended September 30, 1997 as
compared to the same period of 1996.
Three-month                Nine-month
                                         period-to-period           period-to-period
                                        increase Sept. 30,         increase Sept. 30,
                                           1996 to 1997               1996 to 1997
                                     ----------------------     ----------------------
Revenues:                                                     
  Gain on contract sales                      51.0%                      56.2%
  Interest                                    82.7                       72.2
  Service                                     49.0                       52.5
  Commission and other                        48.7                       49.9
Expenses:                                                     
  Interest                                   166.8                      145.0
  Cost of servicing                           50.9                       59.9
  General and administrative                  77.7                       84.2
Earnings before income taxes                  38.9                       40.2
Net earnings                                  38.9                       40.2
Gain on contract sales increased 51.0% and 56.2% for the three and nine-month
periods ended September 30, 1997, respectively, over the same periods in 1996 as
a result of the increased dollar volume of contracts sold, higher interest rate
spreads on manufactured housing sales, and longer average terms on the contracts
sold.  For the quarter ended September 30, 1997, total contract sales increased
$536,373,000 or 23.2% over the same period in 1996.

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The following table sets forth the Company's fixed term contract originations
and sales for the three and nine-month periods ended September 30, 1997 and
1996.  Dollar amounts are in thousands.
Three-month period ended             Nine-month period ended
                                            Sept. 30,                            Sept. 30,
                                --------------------------------     --------------------------------
                                      1997              1996               1997              1996
                                --------------    --------------     --------------    --------------
Originations:
  Manufactured Housing              $1,603,084        $1,415,401         $4,111,419        $3,658,540
  Home Equity/ Home
     Improvement                       967,038           407,899          2,437,855           925,843
  Consumer                             286,385           269,857            769,449           691,847
  Commercial and Equipment             292,846            79,701            768,045           200,879
                                --------------    --------------     --------------    --------------
          Total                     $3,149,353        $2,172,858         $8,086,768        $5,477,109
                                ==============    ==============     ==============    ==============
 
Sales:
  Manufactured Housing              $1,599,997        $1,555,052         $3,969,983        $3,783,235
  Home Equity/Home
     Improvement                       749,925           394,065          2,016,778           805,351
  Consumer                             321,327           249,305            767,991           832,584
  Commercial and Equipment             178,672           115,130            459,319           384,029
                                --------------    --------------     --------------    --------------
          Total                     $2,849,921        $2,313,552         $7,214,071        $5,805,199
                                ==============    ==============     ==============    ==============
The Company believes that its market share of contracts for financing new
manufactured housing increased in the first nine months of 1997 compared to the
same period in 1996.  During this same time period the manufactured housing
market experienced a decrease in new home shipments as compared to the prior
year.  The Company's dollar volume of new manufactured housing contract
originations rose 13% and 12% during the three and nine-month periods ended
September 30, 1997, respectively, over the same periods in 1996.  The number of
new contracts originated by the Company during the first nine months of 1997 has
grown from 1996 and the average contract size has also increased due to a trend
in the Company's manufactured home financing to more land-and-home contracts and
slight price increases by the manufactured housing manufacturers.  The dollar
volume of previously owned manufactured housing contract originations rose 34.3%
and 28.3% for the three and nine months, respectively, compared to the same
periods in 1996.

The dollar volume of home equity/home improvement contract originations rose
137% for the quarter and 163% for the nine-month period ended September 30, 1997
over the same periods of 1996 to $2,437,855,000.  Consumer originations rose 6%
and 11% for the three and nine-month periods ended September 30, 1997 compared
to the same periods in 1996 to $769,449,000.  Commercial and equipment fixed
term loan and lease originations increased 267% for the quarter and 282% for the
nine months ended at September 30, 1997 over the same periods in 1996 to
$768,045,000.  The overall growth in these originations resulted from new
manufactured housing dealer participation programs, expanding the number of
relationships with dealers, and the growth in the Company's home equity
originations network, as well as the addition of the equipment leasing business.

