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The penalties are tied to specifically the settlement you occupy, and one region that acts as the supplier, you only get factionwide penalties if you have no settlements capable of supply, and are essentially running out of supplies factionwide to build the new settlement.
Asking since I normally play by sending armies out on long distance expeditions tend to occupy enemy territory that can be across the ocean from my closest settlement. I normally occupy those regions as a staging area before moving on and eventually trading the settlements to local allies.
Your mod still penalizes me even if I take a region and immediately trade it away, which gets really annoying to deal with for territory I don't plan to keep.