Kara Homes Inc., a New Jersey-based homebuilder, filed for bankruptcy protection Oct. 6, owing 12 bank lenders at least $244 million.According to a just-released report issued by Sandler O'Neill, "the magnitude of the exposure that some banks had was not known (and was frankly a bit surprising to us)." Sandler added that, "At this juncture, it is difficult to ascertain how, or if, this debt is collateralized." Among the banks with the largest claims are ING Direct, which is owed $77 million, Amboy National Bank ($58 million), and National City Corp. ($48 million). ING and National City are also large mortgage lenders. The housing market has been weakening all year, and there is little chance of an upturn until late next year, economists believe. Kara filed for Chapter 11 bankruptcy protection in federal court in New Jersey.

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