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In this tutorial, the speaker discusses the significance of the hardship letter when applying for a loan modification versus a short sale or deed in lieu. For a loan modification, the letter should convey recovery from past financial hardship, demonstrating a solid current financial position. This approach is essential for convincing the lender to allow a repayment plan to retain the home. Conversely, if seeking relief from debt through a short sale or deed in lieu, the emphasis should be on the ongoing nature of the financial hardship, indicating the mortgage payments are unaffordable. Understanding these differences is crucial before drafting the hardship letter.