SECURITIES AND EXCHANGE COMMISSION



                                 WASHINGTON, DC
                                      20549





                                    FORM 8-K




                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                        Date of Report: December 9, 1996
                        (Date of earliest event reported)


                         INSIGNIA FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)


       DELAWARE                        0-19066             13-3591193
(State or other jurisdiction of      (Commission        (I.R.S. Employer
incorporation or organization)       File Number)        Identification
                                                             Number)


                          One Insignia Financial Plaza
                              Post Office Box 1089
                        Greenville, South Carolina 29602
                     (Address of Principal Executive Office)


       Registrant's telephone number, including area code: (864) 239-1000



                                      


<PAGE>

Item 7.  Financial Statements and Exhibits


     (a) Pro Forma Condensed Consolidated Financial Statements (Unaudited)




<PAGE>

(a)  Pro Forma Condensed Consolidated Financials
Insignia Financial Group, Inc. and Subsidiaries

                    Convertible Preferred Securities Offering

On November 1 and 6, 1996,  Insignia Financing I, a Delaware business trust (the
"Trust"),  issued and sold (the  "Convertible  Preferred  Securities  Offering")
2,990,000 of its 6 1/2% Trust Convertible Preferred Securities with an aggregate
liquidation amount of $149.5 million (the "Convertible  Preferred  Securities").
All of the  outstanding  common  securities  of the  Trust,  with  an  aggregate
liquidation value of approximately $4.6 million (the "Common  Securities"),  are
owned by the Company  which  entitles it to designate the trustees of the Trust.
The Convertible Preferred Securities were sold to Lehman Brothers,  Dillon, Read
& Co. Inc.,  Goldman,  Sachs & Co. and A.G.  Edwards & Sons,  Inc. (the "Initial
Purchasers") for an aggregate purchase price of $149.5 million. The Company paid
the Initial  Purchasers a commission of 3% of the aggregate  purchase price. The
Initial Purchasers resold the Convertible Preferred Securities (i) to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the  "Securities  Act")) in compliance with Rule 144A, (ii) to other
institutional "accredited investors" (as defined in Rule 501(A) (1), (2), (3) or
(7)  under  the  Securities  Act) in  compliance  with  Regulation  D under  the
Securities  Act and (iii)  outside the United  States to persons other than U.S.
persons in reliance on Regulation S under the  Securities  Act. The  Convertible
Preferred Securities may be converted at the option of the holder after December
30,  1996 into  shares of  Common  Stock at the rate of 1.8868  shares of Common
Stock for each Convertible  Preferred Security (equivalent to a conversion price
of $26.50 per share of Common Stock). The Convertible  Preferred  Securities and
the Common Securities  represent undivided beneficial interests in the assets of
the Trust,  which consist of approximately  $154.1 million  aggregate  principal
amount of the Company's 6 1/2% Convertible Subordinated Debentures due September
30, 2016.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

     The  following  Pro  Forma  Condensed  Consolidated  Balance  Sheet  as  of
September 30, 1996 and Pro Forma Condensed Consolidated Statements of Income for
the year ended  December 31, 1995 and the nine months ended  September  30, 1996
give effect to the sale by the Trust of the Convertible Preferred Securities and
the application of the estimated net proceeds therefrom. The Pro Forma Condensed
Consolidated Statement of Income for the year ended December 31, 1995 also gives
effect  to the  acquisition  of  all of the  issued  and  outstanding  stock  of
O'Donnell  Property  Services,  Inc.  ("O'Donnell"),  the  consummation  of  the
acquisition of the property  management  business of Douglas  Elliman-Gibbons  &
Ives and Kreisel Company, Inc. (collectively known as "DEK"), the acquisition of
National  Property  Investors,  Inc.,  its property  management  affiliates  and
general partner and certain limited partner  interests in affiliated real estate
limited partnerships (collectively,  "NPI"), the acquisition of the business and
substantially  all the assets of Edward S. Gordon Company,  Incorporated and its
affiliates  ("ESG"),  and the acquisition of the commercial real estate services
business of Paragon Group,  Inc.  ("Paragon"),  including  borrowings  under the
Company's revolving credit facility in connection therewith, and the acquisition
of limited partner interests in six partnerships  that were formerly  affiliated
with  U.S.   Shelter   Corporation   (collectively,   the  "Shelter   Properties
Partnerships"), Consolidated Capital Properties III ("CCP III") and Consolidated
Capital  Properties  IV ("CCP  IV"),  as if effected  at the  beginning  of such
period.  The Pro Forma Condensed  Consolidated  Statement of Income for the year
ended  December  31, 1995 also gives effect to the sale by Insignia of 3,850,000
shares of Common Stock and the  application of the net proceeds  therefrom as if
effected at the beginning of such period.  The Pro Forma Condensed  Consolidated
Statement  of Income for the nine  months  ended  September  30, 1996 also gives
effect to the NPI acquisition,  the ESG acquisition and the Paragon acquisition,
including borrowings under the Company's revolving credit facility in connection
therewith, as if effected at the beginning of each period.

