Could they be charged with fraud?

In May of 2000 my Grandmother's daughter and son-in law moved in with her because they were unable to purchase a home of their own thus not allowing them to adopt a child. Upon moving in they asked my grandmother to loan them money so that they could adopt. Prior to asking for the loan, a home inspection was conducted by a social worker from the social services. According to my Grandmother's son-in-law the case worker stated that an addition was needed in order to make the home suitable for the child to be adopted. Thus my grandmother agreed to the loan. My grandmother opened a home equity line of credit in the amount of $60,000.00 with my Aunt and her husband co-signing. Because my grandmother, a retiree, did not meet the qualifications for a loan, the loan officer had put in writing that my Aunt and her husband would pay my grandmother x-amount of rent per month so that they could qualify for the loan, which in turn would be the mothly payments for the loan. The loan was given, however my "uncle" never brought the check to my grandmother to be signed, he signed it himself and placed it in a personal checking account. The addition was completed for a sum of $15000.00. In January of 2001 they adopted a child for the sum of $17,500.00 totaling $32,500.00. In 2003 my grandmother suffered a heartattack and was in and out of the hospital for a year and half. The entire time she was hospitalized no payments were made to the loan as my aunt and uncle promised to do. In stead my uncle continually took loans against the home equity line of credit that was established. In the spring of 2006 after a host of inquiries by my uncles creditors, my grandmother decided to verify the loan was being paid. Upon discovery she found that payments had been made then loans were taken against that payment. My grandmother chose to freeze the line of credit so that no more loans, only payments could be made. Enraged by her deicison my aunt and her husband moved out, have paid the loan peridoically after promising to pay the loan in full. They took their own loan to purchase a home and are continually delinquent on the home equity loan that they took along with my grandmother. The entire time banking was done without my grandmother's knowledge or signature. She never saw the check and had little knowledge of transactions as they were made. Has her daughter and son-in law committed fraud? Does she have any legal recourse?

Yes they can certainly be sued to get back all of those funds.

There could even be criminal law issues and they could be charged with fraud possibly.

Get counsel to review this carefully!