5. Loans and Loans Held for Sale

Our loans by category are summarized as follows:



December 31,
in millions	2016		2015
Commercial, financial and agricultural ^(a)	$	39,768	$	31,240
Commercial real estate:
Commercial mortgage	15,111		7,959
Construction	2,345		1,053
Total commercial real estate loans	17,456		9,012
Commercial lease financing ^(b)	4,685		4,020
Total commercial loans	61,909		44,272
Residential — prime loans:
Real estate — residential mortgage	5,547		2,242
Home equity loans	12,674		10,335
Total residential — prime loans	18,221		12,577
Consumer direct loans	1,788		1,600
Credit cards	1,111		806
Consumer indirect loans	3,009		621
Total consumer loans	24,129		15,604
Total loans ^{(c), (d)}	$	86,038	$	59,876


(a)	Loan balances include $116 million and $85 million of commercial credit card balances at December 31, 2016, and December 31, 2015, respectively.


(b)	Commercial lease financing includes receivables of $68 million and $134 million held as collateral for a secured borrowing at December 31, 2016, and December 31, 2015, respectively. Principal reductions are based on the cash payments received from these related receivables. Additional information pertaining to this secured borrowing is included in Note 19 (“Long-Term Debt”).


(c)	At December 31, 2016, total loans include purchased loans of $21 billion, of which $865 million were purchased credit impaired. At December 31, 2015, total loans include purchased loans of $114 million, of which $11 million were purchased credit impaired.


(d)	Total loans exclude loans in the amount of $1.6 billion at December 31, 2016, and $1.8 billion at December 31, 2015, related to the discontinued operations of the education lending business.

We use interest rate swaps, which modify the repricing characteristics of certain loans, to manage interest rate risk. For more information about such swaps, see Note 9 (“Derivatives and Hedging Activities”).

Our loans held for sale by category are summarized as follows:



December 31, in millions	2016		2015
Commercial, financial and agricultural	$	19	$	76
Real estate — commercial mortgage	1,022		532
Commercial lease financing	—		14
Real estate — residential mortgage ^(a)	62		17
Real estate — construction	1		—
Total loans held for sale	$	1,104	$	639

(a)

Real estate — residential mortgage loans held for sale at fair value at December 31, 2016. The fair value option was elected for real estate — residential mortgage loans held for sale during the third quarter of 2016 with the First Niagara acquisition. The contractual amount due on these loans totaled $62 million at December 31, 2016. Changes in fair value are recorded in "Consumer mortgage income" on the income statement. Additional information regarding residential mortgage loans held for sale fair value methodology is provided in Note 7 (“Fair Value Measurements”).

Our summary of changes in loans held for sale follows:



Year ended December 31,
in millions	2016			2015
Balance at beginning of the period	$	639		$	734
Purchases	48			—
New originations	8,356			7,108
Transfers from (to) held to maturity, net	35			62
Loan sales	(7,979		)	(7,229		)
Loan draws (payments), net	5			(36		)
Balance at end of period ^(a)	$	1,104		$	639


(a)	Total loans held for sale include Real Estate - residential mortgage loans held for sale at fair value of $62 million at December 31, 2016.

Commercial lease financing receivables primarily are direct financing leases, but also include leveraged leases. The composition of the net investment in direct financing leases is as follows:



December 31,
in millions	2016			2015
Direct financing lease receivables	$	3,468		$	2,821
Unearned income	(278		)	(224		)
Unguaranteed residual value	316			261
Deferred fees and costs	16			17
Net investment in direct financing leases	$	3,522		$	2,875

At December 31, 2016, minimum future lease payments to be received are as follows: 2017 — $1 billion; 2018 — $818 million; 2019 — $575 million; 2020 — $371 million; 2021 —$210 million; and all subsequent years — $387 million. The allowance related to lease financing receivables is $42 million at December 31, 2016.