"Please tell me I am not being selfish!"
You are absolutely not. In effect, if you allowed your "friend" to live with you so that she can use the proceeds of sale to fund her daughter's divorce and mortgage, then it would mean you would be funding these things.
If you felt lonely and wanted a houseshare you might choose to sell one of the houses and use the proceeds to travel the world or take annual cruises.
But you don't want a houseshare and you don't want to fund the divorce and mortgage. So the answer has to be NO.
Meanwhile I think you should advise your friend to stop funding the divorce and tell her daughter she must "agree terms" post haste! (Or lose everything!)
Perhaps your friend should also stop paying any of the mortgage, if she's beggared herself over the legal fees, and can't afford it without making herself homeless.
Good Luck. Don't let someone else's unwise decisions lead you to an unhappy outcome. Nor let the mutual "friend" badger you into saving her from the same unhappy outcome.
How would this story end? When your long-term friend's money from the house sale runs out, will she be asking you to give up your housekeeping money?
Be strong. Be firm. Be sensible.
What did you never own up to ?
