With DSS mom being unable to care for him, you can go to family court and sue for custody. Grandma cannot just take care of dss, when mom isn't up to the job and dad wants custody.
If you all get appointed as the custodial parents, you won't have to make payments anymore to the mom, who doesn't even take care of him. You all could also go to court for partial custody and have grandma also declared a partial custodian.
If you have court ordered payments, dad should at the very least have scheduled visits.
It does not make sense to continue to have dss living at grandma's, who does not have custody, and pay mom. It also does not make sense for the poor kid to be living like this, when he has a dad who is able and willing to care for him.

The crazy ex should not be running the show when she is unable and unwilling to care for her own child. For the sake of your husband's son, I wish you all the best of luck.