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In this tutorial, the speaker discusses the purpose of a hardship letter when applying for a loan modification versus other options like a deed in lieu or short sale. For a loan modification, the letter should convey that, despite previous financial hardships, the applicant has since recovered and is in a stable financial position. In contrast, if seeking a short sale or deed in lieu, the letter should emphasize ongoing financial difficulties and demonstrate that mortgage payments remain unaffordable. Understanding these distinctions is crucial before drafting the hardship letter.