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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

[ ] 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 0-12659

U.S. SHELTER CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 57-0769881
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

201 LAVINIA AVENUE
GREENVILLE, SC 29601
(Address of principal executive office)(Zip code)

(864) 242-6631
(Registrant's telephone number)

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 [ ] No [X]

The registrant had 9,629,793 shares of Common Stock outstanding as of
November 16, 1998.

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PART I

Item 1. Financial Statements

U.S. SHELTER CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
SEPTEMBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
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September 30, December 31,
1998 1997
ASSETS (unaudited) (1)

Investment in common stock of Insignia
Financial Group, Inc. - Class A New (Note 3) $ 4,600,407 --
Investment in common stock of Insignia/ESG
Holdings, Inc. (Note 3) 3,571,613 --
Investment in common stock of Insignia
Financial Group, Inc. - Class A (Note 3) -- $10,852,872
Cash 13,914 370,946
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Total Assets 8,185,934 11,223,818
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LIABILITIES

Estimated costs during period of liquidation
and accrued liabilities (Note 4) 599,989 937,062
Taxes payable (Note 5) 255,000 300,000
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Total Liabilities 854,989 1,237,062
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Contingencies and Litigation (Note 6)

NET ASSETS IN LIQUIDATION $ 7,330,945 $ 9,986,756
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(1) Derived from December 31, 1997 audited consolidated financial statements.

See notes to unaudited condensed consolidated financial statements.

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U.S. SHELTER CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
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1998 1997

Net Assets in Liquidation as of July 1 $ 10,675,181 $ 7,731,419
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Changes during the period:

Realized loss on sale of common stock (3,087) --

Unrealized gain (loss) on common stock (3,241,649) 943,728

Increase in estimated costs during period of
liquidation and accrued liabilities (164,500) --

Federal income tax benefit (expense) 65,000 (20,000)
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Net changes during the period (3,344,236) 923,728
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Net Assets in Liquidation as of September 30 $ 7,330,945 $ 8,655,147
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See notes to unaudited condensed consolidated financial statements.

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U.S. SHELTER CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
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1998 1997

Net Assets in Liquidation as of January 1 $ 9,986,756 $ 9,765,376
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Changes during the period:

Realized loss on sale of common stock (3,958) (14,552)

Unrealized loss on common stock (2,532,353) (1,120,677)

Increase in estimated costs during period of
liquidation and accrued liabilities (164,500) --

Federal income tax benefit 45,000 25,000
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Net changes during the period (2,655,811) (1,110,229)
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Net Assets in Liquidation as of September 30 $ 7,330,945 $ 8,655,147
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See notes to unaudited condensed consolidated financial statements.

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U.S. SHELTER CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
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1. OPERATIONS PRIOR TO PLAN OF LIQUIDATION AND THE COMPANY'S PLAN OF
LIQUIDATION

Prior to the sale of substantially all of the Company's operating assets
and the plan of liquidation, the Company operated in three segments:
property management and leasing, mortgage banking, and real estate
interests. The property management and leasing segment managed apartment
complexes and managed and leased commercial properties. The mortgage
banking segment originated loans on commercial properties. The real estate
interests segment sold real estate owned by the Company, held mortgage
loans issued in connection with sales of properties, and served as a
general partner in partnerships organized by the Company.

On December 31, 1990, the Company obtained shareholder approval and the
Company completed the sale of substantially all of its assets (except
Malibu Savings Bank, a wholly-owned subsidiary of the Company) to Insignia
Financial Group, Inc. ("Insignia"). On November 27, 1991, the Company
filed a certificate of dissolution with the Secretary of the State of
Delaware. The Delaware Chancery Court ordered the Company's existence to
continue for the sole purpose of winding up its affairs, including the
prosecution and defense of suits by or against it, the discharge of its
liabilities and the distribution to its shareholders of any remaining
assets.

On January 11, 1991, the Office of Thrift Supervision declared Malibu
Savings Bank insolvent, placed it into receivership, and appointed the
Resolution Trust Company ("RTC") as conservator. Accordingly, Malibu
Savings Bank ceased to exist as a subsidiary of the Company.

