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                                                                  EXHIBIT 10.222

                SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT


       THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Seventh
Amendment" or "Amendment"), made as of the 15th day of December, 2000, by and
among PREFERRED EQUITIES CORPORATION, a Nevada Corporation, having an address of
4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as
"Preferred"); and

       COLORADO LAND AND GRAZING CORP., a Colorado Corporation, having an
address of 4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to
as "CLGC") (Preferred and CLGC are hereinafter collectively referred to as the
"Borrower" and any documents required to be executed by (or prepared for) the
Borrower pursuant to this Amendment shall be executed by (or prepared for) each
Borrower); and

       MEGO FINANCIAL CORP., a New York corporation having an address of 4310
Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as "Guarantor");
and

       DORFINCO CORPORATION, a Delaware Corporation, having an address of 40
Westminster Street, P.O. Box 6687, Providence, Rhode Island
02940-6687(hereinafter referred to as "Lender").

                                   WITNESSETH:

       WHEREAS, On August 9, 1991, Preferred executed in favor of Lender a note
evidencing a revolving line of credit loan (the "Loan") in the maximum principal
sum of Five Million Dollars ($5,000,000.00) which note was amended by a First
Amendment to Promissory Note dated June 30, 1993, which amendment, inter alia,
increased the maximum amount of the Loan to Seven Million Five Hundred Thousand
Dollars ($7,500,000.00) and by a Second Amendment to Promissory Note dated
August 23, 1994 and by a Third Amendment to Promissory Note dated September 30,
1995 and by a Fourth Amendment to Promissory Note dated as of November 29, 1996
and by a Fifth Amendment to Promissory Note of even date herewith (collectively,
"Note Amendment") (Said note, as amended, being hereinafter referred to as the
"Note"); and

       WHEREAS, the above described Note evidences sums advanced or to be
advanced pursuant to a Loan and Security Agreement dated July 31, 1991, which
agreement was amended by a First Amendment dated January 8, 1992, and by Second
Amendment to Loan and Security Agreement dated June 30, 1993 and by a Third
Amendment to Loan and Security Agreement and Assumption Agreement dated August
23, 1994 which amendment inter alia, added CLGC as a Borrower and by a Fourth
Amendment to Loan and Security Agreement dated September 30, 1995 and by a Fifth



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Amendment to Loan and Security Agreement dated November 29, 1996 and a Sixth
Amendment to Loan and Security Agreement dated as of June 30, 1999 (the Loan and
Security Agreement, as so amended, being hereinafter referred to as the "Loan
Agreement"); and

       WHEREAS, Preferred is currently marketing residential lots (the "HSR
Lots") in a subdivision known as Hartsel Springs Ranches, located in Park
County, Colorado (the HSR Subdivision").

       WHEREAS, Preferred and CLGC have requested that Lender modify the terms
of the Loan, upon the terms and provisions hereinafter set forth, in order to
amend the definition of Eligible Notes Receivables to include Eligible Notes
Receivables generated from the sale of the HSR Lots, to extend the Term and the
Revolving Credit Period as well as certain other provisions.

       NOW THEREFORE, in consideration of the foregoing recitals, and in further
consideration of the mutual covenants contained herein, and intending to be
legally bound hereby, the parties hereto mutually agree as follows:


I.     AMENDMENTS

       1. The date of this Seventh Amendment is referred to as the "Seventh
Amendment Date."

       2. The parties hereto mutually agree that all references to the Uniform
Commercial Code of the State of Nevada as contained in Paragraph 1.1 (h) of the
Loan Agreement shall be deemed to refer to the Uniform Commercial Code of the
State of Colorado, when pertaining to the procedures for perfecting any security
interest in any Collateral and for enforcement of any remedy against Collateral
in each case located within or subject to the laws of the State of Colorado
including but not limited to any Pledged Deeds of Trust or Eligible Notes
Receivable generated by the Sale of the SPR Lots or of HSR Lots. In all other
respects the parties hereto agree that the Uniform Commercial Code of the State
of Nevada shall govern.

       3. The parties hereto mutually agree that Section 1.1 (p) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (p) DEED OF TRUST. A deed of trust and an assignment of
              rents, executed and delivered by a Purchaser to Borrower, securing
              that Purchaser's Note Receivable and constituting a Lien upon the
              fee simple estate and interest of the Purchaser in and to its Lot.
              Said deed of trust and assignment shall be in substantially the
              form attached hereto as Exhibit "M-1" for any Lot located in the
              state of Nevada, and in substantially the



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              form attached hereto as Exhibit "M-2" for any SPR Lot located in
              the state of Colorado and in substantially the form attached
              hereto as Exhibit "M-3" for any HSR Lot located in the State of
              Colorado. Any reference in this Agreement to Exhibit "M" shall be
              deemed to refer to Exhibit "M-1" if the Lot is located in the
              State of Nevada, and to Exhibit "M-2" if SPR Lot and to Exhibit
              "M-3" if a HSR Lot."

