In a short sale your offer is really made to the Seller and they have to accept your offer, which will be contingent upon what the Seller's bank will accept. If you really need to have your closing cost covered this should, ideally, have been in your original contract offer.
Once the seller accepts the contract it is submitted to the seller's lender. They will review the offer and Title/Escrow will prepare a HUD (closing statement) showing the Seller's lender how much fees and how much money the seller's lender is writing off. That lender then submits to the "powers that be" for approval. If they don't like what they see then then counter back to the Seller. Who counters back to you. When you make changes to the contract this upset's the flow and can put the file at the bottom of the stack and delay your approval.
Talk with your agent and lender so that you have a contract you can perform to.
Executed sale purchase contract between you and buyer governs release of earnest money held in escrow by the title company. Title company can not release money till all parties have signed amendment, however both parties MUST comply with contract.
It is the buyers agent who has forward an amendment cancel sales purchase not the loan officer who has no authority over the contract.
Speak with your listing agent determine what is your recourse. Buyer could be sued if they have no cause not too close just changed their mind in purchasing. Now if lender determine not qualified for a loan, then earnest money may have to be returned.