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In this tutorial, the speaker discusses the importance of a hardship letter when applying for a loan modification versus options like a deed in lieu or short sale. For a loan modification, the letter should convey that while you experienced financial hardship, you have since recovered and are now in a good financial position. This aims to reassure the bank of your ability to manage payments. Conversely, if seeking relief from debt through a short sale or deed in lieu, the letter should emphasize that you have not recovered and that mortgage payments are unaffordable. Understanding these different purposes is crucial before drafting your letter.