In our closing documents (we use Laser Pro), it states in our Note that the loan would automatically go into default upon the death of a guarantor. We have a borrower who is wanting us to remove that and stipulate that we provide written notice and time frame to cure before we put the loan in default.

Has anyone ever heard of this?

It's perfectly okay to put it into default upon the death of the guarantor, correct?

That depends on state law. Some states place limits on events of default.