Exhibit 10.2

When recorded, return to:

Andrew Abraham, Esq.
Burch & Cracchiolo, P.A.
702 East Osborn Road, #200
Phoenix, Arizona 85014

                          FIRST MODIFICATION AGREEMENT

DATE:    September _________, 2001

PARTIES: The Steele Foundation, Inc., an Arizona non-profit corporation
         702 East Osborn Road, #200
         Phoenix, Arizona 85014
         ("Lender")

         ILX Resorts Incorporated
         2111 E. Highland Ave., Suite #210
         Phoenix, AZ  85016
         ("Borrower")

     This  Modification  Agreement (the "Agreement") made effective the date and
year set forth above,  is entered into by and between  Lender and  Borrower,  as
identified above.

RECITALS:

A. On or about  February 23, 2000,  Borrower  executed and delivered to Lender a
Promissory  Note in the original  principal  amount of Six Hundred  Thousand and
NO/100 Dollars ($ 600,000.00) (the "Note").  The Note is secured by, among other
things:  (i) a Pledge  Agreement dated February 23, 2000 (the  "Pledge"),  which
Pledge  grants a security  interest in Wedbush  Morgan  Securities,  Account No.
4398-3106    (the    "Stock")   and   by   the    collateral    assignment    of
Borrower's/Consenting  Parties'  right  in  each  of  the  Resort  Funding  Inc.
contracts (`Contracts");  and (ii) other security documents executed by Borrower
and  delivered to Lender in connection  with the loan (the "Loan")  evidenced by
the Note (for purposes of this  Agreement,  the Note,  Pledge and other security
documents  described  herein may  collectively  be referred  to as the  "Related
Agreements").

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STEELE/ILX
First Modification Agreement
<PAGE>
B. Borrower has  requested an  additional  advance in the amount of Five Hundred
Thousand  Dollars  ($500,000.00)  and an extension  of the Maturity  Date of the
Loan,  and Lender has agreed to advance the  additional  funds and to extend the
Maturity Date of the Loan, provided the other terms hereof are complied with.

C. It is the  desire of the  parties  to permit a  modification  of the Note and
Pledge upon the terms and conditions hereinafter contained.

     NOW,  THEREFORE,  in consideration of the mutual covenants,  conditions and
promises  contained  herein,  and for the  purposes  set forth in the  foregoing
recitals which are  incorporated  herein by reference,  the parties covenant and
agree as follows:

     1. REPRESENTATIONS AND WARRANTIES. By signing this Agreement:

          a. Borrower  represents  and warrants to Lender that:  (i) Borrower is
     authorized  and empowered to enter into this  Agreement;  and (ii) Borrower
     has  had a full  and  complete  opportunity  to  review  and  examine  this
     Agreement.

          b. Borrower  acknowledges that, as of the date of this Agreement,  the
     outstanding principal balance under the Loan is $ 261,667.79, that interest
     and  principal  have been paid  through  September  1,  2001,  and that the
     present Maturity Date of the Loan is September 1, 2002.

          c. Borrower  confirms  that no Event of Default,  as defined under the
     Related  Agreements,  has occurred under the Loan and no event has occurred
     or condition  exists that,  with notice  and/or the passage of time,  would
     constitute an Event of Default under the Loan.

          d.  Borrower  ratifies,  reaffirms and  acknowledges  that the Related
     Agreements  represent its valid,  enforceable and collectible  obligations,
     and that there are no existing claims,  defenses (personal or otherwise) or
     rights of set-off with respect to the Note or the other Related Agreements.

          e. Borrower acknowledges that this Agreement does not act as a release
     or relinquishment of, or otherwise affect, the lien,  security interest and
     rights  created  by or  arising  under the  Pledge  and the  other  Related
     Agreements,  or the priority thereof, except as expressly described herein.
     Such lien,  security  interest and rights are hereby  ratified,  confirmed,
     renewed and extended in all respects.

          f.  Borrower  acknowledges  and agrees  that,  without  affecting  its
     liability,  obligations  and agreements  under the Note, the Pledge and the
     other Related Agreements, as modified hereby, the Lender, at its option, at
     any time and from time to time,  may extend or further modify the terms and
     amounts  of  payments  under  the  Note,  accept  a  renewal  note or notes

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STEELE/ILX
First Modification Agreement
<PAGE>
     therefor,  modify  the  provisions  of the  Pledge  and the  other  Related
     Agreements,  release  any of the  Collateral,  or take or release  other or
     additional  security  for the Note,  without  consent from or notice to the
     Borrower  except to the extent  that its  signature  may be  required  as a
     matter of law on the documents  evidencing such of the foregoing actions as
     may be taken.

