I am very sympathetic, because we face a similar situation with both our mothers. Except neither of them have any home equity...just total poverty and psychological issues that promote in one case, passivity, and in the other, active self sabotage.
Before really making a move to help, we had to think about each case, and how much we could do to stabilize the situation. I would recommend not only considering practical things like what you can actually afford, but also what kind of psychological and time-sink toll your plan might entail. In our case, we have essentially taken on more than half the support of one parent (bought a second house to give her a place, gave her our car and bought a new one, pay all her utilities, etc.) It was a long and unpleasant period of YEARS to put this plan in place, and convince her she was close to the end of her options because she had to uproot, move to a town she didn't want to live in, become totally accountable for her spending etc., in exchange for low stress, no bill collectors, and a guaranteed roof over her head. This costs us 7-10k/year out of pocket, which don't get me wrong, really really sucks. I resent it and it has somewhat affected my formerly happy relationships with other family members, but overall it has completely stabilized the situation for my mother, and the multi-relationship fallout is sad but manageable.
On the other hand, my mother in law is similar to your situation in terms aggressively bad decision making, mooching relatives, etc. Also, she's completely uncooperative and unaccountable and would never agree to a plan and stick to it. She's in another state and we have almost no direct contact. So with her, we budget 3-5K/year 'emergency bail out' money; and then we wait for the quarterly phone calls begging for cash to stem the current disaster. Then we cut a check and stop thinking about it until the next call. In that case, it is much less stressful to just send that cash into a black hole and pretend we never had it, than to try to intervene directly in a situation that is unstable and that we can't rely on her to stabilize under any conditions.
So there you go...two different approaches within the same household!