In its complaint, the regulator alleges that Mr Mozilo, along with Countryside president David Sambol and ex-chief financial officer Eric Sieracki, deliberately misled investors between 2005 and 2007 by falsely claiming the firm was principally a prime mortgage lender that had avoided the excesses of its rivals.
However, Countrywide was actually writing riskier and riskier loans, the SEC said, to the point where Mr Mozilo warned his fellow executives that the company was "flying blind on how these loans will perform" when the downturn hit the mortgage market.
"This is the tale of two companies," said Robert Khuzami, director of the SEC's enforcement division.
Mr Mozilo is also charged with selling Countrywide stock using non-public information regarding the firm's increasing credit risk and the anticipated poor performance of its loans.
The SEC alleges that between November 2006 and August 2007, he exercised over 5.1 million stock options and sold the underlying shares for a profit of approximately $140 million.