What happens when a parent on Medicaid holds a mortgage dies

[Cris Dahlgren]

If this is the wrong Category please correct it.  I am asking for a friend who was buying a house with a loan from his mother.  What happens when someones parent holds the mortgage on a property, has to go in a nursing home on medicaid and then dies.  I understand the mortgage does not die with them but there is no one to make the payments to.  The person with power of attorney loses that.  There is no reason for next of kin to probate the estate as the mortgage is the only property and all funds will go to Medicaid Recovery.  The Medicaid people are certainly made aware of the death by the Nursing home.  There then are no funds to pay for the probate.  Is there a time limit that the Medicaid Recovery people have to start the probate?  Does the Note then become dormant? Can it be "abandoned" for lack of a better word?