                                       11
The following table reflects the composition of the Company's servicing
portfolio at September 30, 1997 and 1996.  Dollar amounts are in thousands.
Sept. 30
                                         ------------------------------------
                                                1997                1996
                                         ----------------    ----------------
Servicing Portfolio:
 
  Fixed term contracts                        $24,214,000         $16,996,000
  Commercial revolving credit                   1,464,000             958,000
  Consumer revolving credit                       247,000              25,000
                                         ----------------    ----------------
          Total                               $25,925,000         $17,979,000
                                         ================    ================
Interest income is realized from interest only securities, commercial finance
and revolving credit receivables, contract and lease inventory, cash deposits,
and short-term investments.  Interest income grew 82.7% and 72.2% during the
three and nine-month periods ended September 30, 1997 compared to the same
periods in 1996 primarily from increased earnings on the Company's commercial
finance and lease receivables and the increase in interest only securities.  Due
to higher origination levels, contract inventory for the nine-months ended
September 30, 1997 was higher on average than the same period in 1996 which also
contributed to the increase in interest income.

The increase in servicing income of 49.0% and 52.5% during the three and nine-
month periods ended September 30, 1997, respectively, compared to the same
periods of 1996 resulted from the growth in the Company's average servicing
portfolio.  The Company's servicing income as a percentage of the serviced
portfolio increased as a result of the product mix of the portfolio changing to
products with higher servicing fees.

Commissions and other income, which includes commissions earned on new insurance
policies written and renewals on existing policies, grew 48.7% and 49.9% during
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996.  This growth is primarily a result of the
increase in net written insurance premiums as the Company's contract
originations and servicing portfolio continue to grow.

Interest expense increased 166.8% and 145.0% during the three and nine-month
periods ended September 30, 1997, as a result of higher interest rates and the
Company maintaining a higher level of borrowings to fund its loan originations,
commercial finance, revolving credit, and lease portfolio during the first nine
months of 1997 compared to 1996.

Green Tree's dollar amount of cost of servicing increased 50.9% for the quarter
and 59.9% for the nine-month period ended September 30, 1997, compared to the
same periods in 1996 as the Company's total average servicing portfolio grew
44.2%.  The Company's cost of servicing as a percentage of the serviced
portfolio increased as a result of the product mix change in the portfolio
towards products which require more servicing resources.

General and administrative expenses rose 77.7% and 84.2% for the three and nine-
month periods ended September 30, 1997.  As a percentage of total finance
volumes, these expenses have slightly increased compared to the same periods in
1996.  The dollar growth is due primarily to an increase in personnel and other
costs related to the continued expansion of the Company's new divisions as well
as the increased volume of contracts the Company originated during the first
nine months of 1997.

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Capital Resources and Liquidity:

The Company's business requires continued access to the capital markets for the
purchase, warehousing and sale of contracts.  To satisfy these needs, the
Company employs a variety of capital resources.

Historically, the most important liquidity source for the Company has been its
ability to sell contracts in the secondary markets through loan securitizations.
During the third quarter of 1997 the Company completed four public
securitizations, two backed by manufactured housing loans, one by home equity
and/or home improvement loans and one by consumer and equipment loans.  Each
securitized sale employed a senior/subordinate structure with a portion of the
subordinate bonds enhanced by a corporate guarantee.  Additionally, the Company
completed a private securitization of its consumer revolving credit portfolio
during the quarter utilizing a revolving master trust structure.

Servicing fees and net interest payments collected, which has been the Company's
principal source of cash, increased during the nine-month period ended September
30, 1997 compared to the same period in 1996.  Contributing to this growth is an
increase in servicing revenue collected by the Company on its growing servicing
portfolio, and growth in the interest only securities from the Company's ongoing
securitizations.

Net principal payments collected were positive for the nine-month period ended
September 30, 1997 and 1996 as a result of an increase in the contract principal
payments collected by the Company but not yet remitted to the investors/owners
of the contracts.  These increases are a result of customer payoffs and the
growth of the Company's servicing portfolio of contracts which have been sold.