Subsequent to commencement of dissolution, the Company's activities have
involved winding up the Company's affairs, including the defense and
settlement of various claims against the Company. The Company commenced
liquidation activities in 1991. The Company intends to partially
distribute funds to shareholders if the Delaware Chancery Court approves
and if the following conditions are met: (1) the contingent liability, if
any, for the Metlife matter (see Note 6) can be quantified and the amount
of such contingent liability, if any, is approved by the Court, (2)
resolution of certain other liabilities, including certain state and local
taxes payable occurs (see Note 5), and (3) any other matters required to
be accomplished by the Delaware Chancery Court prior to the partial
distribution. Upon approval by the Delaware Chancery Court, all additional
assets, if any, will be distributed to shareholders. There have been no
distributions to shareholders under the plan of liquidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates - The accompanying consolidated
financial statements include the accounts of U.S. Shelter Corporation and
its wholly-owned subsidiary, Tandem Development, Inc. All significant
intercompany balances and transactions have been eliminated.

As a result of the dissolution of the Company commenced on November 27,
1991, the Company changed its basis of accounting from a going-concern
basis to the liquidation basis of accounting. Under the

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liquidation basis of accounting, assets and liabilities are stated at
their estimated net realizable value and estimated costs through the
liquidation are provided to the extent reasonably determinable. All costs
incurred in the nine months ended September 30, 1998 and 1997,
respectively, have been charged to the liability account, estimated costs
during period of liquidation, that was established upon adoption of the
liquidation basis of accounting. During the three months ended September
30, 1998, a provision for additional estimated costs during the period of
liquidation was recorded due to the Company's reassessment of the length
of the remaining period until liquidation.

As a result of the change in the Company's basis of accounting from the
going-concern basis to the liquidation basis, assets have been valued at
estimated net realizable value, and liabilities have been reflected at
their estimated settlement amounts including estimated costs to be
incurred during the period of liquidation. The valuation of assets and
liabilities is based on management's estimates and assumptions as of the
date of the financial statements; actual realization of the assets and
settlement of liabilities could be higher or lower than the amounts
indicated. There are a number of important factors which could cause
actual results to differ from the estimates, including the settlement
amount of claims and other liabilities to be paid in the liquidation, the
amounts to be received for assets which have not yet been sold, and the
time period and actual costs necessary to complete the plan of
liquidation.

The interim financial data as of and for the nine months ended September
30, 1998 and 1997, are unaudited and are presented on the liquidation
basis of accounting in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In management's
opinion, all adjustments (consisting only of adjustments of a normal,
recurring nature) necessary for a fair presentation have been included.
The December 31, 1997 financial information was derived from audited
consolidated financial statements, but excludes certain disclosures
included in the Company's audited consolidated financial statements.

These consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto for the
year ended December 31, 1997, as well as the other information included in
the Company's annual report filed on Form 10-K. The consolidated
statements of changes in net assets in liquidation for the interim periods
presented are not necessarily indicative of the results to be expected for
the year ending December 31, 1998 or any other interim period.

3. INVESTMENTS

In September 1998, as a result of the proposed merger of the residential
property management operations of Insignia with Apartment Investment and
Management Company ("AIMCO"), Insignia shareholders approved the spin-off
and distribution by Insignia to its stockholders of all of the outstanding
common stock of Insignia/ESG Holdings, Inc., a subsidiary of Insignia
("Holdings"). Holdings includes primarily the commercial real estate
service, residential brokerage, and mortgage banking operations of
Insignia. As a result of this distribution, each holder of shares of Class
A common stock of Insignia received two shares of Holdings common stock
for each three shares of Insignia common stock held. The shares of
Insignia common stock continued to represent issued and outstanding shares
of Insignia common stock ("Class A New common stock").

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As of September 30, 1998, after reflecting the results of the above
distribution, the Company's investments consisted of 465,864 shares of
Insignia Class A New common stock at $9.88 per share and 310,575 shares of
Holdings common stock at $11.50 per share. At December 31, 1997, the
Company held 471,864 shares of Insignia Class A common stock at $23 per
share. These investments are carried at estimated market value determined
based on closing market prices as reported on open stock exchanges.

In October 1998, Insignia completed its merger with AIMCO, and on October
7, 1998, shareholders of Insignia Class A new common stock received AIMCO
preferred convertible Class E shares in exchange for shares of Insignia
Class A New common stock at a rate of approximately 0.262 AIMCO preferred
convertible Class E shares per share of Insignia Class A New common stock.
The Company therefore received approximately 122,050 shares of AIMCO
preferred stock at that time. The market price of AIMCO preferred shares
was $35 per share on October 7, 1998, based on closing market prices as
reported on an open stock exchange.