     The pro forma statements have been prepared by management of Insignia based
upon the  financial  statements  of Insignia,  NPI,  ESG,  Paragon,  the Shelter
Properties  Partnerships,  CCP III, CCP IV, O'Donnell, and Kreisel Company, Inc.
and the unaudited  accounting  records of Douglas  Elliman-Gibbons & Ives. These
pro forma  statements may not be indicative of results had the combination  been
in effect on the dates  indicated  or of results  which may be  obtained  in the
future.  In each  acquisition  by Insignia,  the  acquired  business has its own
overhead  structure  which  includes  executive  management,   accounting,   and
management  information  costs.  A significant  portion of these  overhead costs
historically  has been  eliminated  upon  acquisition as they have been absorbed
into Insignia's  existing  systems,  thereby taking  advantage of such operating
economies of scale. This elimination of duplicate  management,  accounting,  and
information  systems  has  allowed  Insignia  to improve  operating  margins and
provide better operating results than would be reflected on a pro forma basis.




<PAGE>

(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
September 30, 1996
(Thousands of Dollars, except share data)

<TABLE>
<CAPTION>
 
                                                                                       Preferred       Pro Forma
                                                                           Insignia     Issuance      Balance Sheet
<S>                                                                       <C>        <C>              <C>   
Assets
    Cash and cash equivalents                                             $  60,131  $        --      $  60,131
    Restricted cash                                                             642           --            642
    Receivables                                                              14,292           --         14,292
    Commissions receivable                                                   16,582           --         16,582
    Property and equipment                                                   11,282           --         11,282
    Investments in real estate limited partnerships                         124,898           --        124,898
    Property management contracts                                           133,827           --        133,827
    Apartment properties                                                     25,178           --         25,178
    Costs in excess of net assets of acquired businesses                     76,474           --         76,474
    Other assets                                                              8,583           --          8,583
                                                                              -----                       -----

       Total Assets                                                        $471,889    $      --       $471,889
                                                                           ========    =========       ========

Liabilities and Stockholders' Equity
    Liabilities:
       Accounts payable                                                  $    2,602  $        --     $    2,602
       Commissions payable                                                    9,257           --          9,257
       Accrued and sundry liabilities                                        24,604           --         24,604
       Deferred taxes                                                        13,661           --         13,661
       Non-recourse mortgage notes payable                                   20,408           --         20,408
       Notes payable                                                        185,182     (144,515)(a)     40,667
                                                                            -------     --------         ------
          Total liabilities                                                 255,714     (144,515)       111,199
                                                                            -------     --------        -------

    Redeemable convertible preferred stock                                       --      144,515(a)     144,515

    Minority interests in consolidated subsidiaries                           2,762           --          2,762

    Stockholders' Equity:
       Common stock, Class A, par value $.01 per share                          288           --            288
       Additional paid-in capital                                           188,710           --        188,710
       Retained earnings                                                     24,415           --         24,415
                                                                             ------                      ------
          Total stockholders' equity                                        213,413           --        213,413
                                                                            -------                     -------

Total liabilities and stockholders' equity                                 $471,889     $     --       $471,889
                                                                           ========     =========      ========

</TABLE>

See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet


<PAGE>

(a)  Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

(a)  The  proceeds of this  offering,  net of costs of issuance in the amount of
     $4,985,000,  are intended to be used to pay down amounts  outstanding under
     the Revolving Credit Facility and to retire certain other notes payable.

                                             Notes                  Preferred
                                            Payable                 Issuance
                                                 (Thousands of Dollars)


Net proceeds of this Offering              $(144,515)                $144,515
                                           ---------                 --------

       Change in respective item           $(144,515)                $144,515
                                           ---------                 --------


<PAGE>

(a) Pro Forma Condensed Consolidated Financials (Continued)

Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Nine Months Ended September 30, 1996
(Thousands of Dollars, except share and per share data)
                                                                        
<TABLE>
<CAPTION>
                                                                                                                          Pro Forma
                                                                                           Pro Forma     Preferred         Income
                                       Insignia             ESG           Paragon         Adjustments    Issuance         Statement
<S>                                    <C>             <C>                <C>            <C>              <C>
Revenues
    Fee based services                 $140,117        $  46,778          $  8,635       $      627(a)    $    --         $196,157
    Interest                              2,193               20                 1               (8)(a)        --            2,206
    Other                                 1,597               --               556                3 (a)        --            2,156
    Apartment property revenues           5,297               --                --              434 (a)        --            5,731
                                          -----                                                 ---                          -----
                                        149,204           46,798             9,192            1,056            --          206,250
Costs and Expenses
    Fee based services                  106,570           39,974             7,440               89 (c)        --          154,073
    Administrative                        5,681            4,149             1,559           (2,715)(b)        --            8,674
    Apartment property expenses           2,838               --                --              237 (c)        --            3,075
    Deferred compensation and 
       stock option plan                     --           37,664                --          (37,664)(d)        --               --
    Interest                             10,244              677               751            1,548 (e)    (8,929)(i)        4,291
    Apartment property interest           1,698               --                --               94 (c)        --            1,792
    Depreciation and amortization        16,189            1,447               628            1,750 (f)        --           20,014
    Apartment property depreciation         769               --                --               63 (c)        --              832
                                            ---                                                  --                            ---
                                        143,989           83,911            10,378          (36,598)       (8,929)         192,751

