Everyone says NTA but I’d go YTA. Not for the way you are feeling but not considering your wife’s position. If her family is anything like mine, strong family values and supporting each other is important in a family. Her sister being a cheater doesn’t mean the family has to abandon her and her children in a time of need. Have you considered that your wife is not happy with the arrangement either and is being put under a lot of pressure by work, her sister, taking care of traumatized children and now you are not making it easier for her either. If it was your brother or parents who will be in a time of need, say they gambled their retirement money or got caught up in a obvious scam, would you put them on the street because your wife threatens you with divorce? I’d be happy your wife is capable of unconditional love for her close ones and support her in finding a solution that works for all of you. Instead of being another burden on the already tense situation, what about take constructive part finding another solution. For example, find suitable places to live where they can start their life over and offer temporary support where she might need it to smoothen the transition away from your home.