Realized and unrealized gains and losses are included in the accompanying
consolidated statements of changes in net assets in liquidation.

4. ESTIMATED COSTS DURING PERIOD OF LIQUIDATION AND ACCRUED LIABILITIES

The Company commenced liquidation activities in 1991 and provided an
estimate of the costs to liquidate the Company at that time. The remaining
estimated costs to liquidate at September 30, 1998 and December 31, 1997,
represent known liabilities and estimated legal, accounting, and other
fees necessary to liquidate and distribute the remaining assets, if any,
of the Company. The actual amount of this liability may vary significantly
depending on the length of time required to complete the plan of
liquidation and complexities which may arise in settling certain legal
matters (see Note 6) and disposing of the remaining assets. During the
three months ended September 30, 1998, a provision for additional
estimated costs during the period of liquidation was recorded due to the
Company's reassessment of the length of the remaining period until
liquidation.

5. TAXES PAYABLE

Taxes payable consist of the following:

September 30, December 31,
1998 1997
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Federal income taxes payable $155,000 $200,000
State and local taxes payable 100,000 100,000
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$255,000 $300,000
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The Federal income taxes payable, as described below, represent estimated
alternative minimum income taxes payable upon the sale of the Company's
investments in the common stock of Insignia Financial Group, Inc. - Class
A New and Insignia/ESG Holdings, Inc.

The state and local taxes payable represent the Company's estimate of
state and local taxes claimed in prior years by various state and local
taxing authorities.

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No other taxes have been provided for Federal and state income tax
purposes due to the availability of net operating loss carryforwards of
approximately $15.9 million for Federal and state purposes at September
30, 1998 and December 31, 1997. These net operating loss carryforwards are
available to offset future income, with certain limitations, and begin to
expire in 2003. Alternative minimum income taxes are expected to be
payable under the alternative minimum income tax provisions of the
Internal Revenue Code because only a portion of the Federal net operating
loss carryforwards can be utilized to offset alternative minimum taxable
income. Although the payment of Federal alternative minimum income tax
usually gives rise to a credit against future regular Federal income tax
liabilities, the liquidation position of the Company makes it unlikely
that any deferred tax asset created by the payment of the alternative
minimum income tax will ever be realized. Therefore, the Company has not
recorded a deferred tax asset related to the payment of Federal
alternative minimum tax.

6. CONTINGENCIES AND LITIGATION

The Company is one of several defendants in a lawsuit filed by
Metropolitan Life Insurance Company ("MetLife"). In the action, MetLife
seeks damages for siding installed on apartment buildings it owns in West
Palm Beach, Florida. According to the complaint, MetLife purchased the
property from the Company in 1989 and claims breach of warranty against
the Company based on allegedly defective work and improper materials. The
action was filed in July 1996 and is in the early stages of discovery. The
Company has denied the allegations of the complaint and is contesting the
matter. The Company is not able to determine the ultimate outcome of this
litigation and, accordingly, no amounts have been provided in the
accompanying financial statements for this matter.

7. COMMON STOCK OF THE COMPANY

As described in Note 1, the Company has adopted the liquidation basis of
accounting. Accordingly, the presentation of per share data in the
accompanying consolidated statements of changes in net assets in
liquidation has been omitted.

For all periods presented, the Company had 20,000,000 authorized shares of
common stock, $1 par value and 9,629,793 shares of common stock issued and
outstanding.

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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto.

The Company sold substantially all of its assets to Insignia Financial
Group, Inc. on December 31, 1990, and on November 27, 1991 filed a Certificate
of Dissolution with the Delaware Secretary of State. As a result, the Company
changed its basis of accounting from a going-concern basis to a liquidation
basis. During the period ended September 30, 1998, the Company's activities have
been limited to continuing its winding up and liquidation.

