Meaning of 事情并没有想家的那么糟糕 事情并没有想家的那么糟糕。

(1) What is the meaning of this sentence?
(2) In “想家的那么糟糕”, please explain to me the function of 的? I do not understand why 的 turns up in that position.
事情并没有想家的那么糟糕。

The sentence you quote has a typo. It should be:

事情并没有想像的那么糟糕。

想像的 is nominalization, meaning what one thinks of. The whole sentence means things don't go as bad as what we think of.