Are you sure you filed a Chapter 7 and not a 13?
Generally speaking, you can keep your home during a Chapter 7 case so long as you "reaffirm" the debt to the mortgage company during the case. This means you contact the mortgage company and tell them you want a "reaffirmation agreement," then they will send you one and you sign it, they sign it, and you file it with the court. This reaffirmation agreement puts you back on the hook legally for the mortgage debt, but lets you keep your home. In other words, it allows the mortgage to pass through the bankruptcy unscathed.
There are a couple of roadblocks to this though: (1) If you are not current on your mortgage payments, the mortgage company will usually not allow you to reaffirm the debt. So, generally people in Chapter 7 must be current on mortgage payments to be able to keep a home in a Chapter 7. (2) If you have too much equity in the home, the Bankruptcy Court may seek to sell the home. In other words, each State says how much equity in residential real estate a person who files bankruptcy in that State may protect. If you go over this amount, the Bankruptcy Court can sell the home to get that unprotected equity to give to your creditors.
So, to keep a house in Chapter 7 you have to be current on the mortgage and check and be sure you are within the amount of equity you are allowed to have in your State. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts and law.
The reference to the lift of stay usually occurs during a Chapter 13, where the homeowner agrees to make payments to the bank. If you don't stay current in your payments the bank will file a lift of stay to be able to sell the home. If you are behind and file a Chapter 13 you can halt the sale of the home, but if you want to keep the home you have to start making payments again. You have to stay current on these payments or the bank will file a lift of stay and begin foreclosure.
The banks are supposed to do an assignment of mortgage before filing a foreclosure, you should speak with a foreclosure attorney right away. Once the debt is discharged you will no longer owe on the debt, but you will also lose the home.