A close up photo may help. Maybe it's lichen , which won't harm the tree. There are some photos of lichen on a tree here www.botanicalgarden.ubc.ca/forums/showthread.php?t=31833
Yeah its probably lichen but here are two picture attachments you guys can look at to make sure. Thanks.
Looks more like fungus. In the first photo it is growing on a dead branch, possibly in the other photo likewise. A good first step would to be to remove all dead wood and see how that affects the situation.