Is the person negotiating my short sale required to have credentials to do so? Is it considered fraud if they do not?
This is an excellent question. Some states now require that anyone practicing loss mitigation (short sales negotiations are included in the definitioin of loss mitigation) be a liscense Real Estate Agent, attorney or non profit organizaion. Certainly you want someone with a lot of experience regardless. This is not a cookie cutter process as there are lots of twist turns and exceptions.
Be very careful. If you don't trust the person then trust your instinct and get some professional help. Interview them to make sure they really know what they are doing and have many years of experience under their belt.