Best case she realizes you're serious and won't spend her rent money on another vacation 

Welcome, BP is worth spending a lot of time browsing.

Replacing kitchen cabinets and counter tops to not only look professional, but to also do so without spending an arm and a leg. 

You can easily spend scores of hours dealing with this issue and may not have any success.It likely affects your property value more than a few hundred dollars.It may result in happier and longer term tenants.The risk is they tell all of their homeless buddies who now set up behind your rental in hopes of getting an easy $100.It is just moving the problem elsewhere but in this case the NIMBY can affect your finances. 

As a buyer, my lender flaked out 2 weeks before the closing date so I scrambled to find another lender.

I am not sure a judgment raises the red flag any higher or makes it bigger, but it's your money you are spending on it.

Check with your attorney on how to proceed.In my mind... and perhaps the borrow may be thinking the same thing... if you're in Ohio and they are in Alaska... how much money are you going to spend to make the situation right when the outstanding balance is at $12k? 

Or would the additional equity probably not really make a difference considering the out of pocket expense we'll be spending anyways on the deck?   

I'd recommend spending the money to have an attorney draft one for you. 

With all my expenses figured in plus mortgage I will be spending about $1000 a month, so cash flowing roughly $455 a month right of the bat.