Of course it is illegal! Look at International Humanitarian Law, and especially the 4th Geneva convention - it is illegal under any circumstances to move or assist the move of civilian population of the occupation power. Furthermore it is illegal to change the demographic structure on occupied territory by the occupation power. That includes all aspects of settlement. And remember, both Israel and the US have signed the Geneva Conventions.
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Firebombs hurled at Border Policemen in East Jerusalem's Ras al Amud; no policemen wounded (Haaretz)
from the article: U.S. politician wants American Jews to buy West Bank homes