Beyoncé name-drops housing-finance giant Fannie Mae on 'Cowboy Carter.' Here's what she meant.

By Aarthi Swaminathan

As a California homeowner herself, Beyoncé is familiar with the threat of natural disasters, and sings about it in the song 'Ya Ya'

She may be rich and famous now, but Beyoncé is keeping close tabs on the bills, bills, bills that millions of homeowners face today with their home insurance.

Her new album, "Cowboy Carter," references country legends Dolly Parton and Willie Nelson - and the housing-finance giant Fannie Mae. In the song "Ya Ya," Beyoncé sings: "Wildfire burnt his house down / Insurance ain't gon' pay no Fannie Mae, shit."

What did the artist mean by that?

"Beyoncé clearly understands the risks that natural disasters can have on a home's value," Daryl Fairweather, the chief economist at Redfin (RDFN), told MarketWatch. She also posted on X about the reference after the album's release.

"Ya Ya" also touches on how hard it can be to get by in the U.S., with lines such as, "Are you tired, workin' time and a half for half the pay?" With the lyrics referencing Fannie Mae and wildfire destruction, the singer seems to be referring to how more homes are being damaged or destroyed due to the increased incidence of natural disasters fueled in part by climate change - while insurance doesn't necessarily come to the rescue.

Home-insurance coverage has become more expensive and harder to find in California due to wildfires, because insurance companies in the state are finding it financially untenable to continue to offer coverage. Similar challenges are unfolding in Florida, where hurricanes take a toll on homes and insurers' bottom lines.

A representative for Beyoncé did not respond to a request for comment.

While Beyoncé's cover of Dolly Parton's "Jolene" on "Cowboy Carter" is getting a lot of attention, some listeners also noticed the Fannie Mae reference.

What is Fannie Mae and why did Beyoncé sing about it on 'Ya Ya'?

Fannie Mae is a government-sponsored enterprise that essentially provides money to the mortgage market. As Fairweather explained, the housing giant ensures that mortgage lenders have enough funds to lend to home buyers.

"Fannie Mae has a really big role in the housing market ... and has been a really critical part of the American dream of homeownership," said Aniket Mehrotra, a policy assistant at the Urban Institute who posted on LinkedIn about Beyonce's lyrics, writing they deserve "our full attention."

Mehrotra told MarketWatch: "Regular consumers, homeowners or not, don't necessarily understand the intricacies of the housing-finance system and how their mortgage works and what's behind it."

Fannie Mae continually buys mortgages from banks and mortgage lenders to provide them with cash to keep giving out new loans to new borrowers. Lenders have to follow guidelines set by Fannie - and Freddie Mac, another government-sponsored enterprise - so they can sell their loans to the two companies.

"It's important for folks in housing finance to have this issue shouted out, because climate change is set to have a really significant impact on the housing market in a very concerning way," Mehrotra said.

To be clear, Fannie and Freddie - and even Ginnie Mae, a wholly government-owned company that guarantees federally backed loans - don't service mortgage loans. But "Fannie Mae sometimes facilitates mortgage relief for homeowners affected by wildfires to prevent financial loss and displacement," Fairweather said.

For instance, homeowners with mortgages owned by Fannie Mae and Freddie Mac are allowed to delay making monthly mortgage payments for a period of time without incurring fees if they are affected by a disaster, according to the Federal Housing Finance Agency's website.

Why did Beyoncé mention wildfires?

Over the last few years, increased incidence of natural disasters such as hurricanes and wildfires have destroyed properties across the U.S., and many homeowners have had to pay out of pocket to fix the damage.

More than 1.2 million homes in California are at moderate or high risk of wildfire damage, CoreLogic estimated in a 2023 report. California leads the U.S. with its number of homes at risk of wildfire damage, whose reconstruction costs are collectively valued at more than $760 billion.

As a California homeowner herself - with a $190 million, 40,000-square-foot mansion in Malibu - Beyoncé is familiar with the risks of natural disasters, given that 99% of all properties in the area face wildfire risk, Fairweather said. Malibu is located in Los Angeles, which is the metropolitan area with the greatest number of homes - more than 240,000 - at risk of wildfire damage, the CoreLogic report noted.

"Her reference to Fannie Mae shows that she understands that financial support after natural disasters is possible, but not a guarantee, for homeowners," Fairweather said.

What does Fannie Mae say?

Fannie Mae declined to comment on the Beyoncé song, but a day after MarketWatch reached out, it published a blog post about a survey showing that consumers are worried about the impact of extreme weather on home-insurance premiums.

Two-thirds of the survey respondents reported that weather-related events have affected their insurance premiums, Fannie Mae's Economic and Strategic Research Group found.

One in four homeowners reported a large impact on their insurance premiums, Fannie Mae said, though the blog post did not specify by how much.

What's happening with homeowners insurance?

Taking a step back, the "Cowboy Carter" track sheds light on how insurance costs have shifted in light of climate change and natural disasters - and how homeowners are struggling.

After all, "Hard workin' man ain't got no money in the bank," as Beyoncé sings in another lyric from "Ya Ya."

"Homeowners may find themselves paying exorbitant amounts to be covered without the guarantee that this coverage will be sufficient based on the severity of damage," said Fairweather, the Redfin chief economist.

Certain homeowners bear this burden disproportionately. "The implications of property destruction are most severe for communities considered more vulnerable and less resilient, including many communities of color," said a paper published in March by the Urban Institute.

"Broadly, communities of color are often more vulnerable to catastrophes and can experience a slower recovery if they experience such events," the paper's authors added. "Absent an appropriate policy response, such shocks can worsen racial and ethnic disparities."

And with private companies like State Farm pulling out of states such as California, "home buyers may struggle to get covered at all in climate-risky areas," Fairweather added.

From the archives (May 2023): State Farm cracks down on California wildfire insurance. What it means for all homeowners.

In fact, "many consumers are struggling to afford rising premiums and must go without homeowners insurance," Sharon Cornelissen, the director of housing at the Consumer Federation of America and a co-author of a recent study by the CFA, said in a statement.

"That puts them at risk of losing everything," she added. "One storm or wildfire means they have to go into deep financial debt to repair their home, live with unsafe and inadequate housing, or even become homeless."

Of the more than six million homeowners who lack homeowners insurance, 22% are Native American, 14% are Hispanic and 11% are Black, according to the CFA.

"Being uninsured can foster deeper economic precarity for millions of homeowners across the country, especially those with lower incomes, and it is an important contributor to racial inequality," the CFA said in its report. "Inequalities in who has homeowners insurance will likely widen the long-standing racial wealth gap, as uninsurance disproportionately impacts Hispanic, Black, and Native American homeowners."

How have home-insurance prices and home prices affected you and your financial decisions? MarketWatch would like to hear from readers. You are welcome to write to us at readerstories@marketwatch.com. A reporter may be in touch to learn more.

Read next: California homeowners face an insurance crisis. What will it mean for home prices in the state?

-Aarthi Swaminathan

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