       4. The parties hereby mutually agree that the Loan Agreement is hereby
amended by adding thereto, Exhibit M-3 which shall be in the form of Deed of
Trust attached hereto and made a part hereof and marked Exhibit "B (M-3)".

       5. The parties hereto mutually agree that Section 1.1 (u) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (u) FINAL MATURITY DATE. December 31, 2005."

       6. The parties hereto mutually agree that Paragraph 1.1 (ee) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (ee) LOAN YEAR. A period of twelve calendar months,
              commencing with the first day of the first full month following
              the Seventh Amendment Date, and each twelve (12) month period
              thereafter, provided that the period from the Seventh Amendment
              Date through the last day of the month in which the Seventh
              Amendment occurs shall constitute a part of the first Loan Year."

       7. The parties hereto mutually agree that Section 1.1 (ss) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (ss) REVOLVING CREDIT PERIOD. The period from the Seventh
              Amendment Date to June 30, 2002."

       8. The parties hereto mutually agree that Section 1.1 (vv) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (vv) TERM. The period commencing on the Seventh Amendment
              Date and continuing until December 31, 2005. The Term includes
              both the



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              Revolving Credit Period and the period during which no Advances
              are permitted."

       9. The parties hereto mutually agree that Schedule 1.1 (gg) (Lot) of the
Loan Agreement is hereby amended by substituting therefor Revised Schedule 1.1
(gg) which is attached and made a part hereof, and marked Exhibit "A (1.1
(gg))".

       10. The parties hereto mutually agree that Section 1.1 (kk) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (kk) NOTE RECEIVABLE. A promissory note, substantially in the
              form attached hereto as Exhibit "L-1" where such note pertains to
              the sale of any Lot located in the State of Nevada, and in
              substantially the form attached hereto as Exhibit "L-2" or "L-3"
              where such note pertains to the sale of any SPR Lot located in the
              State of Colorado and is substantially the form attached hereto as
              Exhibit "L-4" where such note pertains to the sale of any HSR Lot
              located in the State of Colorado. Any reference in this Agreement
              to Exhibit "L" shall be deemed to refer to Exhibit "L-1" if the
              Lot is located in the State of Nevada, and to Exhibit "L-2" or
              "L-3" if a SPR Lot and to Exhibit "L-4" or Exhibit "L-5" if a HSR
              Lot.

       11. The parties hereto mutually agree that the Loan Agreement is hereby
amended by adding thereto Exhibit "L-4", Exhibit "L-5" which shall be the form
of either promissory note applicable to the sale of a HSR Lot attached hereto,
made a part hereof and marked Exhibit "C (L-4) and (L-5)".

       12. The parties hereto mutually agree that Paragraph 1.1 (uu) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (uu) SUBDIVISION. One of seven subdivisions (NRS 278.320) in
              a planned community called Calvada located in Pahrump, Nye County,
              Nevada, known as Calvada Valley, Calvada Valley North, Calvada
              Meadows, Country View Estates, Country Place II, Vegas Acres Unit
              2 and Golden Spring Ranch, and a subdivision known as South Park
              Ranches located in Park County, Colorado (the "SPR Subdivision")
              and a subdivision known a Hartsel Springs Ranches consisting of
              parcels of land within such subdivision known as either Estates of
              Colorado or Hartsel



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              Ranch located in Park County, Colorado (the "HSR Subdivision")."

       13. The parties hereto mutually agree that Section 1.1 (ww) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (ww) TITLE COMPANY. Chicago Title Insurance Corporation or
              Security Title Guaranty Co. or any other reputable title insurer
              acceptable to Lender and doing business in Nye County, Nevada or
              Park County, Colorado."

       14. The parties hereto mutually agree that Section 2.2 of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "2.2 NON-REVOLVING PERIOD. Notwithstanding anything contained
              herein to the contrary, no Advances of the Loan will be made after
              June 30, 2002."

       15. The parties hereto mutually agree that Section 2.5 (a) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "2.5 (a) VOLUNTARY PREPAYMENTS. Subject to the provisions of
              Section 2.5 (b), Borrower may not prepay the Loan, in whole or in
              part, prior to December 31, 2001; subject to the terms of this
              Agreement and to the payment of the applicable premium set forth
              below, at any time on or after December 1, 2001, Borrower may
              prepay the Loan, in whole but not in part, upon thirty (30) days'
              prior written notice to Lender. Any such prepayment must include
              all outstanding principal, accrued but unpaid interest, accrued
              but unpaid fees and charges (if any), and the applicable
              prepayment premium provided below."

       16. The parties hereto mutually agree that Section 2.5 (b) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "2.5 (b) PERMITTED PREPAYMENTS. Borrower may prepay the Loan (i)
              as a result of any payments or prepayments made under the Pledged
              Notes Receivable; or (ii) in connection with a Mandatory
              Prepayment required under Section 2.5 (c)."