Equity earnings - limited 
   partnership interest                   3,072               --                --              111 (g)        --            3,183
Minority interests in 
    consolidated subsidiaries              (190)               --                --             (19)(g)    (7,475)(i)       (7,684)
                                           ----                                                 ---        ------           ------ 
Income before income taxes                8,097          (37,113)          (1,186)           37,746         1,454            8,998
    Provision for income taxes            3,077           (3,528)               --            3,318 (h)       553 (i)        3,420
                                          -----           ------                              -----           ---            -----
Net Income                             $  5,020         $(33,585)         $(1,186)          $34,428       $   901         $  5,578
                                       ========         ========          =======           =======       =======         ========
Earnings per common share                 $0.15                                                                              $0.17
                                          =====                                                                              =====
Weighted average common shares 
    outstanding and dilutive 
    common stock equivalents           31,107,789                                         1,093,619(j)                  32,201,408
                                       ==========                                         =========                     ==========

</TABLE>


See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income


<PAGE>

(a) Pro Forma Condensed Consolidated Financials (Continued)
<TABLE>
<CAPTION>

Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Year Ended December 31, 1995
(Thousands of Dollars, except share and per share data)
                                                                                                                           Pro Forma
                                                                                                      Pro Forma  Preferred   Income
                        Insignia     ESG       NPI     NPI II    NPI IV   DEK    O'Donnell   Paragon  Adjustments Issuance Statement
<S>                     <C>       <C>        <C>      <C>       <C>     <C>      <C>        <C>       <C>          <C>      <C>
Revenues
    Fee based services  $118,828  $92,064    $17,715  $    --   $   --  $14,840   $5,335    $ 19,255  $     --     $   --   $268,037
    Interest               2,780       84        366       --       --       --       --          3      (625)(a)      --      2,608
    Other                  1,424       --         --       --       --       --       --        831         --         --      2,255
    Apartment property 
        revenues              --       --         --    1,133    6,164       --       --         --         --         --      7,297
                                                        -----    -----                                                         -----
                         123,032   92,148     18,081    1,133    6,164   14,840    5,335     20,089      (625)         --    280,197

Costs and Expenses
    Fee based services    85,707   76,882      7,892       --       --   13,760    2,039     12,918      (275)(c)      --    198,923
    Administrative         8,020    9,486         --       --       --       --      483      3,408    (6,178)(b)      --     15,219
    Apartment property 
        expenses              --       --         --      947    2,945       --       --         --         --         --      3,892
    Deferred compensation 
        and stock option 
        plan                  --    1,274         --       --       --       --       --         --    (1,274)(d)      --         --
    Termination of 
        employment 
        agreement           1,000      --         --       --       --       --       --         --         --         --      1,000
    Interest                7,049     339      5,801       --       --      550       --      1,516      2,919(e)(12,056)(i)   6,118
    Apartment property 
        interest               --      --         --      121    1,538       --       --         --         --         --      1,659
    Depreciation and 
        amortization        3,493   2,476      1,649       --       --      823       86      1,844      5,886(f)      --     26,257
    Apartment property 
        depreciation           --      --         --      211      989       --       --         --       (87)(c)      --      1,113
                                                          ---      ---                                    ---                  -----
                          115,269  90,457     15,342    1,279    5,472   15,133    2,608     19,686        991    (12,056)   254,181
                          -------  ------     ------    -----    -----   ------    -----     ------        ---    -------    -------

Equity earnings - 
        limited partnership 
        interests           2,461      --     15,544       --       --       --       --         --     (8,951)(g)    --       9,054

Minority interests in 
        consolidated 
        subsidiaries         (131)      --    (7,964)      --       --       --       --         --     (2,558)(g)(9,967)(i)(20,620)
                             ----             ------                                                    ------    ------    ------- 

Income before income 
        taxes              10,093      1,691  10,319    (146)      692    (293)    2,727        403   (13,125)     2,089      14,450

    Provision for income 
        taxes               3,835        641    (47)      --        --       --       --         --      268(h)      794(i)    5,491
                            -----        ---    ---                                                      ---         ---       -----
 
Income before 
        extraordinary item $6,258   $  1,050  10,366 $  (146) $    692  $ (293)  $ 2,727  $     403  $(13,393)   $ 1,295   $   8,959
                         ========   ======== ======= ========== ======= =======  =======  =========  ========    =======   =========

Earnings per common 
        shares before
        extraordinary 
        item               $0.22                                                                                               $0.29
                           =====                                                                                               =====

Weighted average common 
        shares outstanding
        and dilutive 
        common stock 
        equivalents    22,681,158                                                                     3,952,055(j)        26,633,213
                       ==========                                                                     =========           ==========

