We have been making payments interest only for more than 2 years, more like renting the property. The property value has decreased more than 35% but would the same mortgage company deal with us to make a new mortgage loan to reflect the lesser value? Stuck in limbo, not sure what to do.
No, it will not. Since it was discharged, the only negative effect is that the mortgage company will eventually foreclose on the property. This will not affect your credit score, but many mortgage companies will not give you a mortgage on a new house until a year has passed since the foreclosure date. Also, you will have to pay any HOA fees until the foreclosure, and you need to take steps to make sure there is valid insurance on the property until then as well.
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You're asking two separate questions in one.
First, will your credit score drop? My answer is, is your credit score improving? Most bank's don't report that you're making payments, so they can't report that you're not. Find this out and you find your answer.
The second question, can you get a loan mod? Maybe. Discuss this with your bank.
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Family Law Attorney
I don't believe your score will "drop" since the bankruptcy already took care of that and wiped out the delinquent scores anyway. I do not, however, believe your score has risen because of your continued payments since the debt obligation was discharged, and the bank stopped reporting on your payments anyway. I doubt you'll get a loan mod since (a) your loan obligation was eliminated, and (b) the bank will probably not want to deal with you anyway. You can always, however, inquire.
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No, leaving the property will not effect your credit report since you do not have a mortgage or owe anyone money. You may be liable for HOA fees (if you have a homeowner's association) and should consider keeping current homeowners insurance on the property until the house is out of your name. An attorney can help with that.
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Divorce / Separation Lawyer
Since the debt was discharged, moving should not alter your credit score. You can seek a modification, but may or may not acheive the particular modification you seek.
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Insurance Law Lawyer
I agree with my colleagues. However, you should request a statement of payment history from your lender and then send that to the credit bureaus so that your mortgage payment history is reported.