Disclaimer: The material provided below are informational and should not be relied upon as legal advice.
The death of the obligor does not affect the her/his obligations. To the extent the debt was secured, the security remains in effect. As well, estate of the deceased will be liable for any deficiencies. Be sure to consult your own attorney to protect your legal rights.
I agree with Mr. Mashal. The lender still has the right to enforce the promissory note. If the estate of the deceased family member fails to pay, the lender may have the right to foreclose on the security (that is, force the sale of the house if the promissory note was secured by a RECORDED deed of trust) or file a collection suit.
Be aware, though, that certain "statutes of limitations" may apply to the ability to collect on an unsecured loan. You need to contact an attorney immediately if you want to be sure you can enforce your claim.
The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.
As to the issue of what happens when the borrower dies I agree with the other attorneys. However, it sounds as you may be asking about what happens when the family member who dies is the lender. The right to collect passes to the heir (or whoever is listed as the beneficiary in the will) when the lender dies. The promissory note and security interests are still effective. You just have a new lender.