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In this video tutorial, the speaker discusses the purpose of a hardship letter when applying for a loan modification versus a short sale or deed in lieu. For a loan modification, the letter should convey that while the applicant experienced financial hardship, they have since recovered and are in a good financial position. Conversely, when seeking a short sale or deed in lieu, the hardship letter should emphasize the applicant's ongoing financial struggles and inability to afford mortgage payments. Understanding these distinctions is crucial before drafting the letter to effectively communicate the intended message to the lender.