Its more a math problem, than some functionality that should
be provided by the engine.

A simple sollution to your problem would be to make te hammer-model,
extend the origin-point of the model some way off the shaft,
and then simply lett the hammer model tilt down 90 degrees.

So you only ROTATE the hammer-model.

This way the hammer would move on a quarter circle path, just like
slamming a hammer on a forge.