</TABLE>

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income



<PAGE>

(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

    Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income

     The table below summarizes the adjustments to the historical  statements of
income  (a) for the year  ended  December  31,  1995  giving  effect  to (i) the
consummation  of the NPI  acquisition,  (ii) the O'Donnell  acquisition  and the
acquisition  of the limited  partnership  interests  in the  Shelter  Properties
Partnerships,  (iii) the DEK  acquisition,  (iv) the ESG acquisition and (v) the
Paragon  acquisition,  and  borrowings  under the Revolving  Credit  Facility in
connection  therewith,  and (b) for the nine  months  ended  September  30, 1996
giving  effect  to the ESG,  NPI and  Paragon  acquisitions,  in each case as if
effected at the beginning of such period.
<TABLE>
<CAPTION>

                                                                        Income Increase          Income Increase
                                                                         (Decrease)             (Decrease) For the
                                                                       For The Year Ended        Nine Months Ended
                                                                       December 31, 1995        September 30, 1996
                                                                                 (Thousands of Dollars)

Pro Forma Adjustments

<S>                                                                    <C>                        <C>  
Revenues

(a)  Represents a reduction in interest income earned
        on cash balances of ESG                                        $      (84)                $      (20)
     Represents a reduction in interest income earned on
        cash balances of NPI                                                    --                        12
     Represents reduced interest income on cash used to
        acquire limited partnership interests in tender offers               (541)                        --
     Represents 21 days of revenue in January 1996 prior to
        the actual acquisition of NPI
           Fee based services                                                   --                       627
           Apartment property revenues                                          --                       434
           Other                                                                --                         3
                                                                                                           -
                                                                             (625)                     1,056

Costs and Expenses

(b)  Represents ESG acquisition pro forma administrative
        services expenses                                                    6,178                     2,715

(c)  Represents NPI, DEK, and O'Donnell pro forma expenses
        (Excluding depreciation and amortization reflected below)
           Fee based services                                                  275                       (89)
           Apartment property expenses                                          --                      (237)
           Apartment property interest                                          --                       (94)
           Apartment property depreciation                                      87                       (63)

(d)  Deferred compensation and stock option plan                             1,274                    37,664

(e)  Represents pro forma interest adjustment related to the
     Revolving Credit Facility                                             (5,386)                    (1,548)
     Stock offering proceeds used to pay down debt (see j)                   3,480                        --
     Amortization of Revolving Credit Facility cost                        (1,013)                        --
                                                                           ------                           
        Total interest effect                                              (2,919)                    (1,548)
</TABLE>

<PAGE>

(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

Notes to  Unaudited  Pro  Forma  Condensed  Consolidated  Statements  of  Income
(Continued)
<TABLE>
<CAPTION>

                                                                        Income Increase          Income Increase
                                                                         (Decrease)             (Decrease) For the
                                                                       For The Year Ended        Nine Months Ended
                                                                       December 31, 1995        September 30, 1996
                                                                                 (Thousands of Dollars)

<S>                                                                          <C>                      <C> 
(f)  Represents reductions (increases) in:
        Amortization of purchase price allocated to
           management contracts                                              1,649                        --
        Depreciation of property and equipment                               4,320                     2,075
        Depreciation of property and equipment                               (145)                       (72)
        Amortization of management contract                                (8,027)                    (1,911)
        Amortization of non-competition agreement and Goodwill             (3,683)                    (1,842)
                                                                           ------                     ------ 
           Total amortization and depreciation effect                      (5,886)                    (1,750)
                                                                           ------                     ------ 
           Total cost and expense effect                                $    (991)                   $36,598

(g)  Represents the purchase of partnership interests in the Shelter
        Properties Partnerships, CCP III and CCP IV, the retention
        by NPI of its interests in five partnerships, the consolidation
        of two partnerships previously reported by NPI on the
        equity method and adjustments to reflect the amortization
        of Insignia's purchase price in excess of its proportionate
        share of partnership book value                                   $(8,951)                 $     111
     Represents minority interest in consolidated limited partnerships
        and joint ventures holding limited partnership interests           (2,558)                       (19)

(h)  Income tax effect                                                       (268)                    (3,318)
                                                                             ----                     ------ 
        Net increase (decrease) to income                                  (13,393                    34,428
                                                                           =======                    ======

Debt and Equity Issuances

(i)  Representing the following:
        Interest on and amortization of issuance cost associated
           with Convertible Preferred Securities                           (9,967)                    (7,475)
        Reduction of interest expense on debt repayment                     12,056                     8,929
                                                                            ------                     -----
                                                                             2,089                     1,454
     Income tax effect                                                       (794)                      (553)
                                                                             ----                       ---- 
        Adjustment to income before extraordinary item                    $  1,295                 $     901
                                                                          ========                 =========

(j)  Adjustment to weighted average common shares outstanding
        gives effect to Insignia's 1995 common stock offering            3,111,643                        --
     Increase in weighted average common shares outstanding
        and dilutive common stock equivalents as a result of
        assumption of ESG options                                          840,412                 1,093,619
                                                                           -------                 ---------
                                                                         3,952,055                 1,093,619
                                                                         =========                 =========

</TABLE>

<PAGE>






                                   SIGNATURES



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

                                         INSIGNIA FINANCIAL GROUP, INC.



