OP here.
The family in question, by all appearances, is very pious. I assume their diet is good, most of what they eat they source themselves. They have a small farm.
I used the term BPD just because it's the most convenient way to indicate a collection of behaviors-- regardless of the veracity of BPD clinically speaking.
To the poster who asked about just telling her the truth, I do think this is necessary. It isn't my place though, I think we need to bring it to her husband. I'm not sure how receptive he will be, he has his own issues (many of which I think are caused by his wife's behavior). Do pray for this family.
I can think of several psychological reasons why she would tell the things you described, aside from being a liar, in the sense of someone consciously choosing to lie to others.
One of them could be that she blurts out every stray thought she has, even if they are nonsensical. Stray thoughts can often sound completely insane to an outsider. Most people suppress those stray thoughts and know not to take them seriously. Imagine someone who acts on their stray thoughts without filtering them, they would look insane from an outsider point of view.
Another reason would be that she does not mean what her words seem to say, because she has unconventional thinking. As an example, by "my husband is dying", she could mean spiritual death rather than physical death, so to her it didn't sound like a lie. She could also be grossly exaggerating by habit.
Another one is that she wants to catch the intention of her interlocutor somehow, so she says something to catch their intention even if it's insane, and once she has their attention she doesn't keep up with the lie.
This isn't necessarily a mental pathology, in the common sense of the word. She could have some sort of eccentric personality type.
I do not have any medical authority, of course, however I am someone deeply interested in neurosciences and psychiatry and I often read books on the subject.
In the end, those are simply my speculations based on the very little evidence you gave us.
In the meantime, the best is to not get upset by her behaviour. There isn't much you can do about it, but you can at least avoid suffering from headaches.