     2.  MODIFICATION  OF PROMISSORY  NOTE.  Effective as of the date hereof the
terms of the Note are modified as follows:

          a. The  principal  amount of the Note as set forth on the face thereof
     is hereby  increased  to $  761,667.79,  which  represents  an  increase of
     $500,000 over the current outstanding principal balance of $ 261,667.79.

          b.  Paragraph 1 of the Note shall be deleted in its  entirety  and the
     following substituted in lieu thereof:

          " 1. PROMISE TO PAY PRINCIPAL AND INTEREST.  Borrower  promises to and
          shall pay Lender in monthly  installments of principal and interest in
          an amount of $23,248.87,  beginning on October 1, 2001, and continuing
          on the first day of each month through December 1, 2004 ("maturity" or
          the  "Maturity  Date").  Pursuant to the terms of the Loan  Commitment
          Letter dated February 23, 2000 (the "Commitment"), interest is charged
          at the rate of Twelve Percent (12%) per annum (the  "Contract  Rate").
          On or  before  December  1,  2004,  Borrower  shall  have  repaid  all
          principal due hereunder,  totaling an amount of $ 761,667.79, plus all
          interest  due  thereon.  In the  event  the  Stock  or  Contracts  are
          liquidated or otherwise  transferred or encumbered as prohibited under
          the Commitment and Pledge  Agreement,  Borrower  promises to and shall
          immediately pay Lender the principal sum and all accrued interest then
          outstanding.  In the event Borrower  breaches any term or condition of
          the Loan Commitment  Letter dated February 23, 2000,  between Borrower
          and Lender,  Lender may, at the Lender's option,  declare all sums due
          hereunder  immediately  due and payable.  The entire unpaid balance of
          the principal and  interest,  if not sooner paid,  shall be and become
          due and payable at maturity. "

All  references  to the Related  Agreements  are hereby  amended to refer to the
Related Agreements as amended by this Agreement. All other terms, conditions and
provisions of the Related  Agreements are continued in full force and effect and

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STEELE/ILX
First Modification Agreement
<PAGE>
shall remain  unaffected and unchanged  except as  specifically  amended by this
Agreement. The Related Agreements will continue to secure the obligations of the
Borrower under the Loan as amended hereby.

     3.  CONDITIONS OF LOAN  MODIFICATION.  This Agreement  shall not be binding
upon or enforceable against Lender, until:

          a. All parties identified herein execute this Agreement.

          b.  Borrower  shall  pay legal  expenses  of  Lender  incurred  in the
     negotiation and  documentation of this Agreement in an amount of $2,500.00;
     and,

          c. Lender shall have received and approved such other documentation as
     may be reasonably requested by Lender or its legal counsel,  which shall be
     in all respects  satisfactory to Lender and its counsel,  in their sole and
     absolute discretion.

     4.  MISCELLANEOUS.  Nothing  contained  herein  shall in any way impair the
Note, the Pledge,  any of the other Related  Agreements or any other document or
instrument which evidences or secures the same, nor alter,  waive,  annul, vary,
or affect any  provision,  condition or covenant  therein  contained,  except as
expressly provided herein, nor affect nor impair any rights,  powers or remedies
under the Note,  the Pledge,  any of the other  Related  Agreements or any other
document  now or hereafter  held by Lender,  it being the intent of Borrower and
Lender  that all of the terms and  provisions  of the Note,  the  Pledge and the
other  Related  Agreements  shall  continue  in full force and effect  except as
expressly  modified by this  Agreement or any other  instrument  executed by and
between the parties hereto.  In the event of a conflict between the terms of the
Note,  the Pledge,  and/or the other  Related  Agreements  and the terms of this
Agreement,  the terms of this Agreement  shall prevail.  This Agreement shall be
governed by the laws of the State of Arizona.  Paragraph  headings  are inserted
herein for  convenience  only and shall not limit the content of any  paragraph.
This Agreement shall be construed in accordance with its plain meaning and shall
not be strictly  construed against either of the parties hereto.  The provisions
hereof shall be binding  upon and inure to the benefit of  Borrower,  Lender and
their heirs, devisees, successors in interest and assigns. This Agreement may be
executed in counterparts  and each such counterpart when taken together with all
other counterparts shall be deemed one and the same original document.

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STEELE/ILX
First Modification Agreement
<PAGE>
     IN WITNESS WHEREOF,  the parties hereto have entered into this Agreement as
of the day and year first above written.

                                        LENDER:

                                        THE STEELE FOUNDATION, INC., AN ARIZONA
                                        NON-PROFIT CORPORATION


                                        By:
                                           -------------------------------------
                                           DANIEL CRACCHIOLO, PRESIDENT


                                        BORROWER:

                                        ILX RESORTS INCORPORATED, AN ARIZONA
                                        CORPORATION


                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------

     The following, as Consenting Partners hereby acknowledge and consent to the
terms set forth above:

                                        LOS ABRIGADOS PARTNERS LIMITED
                                        PARTNERSHIP, AN ARIZONA LIMITED
                                        PARTNERSHIP

                                        By: ILE SEDONA INCORPORATED, AN ARIZONA
                                            CORPORATION, ITS GENERAL PARTNER


                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


                                        PREMIERE DEVELOPMENT INCORPORATED,
                                        AN ARIZONA CORPORATION


                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------

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STEELE/ILX
First Modification Agreement
<PAGE>
                                        VCA SOUTHBEND INCORPORATED, AN ARIZONA
                                        CORPORATION


                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------


                                        VCA TUCSON INCORPORATED, AN ARIZONA
                                        CORPORATION


                                        By:
                                           -------------------------------------
                                        Its:
                                            ------------------------------------

STEELE/ILX
First Modification Agreement

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