Inspectable Area: Site
Inspectable Item: Grounds
This is a legitimate example of undermining, which makes Rutting/Erosion reach Level 3.

Look at how the porch slab has a stress crack near the sidewalk.

This may well have been due to the uneven support due to dirt having washed out from under the slab.
Looking at the objects in the lawn - the rusty pole and the concrete structure - one can see that the dirt has worn down from its original contour by at least 5 inches.

This is Level 3.
The erosion here is pretty obvious, and easily 5 inches deep.

This is Level 3.
A resident drove off the edge of the parking lot while the ground was a little wet. 

This created a rut that is arguable about 3 inches deep.

This is Level 2.

The lack of ground cover promotes erosion, but the presence of bare dirt, in and of itself, does not mean there is erosion.

Don't just throw down straw to cover this up - it does not do any good, it is a waste of time.

Fixing this properly will not be cheap or easy, but it needs to be done.

The real reason this photo represents erosion is that dirt has been displaced and has collected
in an area where it does not belong - on the sidewalk surface.

This is Level 2.
Full definitions, derived from Federal Register    
Grounds (Site)
The improved land adjacent to or surrounding the housing and related structures. This does not include land not owned or under the control of the housing provider.
This inspectable item can have the following deficiencies:
Erosion/Rutting Areas                                Ponding/Site Drainage
Overgrown/Penetrating Vegetation
Erosion/Rutting Areas (Grounds—Site)
Deficiency: Natural processes, weathering, erosion, or gravity, or man-made processes have caused either of these conditions:
—Collection or removal of surface material.
—Sunken tracks, ruts, grooves, or depressions.
Note: This does not include erosion/rutting from a defined storm drainage system or in a play area. These are covered in these sections: “Storm Drainage (Site)” and “Play Areas and Equipment (Site).”
Level of Deficiency:
- Level 1:  N/A
- Level 2:  Erosion has caused surface material to collect, leading to a degraded surface that would likely cause water to pool in a confined area, especially next to structures, paved areas, or walkways.
A rut/groove is 6 to 8 inches wide and 3 to 5 inches deep.
- Level 3:  Runoff has extensively displaced soil, which has caused visible damage or the potential failure of adjoining structures or systems, such as pipes, pavements, foundations, building, etc.
Advanced erosion threatens the safety of pedestrians or makes an area of the grounds unusable.
There is a rut larger than 8 inches wide by 5 inches deep.
Inspector Notice No. 2016-03 (Non-Industry Standard Repairs)    
e. Erosion. Correcting the root cause of the erosion is the correct means of repair, for
example, correct or repair the drainage or add fill-soil. Simply hiding or covering the
erosion with mulch or straw is not correct.