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       17. The parties hereto mutually agree that Section 2.5 (d) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "2.5 (d) PREMIUMS. Any prepayment of the Loan pursuant to Section
              2.5 (a) above and not pursuant to Section 2.5(b) must be
              accompanied by a premium calculated as follows:

<TABLE>
<CAPTION>
              Date of Prepayment                           Premium
              ------------------                           -------
<S>                                                <C>
              On or after December 31, 2001        one percent (1%) of the
                                                   _____ outstanding principal
                                                   balance of the Loan.
</TABLE>

       18. The parties hereto mutually agree that Section 3.5 (b) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "3.5 (b) Attached hereto as Exhibits L-1, L-2, L-3 L-4, M-1, M-2
              and M-3, respectively, are true, accurate and complete copies of
              the forms of Note Receivable and the Deed of Trust in use by the
              Borrower. Attached hereto as Exhibit N-1 is a true, accurate and
              complete copy of the form of Grant, Bargain, Sale Deed conveying
              fee simple interest to a purchaser in use by Borrower in the State
              of Nevada. Attached hereto as Exhibit N-2 and N-3 is a true,
              accurate and complete copy of the form of Special Warranty Deed
              conveying fee simple interest to a purchaser in use by Borrower
              for SPR Lot and HSR Lot respectively in the State of Colorado. All
              references in this Agreement to Exhibit "N" shall be deemed to
              refer to Exhibit "N-1" when dealing with Lots in the State of
              Nevada, and to Exhibit "N-2" when dealing with SPR Lots and to
              Exhibit "N-3" when dealing with HSR Lots in the State of
              Colorado."

       19. The parties hereto mutually agree that the Loan Agreement is hereby
amended to add thereto Exhibit N-3, which shall be the form of Special Warranty
Deed attached hereto and made a part hereof and marked Exhibit "D (N-3)".

       20. The parties hereto mutually agree that Section 4.1 (1) (vii) of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof, the
following provision is inserted:



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              "(vii) FINANCING STATEMENTS. UCC Financing Statements governing
              the Collateral in form and substance satisfactory to Lender and
              its counsel to be recorded in Nye County, Nevada and with the
              Nevada Secretary of State (if the Collateral was generated by the
              sale of lots in Nye County Nevada) or in Park County, Colorado and
              with the Colorado Secretary of State (if the Collateral was
              generated from the Sale of SPR Lots or HSR Lots)."

       21. The parties hereto mutually agree that Section 4.1 (o) (i) is hereby
deleted in its entirety and in lieu thereof, the following provision is
inserted:

              "(i) the current registration with and approval from the Real
              Estate Division of the Department of Commerce of the State of
              Nevada (for Lots located or sold in the State of Nevada) and
              registration with and the approval of the Colorado Real Estate
              Commission of the State of Colorado (for Lots located in the State
              of Colorado), to sell the Lots."

       22. The parties hereto mutually agree that Schedule 4.1 (p) of the Loan
Agreement is hereby amended by adding thereto the Liens affecting the HSR Lots
as set forth on Exhibit "E (4.1 (p))" attached hereto and made a part hereof.

       23. Notwithstanding the language contained in Section 5.1 (c) (i) of the
Loan Agreement, the Assignments of Notes Receivable pertaining to the sale of
HSR Lots shall be in the form attached hereto, made a part hereof, and marked
Exhibit "F (H.3)".

       24. The parties hereto mutually agree that Section 5.1 (c) (ii) of the
Loan Agreement is hereby deleted in its entirety, and in lieu thereof the
following provision is inserted:

              "5.1 (c) (ii) delivered to Title Company, with a copy to Lender
              and Custodian (or if Lender shall instruct, to Lender) a list of
              all Pledged Deeds of Trust and the Lots encumbered thereby, which
              are to be the subject of such requested advance, together with an
              executed and acknowledged Assignment of Deeds of Trust relating
              thereto in the form attached hereto, made a part hereof and marked
              Exhibit "H.2-1" (for Deeds of Trust encumbering Lots in the State
              of Nevada), and in the form attached hereto, made a part hereof
              and marked Exhibit "H.2-2" (for Deeds of Trust encumbering SPR
              Lots) and in the form attached hereto made a part hereof and
              marked Exhibit "H.2-3" (for Deeds of Trust encumbering HSR Lots),
              and such additional information as Lender may in good faith



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              request. All references contained herein to Exhibit "H.2" shall be
              deemed to refer to Exhibit H.2-1 when referring to Deeds of Trust
              encumbering Lots in the State of Nevada, and to Exhibit H.2-2 and
              H.2-3 when referring to Deeds of Trust encumbering SPR Lots and
              HSR Lots respectively in the State of Colorado."

       25. The parties hereto mutually agree that the Loan Agreement is hereby
amended by adding thereto as Exhibit "H.2-3" the form of Assignment of Deed of
Trust attached hereto as Exhibit "G (H.2-3)".

