Four homes on Via Ballena were red-tagged, and two others are threatened. A red-tag designation means the property is not suitable for habitation.
There are concerns houses could slide. The houses overlook Shorecliffs Golf Course.
Orange County Fire Authority Greg McKeown said firefighters found the crumbled land near the back patios of the house Friday.
Heavy rains in December soaked much of Southern California, including flooding in nearby downtown Laguna Beach.
The Associated Press contributed to this report.