                                         By:                                   
                                         --------------------------------------
                                                 John K. Lines
                                                 General Counsel and Secretary



Date:  December 9, 1996
[{"type": "8-K", "sequence": "1", "description": "PRO FORMA FINANCIAL STATEMENTS", "secsgml_size_bytes": 32438}]
{"company-data": {"conformed-name": "INSIGNIA FINANCIAL GROUP INC", "cik": "0000870480", "assigned-sic": "6552", "irs-number": "133591193", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-13962", "film-number": "96677634"}, "business-address": {"street1": "ONE INSIGNIA FINANCIAL PLZ", "street2": "PO BOX 1089", "city": "GREENVILLE", "state": "SC", "zip": "29602", "phone": "8032391000"}, "mail-address": {"street1": "ONE INSIGNIA FINANCIAL PLZ", "street2": "PO BOX 1089", "city": "GREENVILLE", "state": "SC", "zip": "29602"}, "former-company": {"former-conformed-name": "METSOUTH FINANCIAL CORPORATION", "date-changed": "19600201"}}
SECURITIES AND EXCHANGE COMMISSION

                                 WASHINGTON, DC
                                      20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                        Date of Report: December 9, 1996
                        (Date of earliest event reported)

                         INSIGNIA FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                        0-19066             13-3591193
(State or other jurisdiction of      (Commission        (I.R.S. Employer
incorporation or organization)       File Number)        Identification
                                                             Number)

                          One Insignia Financial Plaza
                              Post Office Box 1089
                        Greenville, South Carolina 29602
                     (Address of Principal Executive Office)

       Registrant's telephone number, including area code: (864) 239-1000
Item 7.  Financial Statements and Exhibits

     (a) Pro Forma Condensed Consolidated Financial Statements (Unaudited)
(a)  Pro Forma Condensed Consolidated Financials
Insignia Financial Group, Inc. and Subsidiaries

                    Convertible Preferred Securities Offering

On November 1 and 6, 1996,  Insignia Financing I, a Delaware business trust (the
"Trust"),  issued and sold (the  "Convertible  Preferred  Securities  Offering")
2,990,000 of its 6 1/2% Trust Convertible Preferred Securities with an aggregate
liquidation amount of $149.5 million (the "Convertible  Preferred  Securities").
All of the  outstanding  common  securities  of the  Trust,  with  an  aggregate
liquidation value of approximately $4.6 million (the "Common  Securities"),  are
owned by the Company  which  entitles it to designate the trustees of the Trust.
The Convertible Preferred Securities were sold to Lehman Brothers,  Dillon, Read
& Co. Inc.,  Goldman,  Sachs & Co. and A.G.  Edwards & Sons,  Inc. (the "Initial
Purchasers") for an aggregate purchase price of $149.5 million. The Company paid
the Initial  Purchasers a commission of 3% of the aggregate  purchase price. The
Initial Purchasers resold the Convertible Preferred Securities (i) to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the  "Securities  Act")) in compliance with Rule 144A, (ii) to other
institutional "accredited investors" (as defined in Rule 501(A) (1), (2), (3) or
(7)  under  the  Securities  Act) in  compliance  with  Regulation  D under  the
Securities  Act and (iii)  outside the United  States to persons other than U.S.
persons in reliance on Regulation S under the  Securities  Act. The  Convertible
Preferred Securities may be converted at the option of the holder after December
30,  1996 into  shares of  Common  Stock at the rate of 1.8868  shares of Common
Stock for each Convertible  Preferred Security (equivalent to a conversion price
of $26.50 per share of Common Stock). The Convertible  Preferred  Securities and
the Common Securities  represent undivided beneficial interests in the assets of
the Trust,  which consist of approximately  $154.1 million  aggregate  principal
amount of the Company's 6 1/2% Convertible Subordinated Debentures due September
30, 2016.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

     The  following  Pro  Forma  Condensed  Consolidated  Balance  Sheet  as  of
September 30, 1996 and Pro Forma Condensed Consolidated Statements of Income for
the year ended  December 31, 1995 and the nine months ended  September  30, 1996
give effect to the sale by the Trust of the Convertible Preferred Securities and
the application of the estimated net proceeds therefrom. The Pro Forma Condensed
Consolidated Statement of Income for the year ended December 31, 1995 also gives
effect  to the  acquisition  of  all of the  issued  and  outstanding  stock  of
O'Donnell  Property  Services,  Inc.  ("O'Donnell"),  the  consummation  of  the
acquisition of the property  management  business of Douglas  Elliman-Gibbons  &
Ives and Kreisel Company, Inc. (collectively known as "DEK"), the acquisition of
National  Property  Investors,  Inc.,  its property  management  affiliates  and
general partner and certain limited partner  interests in affiliated real estate
limited partnerships (collectively,  "NPI"), the acquisition of the business and
substantially  all the assets of Edward S. Gordon Company,  Incorporated and its
affiliates  ("ESG"),  and the acquisition of the commercial real estate services
business of Paragon Group,  Inc.  ("Paragon"),  including  borrowings  under the
Company's revolving credit facility in connection therewith, and the acquisition
of limited partner interests in six partnerships  that were formerly  affiliated
with  U.S.   Shelter   Corporation   (collectively,   the  "Shelter   Properties
Partnerships"), Consolidated Capital Properties III ("CCP III") and Consolidated
Capital  Properties  IV ("CCP  IV"),  as if effected  at the  beginning  of such
period.  The Pro Forma Condensed  Consolidated  Statement of Income for the year
ended  December  31, 1995 also gives effect to the sale by Insignia of 3,850,000
shares of Common Stock and the  application of the net proceeds  therefrom as if
effected at the beginning of such period.  The Pro Forma Condensed  Consolidated
Statement  of Income for the nine  months  ended  September  30, 1996 also gives
effect to the NPI acquisition,  the ESG acquisition and the Paragon acquisition,
including borrowings under the Company's revolving credit facility in connection
therewith, as if effected at the beginning of each period.