RESULTS OF OPERATIONS

Quarter Ended September 30, 1998 Compared to Quarter Ended September 30, 1997

Realized and unrealized gains and losses on investment securities are
included in determining net assets under the liquidation basis of accounting. As
described in Note 3 to the unaudited condensed consolidated financial
statements, as a result of a proposed merger involving Insignia Financial Group,
Inc. ("Insignia") and a spin-off and distribution of shares of its common stock
(including shares distributed to the Company) in September 1998, the Company's
investment in the common stock of Insignia is represented at September 30, 1998
as investments in the common stock of Insignia Financial Group, Inc. - Class A
New and in the common stock of Insignia/ESG Holdings, Inc. At September 30,
1998, the Company's principal assets are 465,864 shares of Insignia Class A New
common stock and 310,575 shares of Insignia/ESG Holdings, Inc. common stock. The
closing prices of these shares were $9.88 per share and $11.50 per share,
respectively, at that date. At June 30, 1998, the Company owned 468,864 shares
of Insignia Class A common stock at a price of $24.50 per share. The Company
owned 471,864 shares of Insignia Class A common stock at September 30, 1997 and
June 30, 1997. The closing price per share of this stock at September 30, 1997
and June 30, 1997, was $20.125 and $18.125, respectively. As a result of these
changes in investment values, the Company recorded an unrealized loss of
$3,241,649 for the quarter ended September 30, 1998 compared to an unrealized
gain of $943,728 for the quarter ended September 30, 1997. For financial
reporting purposes, the Company adjusts its investments in stocks to market
value at the end of each financial reporting period.

The Company provided for estimated costs to liquidate effective beginning
in fiscal year 1991, when the Company changed its basis of accounting from a
going-concern basis to the liquidation basis. Accordingly, estimated costs
through the liquidation period were provided at that time and all costs since
then have been charged against such liability. During the three months ended
September 30, 1998, a provision for additional estimated costs during the period
of liquidation was recorded due to the Company's reassessment of the length of
the remaining period until liquidation.

Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 30, 1997

The Company's net assets in liquidation were $7,330,945 at September 30,
1998 compared to $9,986,756 at December 31, 1997, representing a decrease in net
assets of $2,655,811. This decrease is primarily attributable to unrealized
losses on investments held by the Company since December 31, 1997.

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Class A New and in the common stock of Insignia/ESG Holdings, Inc. At September
30, 1998, the Company's principal assets are 465,864 shares of Insignia Class A
New common stock and 310,575 shares of Insignia/ESG Holdings, Inc. common stock.
The closing prices of these shares were $9.88 per share and $11.50 per share,
respectively, at that date. At December 31, 1997, the Company owned 471,864
shares of Insignia Class A common stock at a price of $23 per share. As a result
of this change in investment values, the Company recorded an unrealized loss of
$2,532,353 for the nine months ended September 30, 1998 compared to an
unrealized loss of $1,120,677 for the nine months ended September 30, 1997. For
financial reporting purposes, the Company adjusts its investments in stocks to
market value at the end of each financial reporting period.

The Company provided for estimated costs to liquidate effective beginning
fiscal year 1991, when the Company changed its basis of accounting from a
going-concern basis to the liquidation basis. Accordingly, estimated costs
through the liquidation period were provided at that time and all costs since
then have been charged against such liability. During the nine months ended
September 30, 1998, a provision for additional estimated costs during the period
of liquidation was recorded due to the Company's reassessment of the length of
the remaining period until liquidation.

LIQUIDITY AND CAPITAL RESOURCES

The Company has no short-term or long-term debt facilities available. Cash
used to pay the costs of winding up and liquidation comes primarily from
proceeds on the sale of investments held by the Company. A lawsuit against the
Company is pending. No assurance can be given that such lawsuit will be resolved
in a manner favorable to the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company does not invest in derivative financial instruments.

PART II

Item 1. Legal Proceeding

The Company is one of several defendants in a lawsuit filed by
Metropolitan Life Insurance Company ("Metlife"). In the action, Metlife seeks
damages for siding installed on apartment buildings it owns in West Palm Beach,
Florida. According to the complaint, Metlife purchased the property from the
Company in 1989 and claims breach of warranty against the Company based on
allegedly defective work and improper materials. The action was filed in July
1996 and is in the early stages of discovery. The Company has denied the
allegations of the complaint and is contesting the matter. The Company is not
able to determine the ultimate outcome of this litigation and, accordingly, no
amounts have been provided in the accompanying financial statements for this
matter.

Item 2. Changes in Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

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Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a) List of Exhibits.

27 Financial Data Schedule.

(b) Reports on Form 8-K.

Not applicable.

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 thereunto duly authorized, on November 16, 1998.

U.S. SHELTER CORPORATION

By: /s/ William D. Richardson
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William D. Richardson
Sole Director and President*

* There are no officers of the registrant other than the President.

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