what would you do if someone was bad mouthing a family member because of a refusal to give them the equity in your home to placate a baby mama?

I am dealing with this.

Do I confront this person about saying crappy things and total lies about a family member?

Do I stay silent to not fuel the fire?

Yes, there are children involved and it involves a divorce (not mine).

I feel like this is so weird and I don't want to see a family member get scammed by the sketchy baby mama.

WTF gives her the right to think she is entitled to someone's assets (a senior citizen)

Basically, if she does not give them the money and pick put a cardboard box to live in, then she cannot see the children.

This is EVIL