       26. The parties hereto mutually agree that Section 7.1 (w) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "7.1 (w) FORM OF NOTE RECEIVABLE: Instruments in substantially the
              form of Exhibits L-1 and L-2 or L-3 or L-4 or L-5 attached hereto
              shall be used by Borrower for all Notes Receivable transactions
              which may be entered into in the future during the term of the
              Loan. Borrower will not modify, amend or otherwise alter the form
              or any of the terms of the Notes Receivable or any other documents
              relating thereto without Lender's prior written consent, except as
              required by law or regulatory agency. Borrower will promptly
              notify Lender of any such modification, amendment or alteration
              required by any law or regulatory agency."

       27. The parties hereto mutually agree that Schedule 6.5 (a) of the Loan
Agreement is hereby amended by adding thereto, the covenants, conditions,
restrictions and easements of record pertaining to the HSR Subdivision, as set
forth on Exhibit "I (6.5(a))", attached hereto and made a part hereof. All
references in the Agreement to Exhibit I shall be deemed to refer to Exhibit I-1
when dealing with the SPR Subdivision and to Exhibit I-2 when dealing with the
HSR Subdivision.

       28. The parties hereto mutually agree that the Loan Agreement is hereby
amended to add thereto Exhibit I-2 which shall relate to the HSR Subdivision
attached and made a part hereof and marked "Exhibit H (I-2).


II.    REAFFIRMATIONS

       1. Nothing contained herein shall be construed in any manner so as to
affect the validity or priority lien of any security interest held by Lender,
its successors and assigns, in any Collateral described in the Loan Agreement.
Borrower acknowledges and agrees that the Note, Loan Agreement, Custodial
Agreement, Lockbox Agreement,



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Assignment, Environmental Indemnification Agreement and all other Loan Documents
(as modified herein) shall remain in full force and effect, unimpaired by this
Amendment and that they are valid, binding and enforceable documents, duly
executed and delivered by Borrower, and that Borrower has no offsets or defenses
to the enforcement of the terms and provisions contained therein.

       2. Borrower, and as applicable, the Guarantor, hereby reaffirm, restate
and incorporate by this reference all of their respective representations,
warranties and covenants as updated hereunder made in the Loan Agreement
(including as amended hereby), as if the same were made as of this date and with
reference to the Loan Agreement as amended hereby. In addition, Borrower (and,
as applicable, the Guarantor) represents and warrants as follows:

              a. This Amendment (and the Note Amendment) has been duly
authorized by Borrower and is the legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its terms subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting creditor's rights and remedies
generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and, as
applicable with respect to the Guarantor, this Amendment is the legal, valid and
binding obligation of the Guarantor, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

              b. The execution, delivery and performance of this Amendment and
the documents, instruments and materials to be delivered in connection herewith
and the transactions contemplated hereby do not and will not result in any
breach of, or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon the Collateral or the Subdivisions pursuant to, any
provision of law, or any indenture, agreement or instrument to which Borrower or
the Guarantor is a party or by which the Borrower or the Guarantor may be bound
or affected except for liens in favor of Lender and the Deeds of Trust.

              c. There are no Defaults or Events of Default pursuant to the Loan
Documents; Lender has fully performed its obligations under the Loan Documents
which Lender is required to perform as of the date hereof, and neither Borrower
nor the Guarantor has any defense, set-offs, claims, counterclaims or
recoupments against Lender or with respect to the Loan.

       3. Borrower and the Guarantor hereby reaffirm their respective
obligations, agreements and undertakings as set forth in the Loan Documents, and
acknowledge that the Indebtedness, or with respect to the Guarantor, the
guaranteed Obligations defined in



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the Guaranty, are the valid, legally binding and enforceable obligations of
Borrower, and the Guarantor, respectively.


III.   CLOSING CONDITIONS AND ADDITIONAL TERMS

       1. The obligation of Lender to enter into this Amendment and, in addition
to all of the other conditions precedent set forth in the Loan Agreement or the
other Loan Documents, to fund any further Advance pursuant to the terms hereof,
shall be subject to the satisfaction of each of the following conditions
precedent by no later than January 15, 2001 (the "Expiration Date").

              a. Simultaneously with the first advance after the Seventh
Amendment Date, Borrower shall pay to Lender a commitment fee equal to $50,000
("Seventh Amendment Commitment Fee").

              b. Commencing with the first Advance after the Seventh Amendment
Date, Borrower shall pay to Lender an advance fee equal to one percent of any
advances over $5,000,000 in aggregate advances ("Advance Fee"). Such Advance Fee
shall be payable at the time of each applicable advance.

              c. Simultaneously with the first Advance after the Seventh
Amendment Date, Borrower shall pay Lender Five Thousand Dollars ($5,000) toward
attorney's fees and costs incurred by Lender in connection with the preparation
of this Seventh Amendment and related documentation.

