SMARTFINANCESOLUTIONS.NET - Crazy Loan Modification I need help understanding this?

Find the best financial services for you at: SMARTFINANCESOLUTIONS.NET - Crazy Loan Modification I need help understanding this? - My girlfriend filed chapter 7 about three years ago. In her chapter 7 everything was included but her car. The house was not reaffirmed it was discharged in the bankruptcy. The crazy thing is the bank contacted her and asked her if she would like to modify her mortgage so she can continue to stay in the house. The terms of the modification states very clearly that she has no legal or financial obligation to the house anymore because of the bankruptcy. It also states that sense the house was discharged in Federal Bankruptcy count the bank can no longer come after her if she decide at any point she didn't want to live in the house anymore. It does ask that she give them ample notice when she decides to move so they can secure it and get it get to put on the market.
The modification was the original mortgage monthly amount plus and arrears. Her payment went up about $300 more per month. She called her lawyer and ask him was there anything the bank could do to her if she leaves the house. The lawyer said the bank could foreclose on her in a worst case.
That don't sound right to me, she has papers from the bank clearly stating to terms of her modification. I told her she's renting the house from the bank and no longer is the owner.
The other question is what about the deed to the place its still in her name how do she deal with that?
Any Professional help or and one with first hand knowledge of want to do please help.

NOTE: The mortgage was never rewritten, it shows on her credit report as DISCHARGED IN BANKRUPTCY It's been at least 2 years since the chapter 7 was discharged and she still lives in the house. -