John Woods and his wife Joan, both 70, were persuaded to borrow pounds 145,000 from the Alliance & Leicester in 1991.
Part of the money went to pay off an existing pounds 48,000 mortgage with another building society, and a sum was given to their daughter, Alison, a widow with three young children.
They also gave a cheque for pounds 80,000 to a fraudster called Graham Holland who spent the money on himself. The couple finally went to the police after finding out that their money had not been invested.
Last month, Holland was jailed for four years at Liverpool Crown Court on several fraud and theft charges, including this one, involving more than pounds 200,000.
Some of his victims will receive compensation, because Holland worked briefly for an insurance company, Irish Life, when at least one of the frauds took place. But he had already been sacked by the company by the time he met the Woods. They stand to get nothing because Irish Life was not responsible for the fraud.
Mr Woods said: 'The last two years have been terrible. We have been sick with worry.
'Having spent all our lives working to set something by for our daughter and grandchildren, we now find that we have nothing to leave them. I wish we had never heard of Holland or had any dealings with him.'
The couple, who live at Rainhill, near St Helens, first met Holland through the town's rugby club. 'My daughter Alison's husband had died of a heart attack a few years before,' Mr Woods said. 'We wanted to make financial provision for them and have some money to do up our home.'
Holland advised the couple to take out a new mortgage and invest the money in insurance company bonds, which would be able both to pay off the mortgage and to provide them with an income.
An application was made to Alliance & Leicester for a pounds 145,000 loan, describing Mr Woods as a 'property speculator' with annual earnings of more than pounds 35,000. He is in fact a retired car worker from Ford Halewood, in Merseyside.
Mrs Woods, a retired teacher, is described on the application form as a 'freelance lecturer', with annual earnings of pounds 15,000.
The couple signed a blank application form, which was later filled in by Holland.
Alliance & Leicester checked whether the couple paid their mortgage on time, but not their earnings.
The solicitor's firm that carried out the re-mortgage was Munro's, in Stanley Street, Liverpool.
A spokesman from the Solicitors' Complaints Bureau said the firm had been closed down after its principal, Mr John Sheperd, was found guilty of legal aid fraud at Preston Crown Court. He could not be contacted for comment but is understood to be appealing against the conviction.
An Alliance & Leicester spokesman said: 'We have had discussions with the Woods. They are an elderly couple and we have no intention of evicting them.'
He confirmed that the way in which the mortgage was obtained was now under investigation. 'We would not want to discuss the details and give people clues about how they can carry out fraud.'
He was unable to say whether the Woods' daughter would be allowed to inherit the property.Reuse content