This is true, and the warning here is clearly to those who had been born again (Gal. 4:6; cf. Heb. 3:12) but since works incontrovertibly manifest what we believe, then one who impenitently practices unrighteousness evidences he does not truly believe in the Lord Jesus, any more than one can claim to believe in Reagan was a good president and yet support Communism.
Luther himself taught, Luther himself rejected the idea that a faith which did not effect characteristic obedience was salvific, stating,
faith is a living and an essential thing, which makes a new creature of man, changes his spirit...
Faith cannot help doing good works constantly...
if faith be true, it will break forth and bear fruit...
where there is no faith there also can be no good works; and conversely, that there is no faith.. where there are no good works. Therefore faith and good works should be so closely joined together that the essence of the entire Christian life consists in both.
if obedience and Gods commandments do not dominate you, then the work is not right, but damnable, surely the devils own doings, although it were even so great a work as to raise the dead.. .
if you continue in pride and lewdness, in greed and anger, and yet talk much of faith, St. Paul will come and say, 1 Cor. 4:20, look here my dear Sir, "the kingdom of God is not in word but in power." It requires life and action, and is not brought about by mere talk.
Works are necessary for salvation [as evidential fruit], but they do not cause salvation...
faith casts itself on God, and breaks forth and becomes certain through its works...
faith must be exercised, worked and polished; be purified by fire...
it is impossible for him who believes in Christ, as a just Savior, not to love and to do good. If, however, he does not do good nor love, it is sure that faith is not present...
where the works are absent, there is also no Christ...
References by God's grace.
"I marvel that you are so soon turned away so soon from Him who called you in the grace of Christ, to a different gospel...Who has bewitched you that you should not obey the truth, before whose eyes Jesus Christ was clearly portrayed among you as crucified? This only I want to learn from you: Did you receive the Spirit by the works of the law, or by the hearing of faith? Are you so foolish? Having begun in the Spirit, are you now being made perfect by the flesh [works of the law]"? Gal 1:6;3:1-3.
"Now this I say lest anyone should deceive you with persuasive words...As you have received Christ Jesus the Lord, so walk in Him." Col 2:4,6.
"And if by grace, then it is no longer of works; otherwise grace is no longer grace. But if it is of works, it is no longer grace; otherwise work is no longer work." Rom 11:6.
Again, salvation initially and perpetually is either by grace or by the works of the law. It cannot be by both. The two are mutually exclusive.
Now a reminder of a warning.
"You are turned away so soon from Him who called you in the grace of Christ, to a different gospel...but even if we, or an angel from heaven, preach any other gospel to you than what we have preached to you, let him be accursed. As we have said before, so now I say again, if anyone preaches any other gospel to you than what you have received, let him be accursed." Gal 1:6;8-9.
A double curse is pronounced by God in Galatians through Paul to anyone who brings another "gospel" (there is only ONE true gospel) of salvation by works rather than by grace.
So what about Hebrews 10:26-27? Well, to rightly divide the word of truth, we must understand who scripture is addressing. In this case, the author (probably Paul) is talking to the Jews who were the first recipients of the oracles of God and witnessed and experienced the blood of sacrifice and the Holy Spirit for 1500 years. If they reject Christ whose sacrifice took away all their sins, then "there is no more sacrifice" for their sin of rejecting Christ.
What about the Book of James and works with faith? James is talking about "show me" and "I'll show you". He's not talking contrary to the gospel of grace but about effective faith that others can see. But others don't decide one's salvation. Believing in Christ is the ONLY standard of salvation. Effective Christianity is not a condition for salvation, but for victorious Christianity.
There are many defeated Christians. They belong to Jesus who promised NEVER to leave them but they have failed to avail themselves of the "abundance of grace and the gift of righteousness" by which they may "reign in life" (Rom 5:17).
As far as worldliness goes, the world (and a significant number of Christians) knows nothing about grace. You ask the average guy on the street if he's going to Heaven and he'll say, "Yes, I've been good." But to a confidant he'll say, "I feel guilty, I just committed adultery." The world knows all about the ten commandments. The ten commandments makes sense to the fleshly mind. So your doctrine of salvation by works is very worldly.
But salvation by grace is contrary to the carnal mind and the pride of performance because there is none - Jesus did it all. That pisses off the self-righteous Pharisees of the past and of the present. It takes God's Spirit to reveal the grace of Christ to a person.
This may be it for me with you. I'm pretty sure you are among those who are pissed off by the gospel of grace because it excludes your performance. Self righteousness and self effort are excluded from grace. You may also be pissed because the gospel of the grace of Christ is contrary to a lot of the traditional doctrines taught today by the religious establishment who as in Jesus day, "teach for doctrines the commandments of men" (Matt 15:9), because the gospel clearly says "you are NOT under the law, but under grace" (Rom 6:14).
Good luck.