Cathy,
Oh my. You poor dear. Sorry you are caught in the middle of this.
It sounds like your husband's children did not receive the love, discipline (that's discipline, not punishment), and attention that they needed growing up. Their mother sleeps all day - well that's a tell-tale sign. She needs to see someone for physical and mental health problems. I wouldn't suggest it to her though if I were you.
Sounds like the whole family needs to go counseling/mediation. Get out all of the pent up thoughts so that everyone knows why everyone is feeling the way they do - all in a respectful manner. That means no one blame others for why they feel miserable. Explain: "I am unhappy because... I would like..." Your husband needs to tell his children that he loves them and explain that he left his ex-wife and not them. He wanted a better life for himself AND for them. You didn't come into their life to destroy it. You came into your husbands's life because you love him. You care for your step-children because you love your husband and these are his children. Because they are a part of his life, they are a part of yours. As his wife, you are co-responsible for their upbringing in the home you share with him. I don't imagine that you say disrespectful things about the step-children's mother in front of them. It's a different relationship than that with your own children, but it is a loving relationship. Let them know that you care for them. You have rules in your home because rules are made so that everyone can get along in a peaceful manner. Discuss the rules with them. Ask them what it is about the rules that they do not like. Explain to them what the rule is for and why it is in place. Ex.: We keep the house clean so that our house does not attract pests and is not a fire hazard. A clean house promotes peace of mind, a relaxing place to come home to, a healthy place to live, and allows ease in finding what is needed. Another example: We talk to each other politely so that we show that we care for and love each other. Maybe negotiations can be made in some of the rules.
The same would go for trying to motivate your step-son to take control of his life. "I would like to see you learning at school, working a job to support yourself, etc. because I care about you and hope for you to have a good life." You and your husband can ask him what his plans are, what he is thinking, how he feels. Ask him what kind of help he needs to be able to be on his own. And I'm not talking about financial help. He is at the age of maturity. He is not mature, but he is past the age to be able to support himself. Does he know how to balance a checkbook, make a budget, cook, clean, etc.? If not, make a list together with him of the things he needs to be able to do to take care of himself. Set a deadline as to when he needs to be out of your house and on his own. Then the three of you get to work on him learning how to support himself. He should be at the lead of that. Asking questions. When the deadline arrives he needs to be shown the door. Hopefully this occurs in a loving manner so that he will feel welcome and loved when he returns to visit. Hopefully there are hugs and kisses at that door. Handshakes, pats on the back, and words of "Good Luck" and "I love you."
You and your husband are each others number one priority. (I disagree with Ruby. You are a couple first. The children come second. But that is a very close second. Children do not come first in a family, couples do. Then they choose to have children. Together they raise their children. Then the children leave the home to be single or to eventually enter a relationship of their own. The parents are still together, hopefully, after the grown children leave the home to be on their own. To stay strong as a couple they need to work on their relationship first so that it is strong. (That is not to say that the children are ignored. You both came into this relationship with children in tow so it's a bit of a juggling act.) The parents are the base, the support of the family. Without a strong foundation, you have a weak structure. Together as a strong base, you support the family. When you have a strong family, you have love and support.
You and your husband need to work together as a team so that you can help each other to support your children, all 12. Your husband's first marriage was not a strong, stable team. It was highly unbalanced. Children need the love and support of their parents. Otherwise they do not feel self-worth. They need to see their parents model a loving and supportive relationship so that they will know what a good relationship looks like and how it works. Children are new to life and need to be shown the way in how to do things. That is the job of parents. Teens and young adults sometimes think they know it all. (That's probably hormones talking.) Looks like that is the case here. Letting them do whatever they feel like and saying whatever they feel like, etc. is not acceptable. They need to know that. To maintain order people have to work together to get things done. It is immature and uncooperative to think that one can do whatever one feels like. If that were the case, civilization would be destroyed. That's scarey and that is what is happening in our country because so many children are not being cared for properly.
My advice is to seek help for the whole extended family. Go yourself if no one else will go. Also read parenting books. One book I would suggest is "How to Talk So Kids Will Listen & Listen So Kids Will Talk" by Adele Faber and Elaine Mazlish.
Talk to your husband. Hopefully he will work with you.
Good luck,
Maureen