     The pro forma statements have been prepared by management of Insignia based
upon the  financial  statements  of Insignia,  NPI,  ESG,  Paragon,  the Shelter
Properties  Partnerships,  CCP III, CCP IV, O'Donnell, and Kreisel Company, Inc.
and the unaudited  accounting  records of Douglas  Elliman-Gibbons & Ives. These
pro forma  statements may not be indicative of results had the combination  been
in effect on the dates  indicated  or of results  which may be  obtained  in the
future.  In each  acquisition  by Insignia,  the  acquired  business has its own
overhead  structure  which  includes  executive  management,   accounting,   and
management  information  costs.  A significant  portion of these  overhead costs
historically  has been  eliminated  upon  acquisition as they have been absorbed
into Insignia's  existing  systems,  thereby taking  advantage of such operating
economies of scale. This elimination of duplicate  management,  accounting,  and
information  systems  has  allowed  Insignia  to improve  operating  margins and
provide better operating results than would be reflected on a pro forma basis.
(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
September 30, 1996
(Thousands of Dollars, except share data)
Preferred       Pro Forma
                                                                           Insignia     Issuance      Balance Sheet
Assets
    Cash and cash equivalents                                             $  60,131  $        --      $  60,131
    Restricted cash                                                             642           --            642
    Receivables                                                              14,292           --         14,292
    Commissions receivable                                                   16,582           --         16,582
    Property and equipment                                                   11,282           --         11,282
    Investments in real estate limited partnerships                         124,898           --        124,898
    Property management contracts                                           133,827           --        133,827
    Apartment properties                                                     25,178           --         25,178
    Costs in excess of net assets of acquired businesses                     76,474           --         76,474
    Other assets                                                              8,583           --          8,583
                                                                              -----                       -----

       Total Assets                                                        $471,889    $      --       $471,889
                                                                           ========    =========       ========

Liabilities and Stockholders' Equity
    Liabilities:
       Accounts payable                                                  $    2,602  $        --     $    2,602
       Commissions payable                                                    9,257           --          9,257
       Accrued and sundry liabilities                                        24,604           --         24,604
       Deferred taxes                                                        13,661           --         13,661
       Non-recourse mortgage notes payable                                   20,408           --         20,408
       Notes payable                                                        185,182     (144,515)(a)     40,667
                                                                            -------     --------         ------
          Total liabilities                                                 255,714     (144,515)       111,199
                                                                            -------     --------        -------

    Redeemable convertible preferred stock                                       --      144,515(a)     144,515

    Minority interests in consolidated subsidiaries                           2,762           --          2,762

    Stockholders' Equity:
       Common stock, Class A, par value $.01 per share                          288           --            288
       Additional paid-in capital                                           188,710           --        188,710
       Retained earnings                                                     24,415           --         24,415
                                                                             ------                      ------
          Total stockholders' equity                                        213,413           --        213,413
                                                                            -------                     -------

Total liabilities and stockholders' equity                                 $471,889     $     --       $471,889
                                                                           ========     =========      ========
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(a)  Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

(a)  The  proceeds of this  offering,  net of costs of issuance in the amount of
     $4,985,000,  are intended to be used to pay down amounts  outstanding under
     the Revolving Credit Facility and to retire certain other notes payable.

                                             Notes                  Preferred
                                            Payable                 Issuance
                                                 (Thousands of Dollars)

Net proceeds of this Offering              $(144,515)                $144,515
                                           ---------                 --------

       Change in respective item           $(144,515)                $144,515
                                           ---------                 --------
(a) Pro Forma Condensed Consolidated Financials (Continued)

Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Nine Months Ended September 30, 1996
(Thousands of Dollars, except share and per share data)
Pro Forma
                                                                                           Pro Forma     Preferred         Income
                                       Insignia             ESG           Paragon         Adjustments    Issuance         Statement
Revenues
    Fee based services                 $140,117        $  46,778          $  8,635       $      627(a)    $    --         $196,157
    Interest                              2,193               20                 1               (8)(a)        --            2,206
    Other                                 1,597               --               556                3 (a)        --            2,156
    Apartment property revenues           5,297               --                --              434 (a)        --            5,731
                                          -----                                                 ---                          -----
                                        149,204           46,798             9,192            1,056            --          206,250
Costs and Expenses
    Fee based services                  106,570           39,974             7,440               89 (c)        --          154,073
    Administrative                        5,681            4,149             1,559           (2,715)(b)        --            8,674
    Apartment property expenses           2,838               --                --              237 (c)        --            3,075
    Deferred compensation and 
       stock option plan                     --           37,664                --          (37,664)(d)        --               --
    Interest                             10,244              677               751            1,548 (e)    (8,929)(i)        4,291
    Apartment property interest           1,698               --                --               94 (c)        --            1,792
    Depreciation and amortization        16,189            1,447               628            1,750 (f)        --           20,014
    Apartment property depreciation         769               --                --               63 (c)        --              832
                                            ---                                                  --                            ---
                                        143,989           83,911            10,378          (36,598)       (8,929)         192,751