              d. Lender shall have received from Borrower the original executed
Note Amendment, and a fully executed original or executed counterpart originals
of this Amendment.

              e. Lender shall have received from Ballard Spahr Andrews and
Ingersoll, LLP, Colorado Counsel for the Borrower, Jon Joseph, counsel for the
Borrower and Mego Financial Corp., a New York corporation ("Guarantor"), or
other counsel reasonably acceptable to Lender, closing opinions in form and
substance reasonably acceptable to Lender, dated as of the Seventh Amendment
Date.

              f. Except for information contained in certificates provided
pursuant to Article III(1)(i) hereof, the representations and warranties
contained in the Loan Agreement and in this Amendment, and in the certifications
and closing documents delivered in connection herewith, shall be true and
correct in all material respects, and all covenants and agreements to have been
complied with performed by Borrower (or Guarantor), shall have been fully
complied with and performed to the satisfaction of Lender.



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              g. Neither Borrower nor Guarantor shall have taken any action or
permitted any condition to exist which would have been prohibited by any
provision of the Loan Documents.

              h. No Default or Event of Default shall exist immediately prior to
the closing hereof, or after giving effect to such closing, or immediately after
the making of any Advance requested in connection with such closing.

              i. Lender shall have received a certificate or certificates in
form and substance satisfactory to it, dated as of the Seventh Amendment Date
and signed by the president or other authorized officer of the Borrower,
certifying that the conditions specified in this Amendment have been fulfilled,
and "bringing down" the representations and warranties contained in the Loan
Agreement.

              j. Borrower shall deliver to Lender, and Lender shall have
approved, by no later than the Seventh Amendment Date or Expiration Date:

                     i. A certificate of current good standing for the Borrower,
       together with copies of any amendments to the certificate of
       incorporation or bylaws of the Borrower since November 29, 1996,
       certified to be true, correct and complete by the Borrower, its secretary
       or assistant secretary, or the Nevada or Colorado Secretary of State, as
       applicable;

                     ii. Evidence satisfactory to Lender that all taxes and
       assessments, including without limitation, those specified in Section 4.1
       (q) of the Loan Agreement, owed by or for which Borrower is responsible
       for collection have been paid or will be paid prior to delinquency;

                     iii. A certificate of secretary or assistant secretary of
       Borrower certifying the adoption by the Board of Directors thereof of a
       resolution authorizing specified officers of Borrower to enter and
       execute this Amendment, the Note Amendment and all other documents,
       certificates and instruments to be executed and delivered in connection
       with the Amendment closing, and to consummate the transactions
       contemplated hereunder;

                     iv. A certificate of the secretary or assistant secretary
       of the Borrower certifying the incumbency of, and verifying the
       authenticity of the signatures of, the officers of Borrower authorized to
       sign this Amendment, the Note Amendment and the other documents,
       instruments and materials to be executed and delivered in connection
       herewith;

                     v. A certificate of the secretary or assistant secretary of
       Guarantor certifying the adoption by the Board of Directors thereof of a
       resolution authorizing specified officers of the Guarantor to enter and
       execute this Amendment and all other documents, certificates and
       instruments to be executed



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<PAGE>   12

       and delivered in connection with this Amendment closing, and to
       consummate the transactions contemplated hereunder;

                     vi. A certificate of the secretary or assistant secretary
       of the Guarantor certifying the incumbency of, and verifying the
       authenticity of signatures of, the officers of the Guarantor authorized
       to sign this Amendment and the other documents, instruments and materials
       to be executed and delivered in connection herewith;

                     vii. To the extent any of the same have not previously been
       delivered to Lender, true, correct and complete copies of any amendments
       since the Seventh Amendment Date, to any of the Lot Sale Documents (as
       defined in Section 4.1 [o] of the Loan Agreement) including but not
       limited to those Lot Sale Documents applicable to the HSR Lots, together
       with such copies of any Lot Sale Documents, or required governmental
       permits or licenses obtained, subsequent to the Seventh Amendment Date
       and not previously delivered to Lender; and

                     viii. Such updated litigation and UCC searches as Lender
       may require.

                     vix. An updated Lockbox Account Agreement and/or Blocked
       Account Agreement if deemed necessary by Lender and Lockbox Agent.

              k. All actions taken in connection with the execution or delivery
of this Amendment, all documents, certificates, instruments and materials
relating hereto, shall be reasonably satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of such documents and papers
as Lender or such counsel may reasonably request in connection herewith all in
form and substance satisfactory to Lender and its counsel.

              l. Borrower shall have paid all fees and expenses required to be
paid prior to or at the closing pursuant to this Amendment.