Interest on contracts increased significantly during the first nine months of
1997 compared to the same period in 1996 as a result of the Company having a
larger average outstanding contract portfolio.

Interest on cash, investments and receivables increased during the first nine
months of 1997 compared to the same period in 1996 primarily as a result of the
increase in commercial finance, lease, and revolving credit receivables.

Cash paid to employees and suppliers increased $105,305,000 in the first nine
months of 1997 compared to the same period in 1996.  This increase relates to
the growth in the Company's total general and administrative expenses and
servicing costs and the increase in the taxes paid in 1997 on the annual bonus
of the chief executive officer pursuant to the terms of an employment agreement.

Dividends paid by the Company increased 26.6% in the first nine months of 1997
compared to the same period in 1996 as the Company's quarterly average dividend
rate increased  16.7% over the 1996 quarterly average dividend rate for the
first nine months.

The Company has a $2,000,000,000 commercial paper program which is used
primarily for purposes of financing its contract inventory prior to the sale of
those receivables in the form of securitization.  This program is backed by both
committed bank facilities and master repurchase agreements with various
investment banking firms.  As of  September 30, 1997 the Company had issued and
outstanding $962 million in notes under this program.

                                       13
During the second quarter, the Company established a financing conduit for its
equipment leasing business.  As of September 30, 1997, the principal balance of
the conduit was $359 million.   Other short-term debt outstanding at September
30, 1997 totaled $14 million.

The Company has a three-year unsecured revolving line of credit totaling
$750,000,000 which expires April 15, 1999, as well as a 364 day unsecured
revolving line of credit totaling $750,000,000.  As of September 30, 1997 the
Company had $15 million in borrowings outstanding under the three-year facility.
In addition, master repurchase agreements are in place with a variety of
investment banking firms totaling $2,800,000,000 which are subject to the
availability of eligible collateral.  There were no outstanding balances under
the master repurchase agreements as of September 30, 1997.

Recently Issued Accounting Standards

In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share." which the Company is required to adopt on December
31, 1997.  This adoption requires the Company to change the method currently
used to compute earnings per share and to restate prior periods.  The impact of
this simplified "Earnings Per Share" methodology is not expected to have a
material impact on earnings per share.

In June, 1997, The Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income", which the Company is required to adopt
effective December 31, 1997.  This adoption will have no financial impact to the
Company , but will require new disclosure information.  The Company's management
is currently reviewing the disclosure requirements.

In June, 1997, The Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information",
which the Company is required to adopt for the 1998 fiscal period.  This
adoption does not require that segment information be reported in interim
periods in the initial year, but that segment information is disclosed in the
following year for comparability purposes.  The segmentation disclosure
requirements are under review by the Company's management.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The nature of the Company's business is such that it is routinely a
         party or subject to items of pending or threatened litigation.
         Although the ultimate outcome of certain of these matters cannot be
         predicted, management believes, based upon information currently
         available and the advice of counsel, that the resolution of these
         routine legal matters will not result in any material adverse effect on
         its consolidated financial condition.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6. (a)  EXHIBITS

         11(a).  Computation of Primary Earnings Per Share.

         11(b).  Computation of Fully Diluted Earnings Per Share.
 
         12.     Computation of Ratio of Earnings to Fixed Charges.

         27.     Financial Data Schedule.

        (b)  REPORTS ON FORM 8-K

         None.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                              GREEN TREE FINANCIAL CORPORATION

DATE:  November 14, 1997  //s//   Edward L. Finn
                          ----------------------
                              Edward L. Finn
                              Executive Vice President and Chief
                               Financial Officer

DATE:  November 14, 1997  //s//  Joel H. Gottesman            
                          ------------------------                             
                              Joel H. Gottesman
                              Senior Vice President, General Counsel
                               and Secretary

                                       16
EXHIBIT INDEX

Exhibit Number        Exhibit
--------------        -------

11(a).                Computation of Primary Earnings Per Share.

11(b).                Computation of Fully Diluted Earnings Per Share.

12.                   Computation of Ratio of Earnings to Fixed Charges.

27.                   Financial Data Schedule.

                                     17