I have a house that is 5 yrs. old. When I moved in the exterior basement walls were insulated with an 8' high rolled insulation with vapor barrier on the inside. It is nailed directly to the foundation walls with concrete nails and plastic washers. I have never seen this before and question this practice. I am concerned about mold/moister buildup. I live in the midwest with 4 seasons. What would you recommened to do with this insulation? Take out before finishing the basement? Thanks!!

The builder is required to install this in many areas. It is assumed you have a poured cement wall system in your home. Their is nothing wrong with leaving this in place, however you must understand that its critical that the metal vapor barrier that is over the insulation not be cut into or damaged. Otherwise moisture will be allowed to get behind it and condense in the insulation.

If your going to finish the basement. I suggest that you construct you basement walls standing free of the outide foundation walls. Keep if you can about six inches of free space between the foundation and the back of the new walls. This allows for ventilation and easy access for future wires, plumbing etc if the need ever comes up.

This is the interior of the basement I am talking about. The insulation has a "Tyvek" style vapor barrier. The fiberglass in directly on the concrete wall. Should I keep in place when I finish the basement?

Yes you should keep it in place. Unless you decide to attach your new basement walls onto the foundation wall. Then you would need to remove this and install your insulation in the wall cavity.