IV.    GUARANTOR'S OBLIGATIONS

       1.     The Guarantor:

              a. has reviewed this Amendment with counsel of its choice, and
accepts and consents to the terms of this Amendment and the transactions
provided for herein;

              b. acknowledges and agrees that it receives material benefit and
valuable consideration as a result of the transactions provided for herein or
contemplated hereunder;



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<PAGE>   13

              c. ratifies and reaffirms the Guaranty, and all of the terms,
provisions, agreements, conditions and undertakings contained in the Guaranty or
any of the Loan Documents (as applicable to the Guarantor), all of which remain
unmodified except as modified herein and in full force and effect;

              d. acknowledges and confirms its continuing obligations under the
Guaranty and agrees to be bound by the terms thereof, and that it has been since
July 31, 1991 and remains liable with respect to the guaranteed Obligations as
defined and provided in the Guaranty;

              e. acknowledges and agrees that the guaranteed Obligations
encompass and apply to all Advances, including Advances from and after the
Seventh Amendment Date, and to all Obligations, including Obligations arising
pursuant to this Amendment;

              f. is fully aware of the financial and other conditions of the
Borrower and the HSR Subdivision, and is executing and delivering this Amendment
based solely upon its own independent investigation and not upon any
representation or statement of Lender;

              g. except for information contained in certificates provided
pursuant to IV(1)(i) hereof reaffirms, restates and incorporates by this
reference all of the representations, warranties and covenants made in the
Guaranty as if the same were made as of this date;

              h. acknowledges that its agreements, consents and acknowledgments
contained herein, and the provisions of the Guaranty (which are reaffirmed by
Guarantor), are a material inducement to Lender to enter into this Amendment,
and that, but for the Guaranty, and the Guarantor's agreements as set forth
herein, Lender would decline to enter into this Amendment; and

              i. shall deliver to Lender a certificate or certificates in form
and substance satisfactory to it, dated as of the Seventh Amendment Date and
signed by the president or other authorized officer of the Guarantor, certifying
that the conditions specified in this Amendment have been fulfilled, and
"bringing down" the representations and warranties contained in the Guaranty.


V.     MISCELLANEOUS

       1. This Amendment is entered into for the benefit of the parties hereto,
and is binding on the respective heirs, successors or assigns; provided that
Borrower may not transfer or assign any of its rights or obligations under this
Amendment without the prior written consent of Lender or as permitted under the
Loan Agreement, as amended. Guarantor is a party to this Amendment solely for
the purposes of affirming its obligations in accordance with Article IV hereof.



                                       13
<PAGE>   14

       2. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Amendment shall become effective upon Lender's receipt of one
or more counterparts hereof timely executed by Borrower, the Guarantor and
Lender. This Amendment may not be amended or modified, and no term or provision
hereof may be waived, except by written instrument signed by the parties hereto.

       3. Section headings have been inserted in this Amendment as a matter of
convenience of reference only; such headings are not part of this Amendment and
shall not be used in the interpretation of this Amendment.

       4. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH OF BORROWER, THE GUARANTOR AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY RIGHT,
POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHER
SOUNDING IN TORT OR CONTRACT OF OTHERWISE, OR WITH RESPECT TO ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY. EACH OF BORROWER, THE GUARANTOR AND LENDER
FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL
CANNOT OR HAS NOT BEEN WAIVED UNLESS SUCH FAILURE TO CONSOLIDATE WOULD RESULT IN
INABILITY TO ENFORCE A CLAIM. FURTHER, BORROWER AND THE GUARANTOR HEREBY CERTIFY
THAT NO REPRESENTATIVE OR AGENT OF LENDER, NOR LENDER'S COUNSEL, HAS REPRESENTED
EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER AND THE
GUARANTOR ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS AMENDMENT AND THE OTHER LOAN
DOCUMENTS.

       5. This Agreement and all other Loan Documents shall be governed by the
laws of the State of Nevada in all respects, including matters of construction,
performance and enforcement, except to the extent that the procedural laws of
the State of Colorado govern the enforcement of any remedy against Collateral or
property located in the State of Colorado, and excluding principles governing
conflicts of laws.



                                       14
<PAGE>   15

       6. Capitalized terms used herein which are not otherwise defined shall
have the meaning ascribed in the Note and/or the Loan Agreement.

       7. Whenever possible, the terms of this Amendment and the terms of all
prior amendments shall be read together, but to the extent of any irreconcilable
conflict, the terms of this Amendment shall govern.

       IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have set their hands and seals the day and year first above written.


ATTEST:                                 BORROWER:
                                        PREFERRED EQUITIES CORPORATION

   /s/ [Signature Illegible]            By:   /s/ GREGG McMURTRIE
-----------------------------              -------------------------------------


                                        COLORADO LAND AND GRAZING
                                        CORP.

   /s/ [Signature Illegible]            By:   /s/ GREGG McMURTRIE
-----------------------------              -------------------------------------


                                        GUARANTOR:
                                        MEGO FINANCIAL CORP.