Equity earnings - limited 
   partnership interest                   3,072               --                --              111 (g)        --            3,183
Minority interests in 
    consolidated subsidiaries              (190)               --                --             (19)(g)    (7,475)(i)       (7,684)
                                           ----                                                 ---        ------           ------ 
Income before income taxes                8,097          (37,113)          (1,186)           37,746         1,454            8,998
    Provision for income taxes            3,077           (3,528)               --            3,318 (h)       553 (i)        3,420
                                          -----           ------                              -----           ---            -----
Net Income                             $  5,020         $(33,585)         $(1,186)          $34,428       $   901         $  5,578
                                       ========         ========          =======           =======       =======         ========
Earnings per common share                 $0.15                                                                              $0.17
                                          =====                                                                              =====
Weighted average common shares 
    outstanding and dilutive 
    common stock equivalents           31,107,789                                         1,093,619(j)                  32,201,408
                                       ==========                                         =========                     ==========
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income
(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Year Ended December 31, 1995
(Thousands of Dollars, except share and per share data)
                                                                                                                           Pro Forma
                                                                                                      Pro Forma  Preferred   Income
                        Insignia     ESG       NPI     NPI II    NPI IV   DEK    O'Donnell   Paragon  Adjustments Issuance Statement
Revenues
    Fee based services  $118,828  $92,064    $17,715  $    --   $   --  $14,840   $5,335    $ 19,255  $     --     $   --   $268,037
    Interest               2,780       84        366       --       --       --       --          3      (625)(a)      --      2,608
    Other                  1,424       --         --       --       --       --       --        831         --         --      2,255
    Apartment property 
        revenues              --       --         --    1,133    6,164       --       --         --         --         --      7,297
                                                        -----    -----                                                         -----
                         123,032   92,148     18,081    1,133    6,164   14,840    5,335     20,089      (625)         --    280,197

Costs and Expenses
    Fee based services    85,707   76,882      7,892       --       --   13,760    2,039     12,918      (275)(c)      --    198,923
    Administrative         8,020    9,486         --       --       --       --      483      3,408    (6,178)(b)      --     15,219
    Apartment property 
        expenses              --       --         --      947    2,945       --       --         --         --         --      3,892
    Deferred compensation 
        and stock option 
        plan                  --    1,274         --       --       --       --       --         --    (1,274)(d)      --         --
    Termination of 
        employment 
        agreement           1,000      --         --       --       --       --       --         --         --         --      1,000
    Interest                7,049     339      5,801       --       --      550       --      1,516      2,919(e)(12,056)(i)   6,118
    Apartment property 
        interest               --      --         --      121    1,538       --       --         --         --         --      1,659
    Depreciation and 
        amortization        3,493   2,476      1,649       --       --      823       86      1,844      5,886(f)      --     26,257
    Apartment property 
        depreciation           --      --         --      211      989       --       --         --       (87)(c)      --      1,113
                                                          ---      ---                                    ---                  -----
                          115,269  90,457     15,342    1,279    5,472   15,133    2,608     19,686        991    (12,056)   254,181
                          -------  ------     ------    -----    -----   ------    -----     ------        ---    -------    -------

Equity earnings - 
        limited partnership 
        interests           2,461      --     15,544       --       --       --       --         --     (8,951)(g)    --       9,054

Minority interests in 
        consolidated 
        subsidiaries         (131)      --    (7,964)      --       --       --       --         --     (2,558)(g)(9,967)(i)(20,620)
                             ----             ------                                                    ------    ------    ------- 

Income before income 
        taxes              10,093      1,691  10,319    (146)      692    (293)    2,727        403   (13,125)     2,089      14,450

    Provision for income 
        taxes               3,835        641    (47)      --        --       --       --         --      268(h)      794(i)    5,491
                            -----        ---    ---                                                      ---         ---       -----
 
Income before 
        extraordinary item $6,258   $  1,050  10,366 $  (146) $    692  $ (293)  $ 2,727  $     403  $(13,393)   $ 1,295   $   8,959
                         ========   ======== ======= ========== ======= =======  =======  =========  ========    =======   =========

Earnings per common 
        shares before
        extraordinary 
        item               $0.22                                                                                               $0.29
                           =====                                                                                               =====

Weighted average common 
        shares outstanding
        and dilutive 
        common stock 
        equivalents    22,681,158                                                                     3,952,055(j)        26,633,213
                       ==========                                                                     =========           ==========
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income
(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

    Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income

     The table below summarizes the adjustments to the historical  statements of
income  (a) for the year  ended  December  31,  1995  giving  effect  to (i) the
consummation  of the NPI  acquisition,  (ii) the O'Donnell  acquisition  and the
acquisition  of the limited  partnership  interests  in the  Shelter  Properties
Partnerships,  (iii) the DEK  acquisition,  (iv) the ESG acquisition and (v) the
Paragon  acquisition,  and  borrowings  under the Revolving  Credit  Facility in
connection  therewith,  and (b) for the nine  months  ended  September  30, 1996
giving  effect  to the ESG,  NPI and  Paragon  acquisitions,  in each case as if
effected at the beginning of such period.
Income Increase          Income Increase
                                                                         (Decrease)             (Decrease) For the
                                                                       For The Year Ended        Nine Months Ended
                                                                       December 31, 1995        September 30, 1996
                                                                                 (Thousands of Dollars)

Pro Forma Adjustments
Revenues

(a)  Represents a reduction in interest income earned
        on cash balances of ESG                                        $      (84)                $      (20)
     Represents a reduction in interest income earned on
        cash balances of NPI                                                    --                        12
     Represents reduced interest income on cash used to
        acquire limited partnership interests in tender offers               (541)                        --
     Represents 21 days of revenue in January 1996 prior to
        the actual acquisition of NPI
           Fee based services                                                   --                       627
           Apartment property revenues                                          --                       434
           Other                                                                --                         3
                                                                                                           -
                                                                             (625)                     1,056

Costs and Expenses

(b)  Represents ESG acquisition pro forma administrative
        services expenses                                                    6,178                     2,715

(c)  Represents NPI, DEK, and O'Donnell pro forma expenses
        (Excluding depreciation and amortization reflected below)
           Fee based services                                                  275                       (89)
           Apartment property expenses                                          --                      (237)
           Apartment property interest                                          --                       (94)
           Apartment property depreciation                                      87                       (63)

(d)  Deferred compensation and stock option plan                             1,274                    37,664

(e)  Represents pro forma interest adjustment related to the
     Revolving Credit Facility                                             (5,386)                    (1,548)
     Stock offering proceeds used to pay down debt (see j)                   3,480                        --
     Amortization of Revolving Credit Facility cost                        (1,013)                        --
                                                                           ------                           
        Total interest effect                                              (2,919)                    (1,548)
(a) Pro Forma Condensed Consolidated Financials (Continued)
Insignia Financial Group, Inc. and Subsidiaries

Notes to  Unaudited  Pro  Forma  Condensed  Consolidated  Statements  of  Income
(Continued)
Income Increase          Income Increase
                                                                         (Decrease)             (Decrease) For the
                                                                       For The Year Ended        Nine Months Ended
                                                                       December 31, 1995        September 30, 1996
                                                                                 (Thousands of Dollars)
(f)  Represents reductions (increases) in:
        Amortization of purchase price allocated to
           management contracts                                              1,649                        --
        Depreciation of property and equipment                               4,320                     2,075
        Depreciation of property and equipment                               (145)                       (72)
        Amortization of management contract                                (8,027)                    (1,911)
        Amortization of non-competition agreement and Goodwill             (3,683)                    (1,842)
                                                                           ------                     ------ 
           Total amortization and depreciation effect                      (5,886)                    (1,750)
                                                                           ------                     ------ 
           Total cost and expense effect                                $    (991)                   $36,598

(g)  Represents the purchase of partnership interests in the Shelter
        Properties Partnerships, CCP III and CCP IV, the retention
        by NPI of its interests in five partnerships, the consolidation
        of two partnerships previously reported by NPI on the
        equity method and adjustments to reflect the amortization
        of Insignia's purchase price in excess of its proportionate
        share of partnership book value                                   $(8,951)                 $     111
     Represents minority interest in consolidated limited partnerships
        and joint ventures holding limited partnership interests           (2,558)                       (19)

(h)  Income tax effect                                                       (268)                    (3,318)
                                                                             ----                     ------ 
        Net increase (decrease) to income                                  (13,393                    34,428
                                                                           =======                    ======

Debt and Equity Issuances

(i)  Representing the following:
        Interest on and amortization of issuance cost associated
           with Convertible Preferred Securities                           (9,967)                    (7,475)
        Reduction of interest expense on debt repayment                     12,056                     8,929
                                                                            ------                     -----
                                                                             2,089                     1,454
     Income tax effect                                                       (794)                      (553)
                                                                             ----                       ---- 
        Adjustment to income before extraordinary item                    $  1,295                 $     901
                                                                          ========                 =========

(j)  Adjustment to weighted average common shares outstanding
        gives effect to Insignia's 1995 common stock offering            3,111,643                        --
     Increase in weighted average common shares outstanding
        and dilutive common stock equivalents as a result of
        assumption of ESG options                                          840,412                 1,093,619
                                                                           -------                 ---------
                                                                         3,952,055                 1,093,619
                                                                         =========                 =========
SIGNATURES

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

                                         INSIGNIA FINANCIAL GROUP, INC.

                                         By:                                   
                                         --------------------------------------
                                                 John K. Lines
                                                 General Counsel and Secretary

Date:  December 9, 1996