I am a firm believer that everything happens for a reason. Your sister-in-law is in your life for a reason. How is her overall attitude towards life? Does she have a job? What happened to her that she has to wait Public Housing? What happen to the kids that they are acting out so much? It sounds as though she and the kids have been badly abused on an emotional or physical level, or maybe both. Children are very sensitive to their parent's energy/emotions..
Is your sister-in-law receiving any counseling? How about the kids?(Especially the kids).. Those babies are screaming for attention.. Have you and your husband spent time with the kids alone? How do they act? They don't trust people right now, and you and your husband have to give them a reason to trust again..
It sounds as though everybody in your household needs guidance..You and your husband need to outsource help for your sister-in-law and her kids. You can't do it on your own..Just the fact that your SIL is allowing you to correct her children says alot.. She really needs help on many levels.. She might be suffering from severe depression, and might not be able to function on a level where she is being truly beneficial to herself and her children..
While she is living with you, as a family, you should be supporting one another. Encourage her to go to counseling, back to school, and help her feel better about herself. She might see the relationship that you and your husband have, and ponder why she doesn't have a relationship like that.. That could be depressing enough..
If she receives the tools to help her get back on her feet, you might see a grand transformation,which would be great for her and her kids. Maybe she won't have to utilize public housing.. Maybe when you and your husband need a babysitter, so you can go out on your weekly date, you will have a great person to rely on..
In this lifetime, we are here to become better people/spirits, and we are here to help others, but only if they allow us.. If your SIL does not want your help, and you feel she is an unfit mother, you and your husband might have to make decisions that will benefit your nephews.. Remember, at the end of the day, they did not choose this lifestyle, and they are truly victims of this circumstance..
You are in my prayers my friend.. Especially your nephews..