   /s/ [Signature Illegible]            By:   /s/ CHARLES BALTUSKONIS
-----------------------------              -------------------------------------


                                        LENDER:
                                        DORFINCO CORPORATION

   /s/ [Signature Illegible]            By:
-----------------------------              -------------------------------------


The address of the within named Lender is:
40 Westminster Street
P.O. Box 6687
Providence, Rhode Island 02940-6687

-------------------------------
on behalf of Lender



                                       15
<PAGE>   16

                            CORPORATE ACKNOWLEDGMENT

STATE 0F   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
GREGG McMURTRIE, who acknowledged himself to be the EXEC. VICE PRESIDENT of
PREFERRED EQUITIES CORPORATION, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of
the corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public


My commission expires:
                                            ===================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ===================================



                            CORPORATE ACKNOWLEDGMENT

STATE OF   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
GREGG McMURTRIE, who acknowledged himself to be the PRESIDENT of COLORADO LAND
AND GRAZING CORP., being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation by
himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public


My commission expires:
                                            ===================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ===================================



                                       16
<PAGE>   17

                            CORPORATE ACKNOWLEDGMENT

STATE OF   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
CHARLES BALTUSKONIS, who acknowledged himself to be the SR. VICE PRESIDENT of
MEGO FINANCIAL CORP., being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public


My commission expires:                      ====================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ====================================



                            CORPORATE ACKNOWLEDGMENT

STATE OF             :
        -------------
COUNTY OF            :
        -------------

       ON THIS, the ___ day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
_________________, who acknowledged himself to be the _____________________ of
DORFINCO CORPORATION, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                            -----------------------------------
                                            Notary Public


My commission expires:



                                       17
<PAGE>   18

                                    EXHIBITS


<TABLE>
<S>                   <C>
EXHIBIT A             REVISED LOT SCHEDULE 1.1 (gg)

EXHIBIT B             EXHIBIT M-3 DEED OF TRUST

EXHIBIT C             EXHIBIT L-4 PROMISSORY NOTE/EXHIBIT L-5
                      PROMISSORY NOTE

EXHIBIT D             EXHIBIT N-3 WARRANTY DEED

EXHIBIT E             EXHIBIT 4.1 (p) LIENS AFFECTING LOTS INCLUDING HSR

EXHIBIT F             EXHIBIT H.3 ASSIGNMENT OF NOTES RECEIVABLE - HSR
                      LOTS

EXHIBIT G             EXHIBIT H.2-3 ASSIGNMENT OF DEED OF TRUST

EXHIBIT H             EXHIBIT I-2 HSR SUBDIVISION RESTRICTIONS
</TABLE>



                                       18
<PAGE>   19

                                    EXHIBIT A

                          REVISED LOT SCHEDULE 1.1 (gg)



                                       19
<PAGE>   20

                                    EXHIBIT B

                            EXHIBIT M-3 DEED OF TRUST



                                       20
<PAGE>   21

                                    EXHIBIT C

             EXHIBIT L-4 PROMISSORY NOTE/EXHIBIT L-5 PROMISSORY NOTE



                                       21
<PAGE>   22

                                    EXHIBIT D

                            EXHIBIT N-3 WARRANTY DEED



                                       22
<PAGE>   23

                                    EXHIBIT E

               EXHIBIT 4.1 (p) LIENS AFFECTING LOTS INCLUDING HSR



                                       23
<PAGE>   24

                         EXHIBIT F TO SEVENTH AMENDMENT
                                   EXHIBIT H-3

                    COLLATERAL ASSIGNMENT OF NOTES RECEIVABLE
                             (HARTSEL SPRINGS RANCH)


       AGREEMENT, made and executed this ____ day of ____________ ___, between
PREFERRED EQUITIES CORPORATION, a Nevada corporation ("Borrower") and DORFINCO
CORPORATION, a Delaware corporation ("Lender").

                              W I T N E S S E T H:

       WHEREAS, Borrower and Lender have entered into a Loan and Security
Agreement, dated as of August 9, 1991, as amended, (the "Loan Agreement"),
pursuant to which it is contemplated that Lender will lend an amount not to
exceed $7,500,000.00 (the "Loan") on a revolving basis to Borrower to be secured
by a lien and security interest granted by Borrower to Lender in respect to
certain Notes Receivable (the "Pledged Notes Receivable") of which Borrower is
the payee. The Pledged Notes Receivable are to be delivered to Custodian.

