It appears to me to simply be the parge coat (aka underpinning) that has cracked and chipped away. While this is unsightly it is cosmetic in nature and not indicative of a foundation failure. Other indicators of foundation issues should be carefully inspected like drywall cracks above the windows and elsewhere, windows that don't open/close properly, etc. The parge coat should be repaired with the appropriate material to ensure no further degradation. The gutter downspout should also drain farther away from the foundation, approximately 5'-6' away.
Originally Posted By: mboyett This post was automatically imported from our archived forum.
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A parge coat or underpinning is a thin layer of mortar that is applied to the rough edges of the foundation to clean them up some and make them presentable. It's usually pretty thin, maybe 1/16" to 1/8". The parge coat in your photo looks thicker than that though. Anyway, it's infamous for cracking over time. The cracks are a great way for moisture and even insects (WDI/WDO) to get in behind the rest of the parge coat and create havoc. I suspect parge coat cracks can be cleaned up and filled with a simple concrete mortar compound. Others will chime in to give other repair methods I suspect.