The following is from chapter 4 of A Marvelous Work and Wonder, by LDS Author Legrand Richards, a standard work (not canon, but representative of) usually given to missionaries.
One erroneous teaching of the many Christian churches is: By faith alone we are saved. This false doctrine would relieve man from the responsibility of his act other than to confess a belief in God, and would teach man that no matter how great the sin, a confession would bring him complete forgiveness and salvation. What the world needs is more preaching of the necessity of abstaining from sin and of living useful and righteous lives, and less preaching of forgiveness of sin. This would then be a different world. The truth is that men must repent of their sins and forsake them before they can expect forgiveness. Even when our sins are forgiven, God cannot reward us for the good we have not done.
Justification by faith is through and through, thematically and explicitly, succinctly and passionately taught in the New Testament. The LDS interpretation of James is in direct contradiction with the foundational reason of why the gospel was needed. It forces a dichotomy and ambivalence wherein Mormon teaching works win.
Justification by faith does not preclude an inevitable justification of sin. Justification by faith, rather, was taught as a completely different means of upholding the law of God. Yes, if sin increases, grace increases. Hence, believers really are completely forgiven; but that does not consequentially necessitate a reckless behavior under fire insurance! The fact is that plenty of people believe that they are justified by faith alone, and they follow up with presenting themselves to God as a living sacrifice, not even partly as their means of attaining salvation, but purely out of a confident worship. If the wages of obedience were salvation, then salvation would no longer be a gift! Obedience is a believer’s response to God’s perfect love, not a fulfillment of God’s prescribed conditions.
“If we confess our sins, he is faithful and just and will forgive us our sins and purify us from all unrighteousness.” (1 John 1:9) The atonement of Christ was powerful. The LDS thought is that some people are more worthy of forgiveness than others, and that the blood of Christ does not cover all sins. Yeah, that’s right you death row convicts, sexually defiled, and fellow reprobate sinners, there won’t be any easy love from LDS doctrine. Fear not though, for Christ’s blood really does purify the believer from ALL unrighteosness. The ultimate benefit we reap is a gift, and not a reward or wage according to our work. We have done nothing to deserve it.