       NOW, THEREFORE, to secure the payment of the Indebtedness owed by
Borrower to Lender under the Loan Agreement and the performance of all
obligations owed by Borrower to Lender under the Loan Agreement, and in
consideration of the extension of the Loan to Borrower, Borrower hereby, subject
to all conditions, representations and warranties, covenants and obligations of
Borrower under the Loan Agreement, conveys, assigns, transfers and sets over
unto Lender all of its right, title and interest in and to the Pledged Notes
Receivable set forth on SCHEDULE "A" HEREOF, together with all of Borrower's
right, title and interest in and to the following (together with the Pledged
Notes Receivable collectively the "Collateral"):

              All amendments, extensions, renewals and replacements of, and
       substitutions for, the Pledged Notes Receivable;

              All proceeds (cash and non-cash), property, property rights,
       privileges and benefits pertaining to, or arising from the enforcement
       of, the Pledged Notes Receivable, including, without limitation, proceeds
       in the form of all funds held in any accounts pursuant to any agency or
       lockbox agreement or similar arrangement related to any of the Pledged
       Notes Receivable to the extent such funds represent or arise from any of
       the foregoing, accounts, accounts receivable, chattel paper, contract
       rights, general intangibles and other receivables arising under or
       arising in connection with the Pledged Notes Receivable, instruments and
       documents, and all payments made from time to time on the Pledged Notes
       Receivable in whatever form, including cash, checks, notes, drafts and
       other instruments for the payment of money, all property returned by or
       reclaimed or repossessed from Account Debtors, all rights of foreclosure,
       termination, repossession, dispossession, all documents, instruments,
       contracts, liens and security instruments and guaranties relating to the
       Pledged Notes Receivable, all collateral, security deposits, tax escrows
       (to the extent the same may be pledged under applicable law) or other
       security securing the obligations of any Person under or relating to the
       Pledged Notes Receivable;



                                       24
<PAGE>   25

              Documents, instruments, pledged assets and chattel paper relating
       to the Pledged Notes Receivable; and

              All books, records, computer tapes and disks summarizing or
       evidencing the Collateral.

       Borrower hereby warrants and represents to Lender that, to the extent the
Collateral assigned hereby constitutes Primary Collateral, it is held and owned
by Borrower free and clear of all prior liens, security interests, charges and
encumbrances. Borrower covenants and agrees with Lender not to take any action
with respect to the Collateral which may be prejudicial to the rights of Lender
hereunder except actions which are specifically permitted under the Loan
Agreement.

       All capitalized used herein, but not defined herein, shall have the
meanings assigned to them in the Loan Agreement.

       This assignment shall be binding upon the Borrower and its successors and
assigns, and shall inure to the benefit of Lender and its successors and
assigns. This instrument is governed by and shall be construed under the laws of
the State of Colorado.

       IN WITNESS WHEREOF, Borrower has duly executed this Collateral Assignment
of Notes Receivable as of the date first written above.

                                        Borrower:

                                        PREFERRED EQUITIES CORPORATION, a
                                        Nevada corporation



                                        By:
                                           -------------------------------------


                                        Its:
                                            ------------------------------------

STATE OF ___________________ }
                             }  ss.
COUNTY OF __________________ }

       On _______________ ______, personally appeared before me, a notary
public, personally known (or proved) to me to be the person whose name is
subscribed to the above instrument (Collateral Assignment of Notes Receivable)
who acknowledged that he/she executed the above instrument.



                                        ------------------------------------
                                                   Notary Public



                                       25
<PAGE>   26

                         EXHIBIT G TO SEVENTH AMENDMENT
                                  EXHIBIT H2-3

                          ASSIGNMENT OF DEEDS OF TRUST
                             (HARTSEL SPRINGS RANCH)

       FOR VALUE RECEIVED, the undersigned, PREFERRED EQUITIES CORPORATION,
hereby grants, assigns and transfers to DORFINCO CORPORATION, a Delaware
corporation, all beneficial interest in, to and under those certain Deeds of
Trust (and the Promissory Notes secured thereby), listed on EXHIBIT "A" attached
hereto and made a part hereof, executed by Borrowers, as grantor to The Public
Trustee of Park County, Colorado, as Trustee recorded, as set forth on EXHIBIT
"A", in the official Records in the office of the Clerk and Recorder of Park
County, State of Colorado.

       TOGETHER, with the note or notes therein described or referred to, the
money due and to become due thereon with interest, and all rights accrued or to
accrue under said Deeds of Trust.

       Dated this _____ day of __________ __________.

                                        PREFERRED EQUITIES CORPORATION,
                                        a Nevada corporation


                                        By:
                                           -------------------------------------

                                        Name:
                                             -----------------------------------

                                        Title:
                                              ----------------------------------



                                                 -------------------------------
STATE OF NEVADA }                                 Escrow No. __________________
                } ss.                             WHEN RECORDED MAIL TO:
COUNTY OF CLARK }
                                                  Preferred Equities Corporation
On _________________, ______, personally          4310 Paradise Road
appeared before me, a notary public,              Las Vegas, NV 89109
______________________________, personally        Attention:  Mark Prasse
known to me to be the person whose name is
subscribed to the above instrument who
acknowledged that he executed the above
instrument.


------------------------------
NOTARY PUBLIC



                                       26
<PAGE>   27

                                    EXHIBIT H

                    EXHIBIT I-2 HSR SUBDIVISION RESTRICTIONS



                                       27