Ocwen Financial Corp. (NYSE: OCN) has run into trouble, and all the most recent news about backdated letter allegations by New York regulators came up after the end of its most recent quarter. 24/7 Wall St. was not really interested in the company’s actual earnings release on Thursday morning. It was, however, deeply concerned with how much the company would earmark to deal with the charges and any potential settlement(s).

While Ocwen said that it has completed its legacy ResCap system migration and has surpassed the 500,000 loan modifications milestone, the company also said that it recorded a $100 million charge for potential settlement with New York regulators. Here is the real issue though — is $100 million enough?

When Ocwen’s New York regulatory news broke last week, the stock cratered because the phrase “potentially hundreds of thousands of letters to borrowers” was used in the letter. The company said with earnings on Thursday:

We have not reached any agreement with the New York Department of Financial Services and cannot predict whether or when we may reach such a resolution. Any future resolution of these regulatory and legal matters may be materially different from what has been accrued.

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Ocwen generated revenue of $513.7 million, down 3% compared to the third quarter of 2013. Income from operations was $58.7 million for the third quarter of 2014. The actual loss reported was due to charges and legal costs.

Bill Erbey, Ocwen’s executive chairman, said:

I want to emphasize that Ocwen takes great efforts to keep borrowers in their homes and to avoid foreclosures. Ocwen recently reached a significant milestone by making its 500,000th loan modification, including 290,000 HAMP modifications. Ocwen is the leader in foreclosure prevention with 44% more HAMP modifications than any other servicer. We work very hard to keep borrowers in their homes and that is why we take the concerns raised by the New York Department of Financial Services so seriously. We have numerous compensating controls in place which we believe should have prevented borrower harm. Nonetheless, Ocwen is proactively creating a process whereby any borrower, who believes they received a misdated letter, and were harmed as a result, will have the opportunity to receive a complete file review to resolve any issues caused by the misdating.

We still cannot help but wonder if $100 million is really enough for the company to set aside here. From all we have seen before, during and after the financial crisis, one regulatory matter of this scale tends to beget more and more of the same efforts from other states’ regulatory bodies. The $100 million compares to a market cap of $2.8 billion.

When news broke of the Ocwen issue, shares fell from more than $26 to as low as $18.50 or so. The post-earnings reaction had the stock up 2.5% at $21.34 Thursday morning. This gain may be due to the hope that perhaps the company’s $100 million allowance is an aim to show that it doesn’t feel this is anywhere close to anything resembling a company-killer event at all.

Another notion on what the size of this $100 million really means: Ocwen completed the repurchase of 5,307,019 common shares under its $500 million repurchase program. That put the buyback spending at $158.8 million. Could regulators use this as a public statement that the company wants to retire stock more than pay for potential settlement charges?

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After having witnessed regulatory events of this scale on more than just a few occasions, 24/7 Wall St. cannot help but wonder if this could ultimately be far worse than the reaction we have seen so far. Maybe the notion that this was almost a $60 stock in 2013 has helped to further buffer the losses here. There is a reason we named Ocwen as one of eight stocks that just ruined long-term investor ambitions.

Ocwen’s 52-week range is $18.47 to $59.86. The consensus analyst price target is still above $28, but that consensus target was north of $33.50 prior to this regulatory risk event.

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